Most of us want to save money so that we can have savings and plan for the future. We have goals we want to achieve (like traveling) or things we want to buy (like a dream house). However, this can seem impossible when you’re surviving on a low income.
According to CNN, 25 million American households live paycheck to paycheck. When money is tight, saving any amount may be the last priority on your list. You’re just trying to get by.
So how can you save more money when you’re making minimum wage? How to achieve your financial goals on a low income?
When it comes to finances, it’s important to think not only about the present but also the future. Even if you earn minimum wage, you can still save little by little. Here’s how :
1. Tackle high-interest debt first
To start saving more, you need to tackle your debt head on. Specifically the high interest rate of personal loans, or credit cards, because they force you to pay outrageous fees and interest.
When you pay off debt, you need a repayment plan achievable, but challenging. Start by prioritizing your debts to pay off those with the highest interest first.
Then, as you go, avoid accumulating other high-interest debt, especially credit cards.
2. Reduce your biggest expenses
Trying to save money when you have a low income can be very difficult. Sometimes it seems impossible to cut down even a dollar or two each month.
Except for the usual money saving ideas, like cooking meals at home and canceling your cable bill, what more can you do? Instead of trying to cut down on your small expenses, focus on the biggest in order to have a more significant impact.
For most people, housing costs tend to make up the largest portion of their expenses. If you’re renting, consider downsizing your home or living with roommates.
If you own your home, consider whether refinancing your mortgage for a lower rate would be beneficial. You can also rent a room or a parking space to get extra income. to know
3. Enjoy Free Money
Take advantage of “free money” when you can. As a low-income family, you may qualify for the Earned Income Tax Credit (EITC). According to the IRS website, the EITC can be a significant refund on your taxes, allowing you to keep more of what you earned. Sometimes even up to a few thousand dollars.
You should also look at a 401K at work and see if your company matches up to a certain percentage of your contribution.
If so, you should take advantage of it and start saving as much as possible. The company’s match is essentially free money that will help you save for retirement.
4. Keep your budget lean
To save more, you need to take control of your spending. Choose the categories you want to indulge in, and keep the rest of your budget as lean as possible. You will have to make sacrifices but it is not impossible.
Justlearn to spend responsibly. For example ; reduce the frequency of your outings to the restaurant. You can still enjoy a nice meal out, just not multiple times a week.
5. Start a Side Hustle
If you can’t cut costs more than you already have, consider diversify your income in starting a side hustle to earn extra money. Outside of your full-time job, you can get a job on the side to provide another source of income.
Many side hustles can be done right from home in your free time. Think about what you know how to do, what type of hobbies can make money, or what you already love that can be turned into a side job.
Popular side hustles include freelance writing, data entry, and graphic design.
Save money when you earns minimum wage is certainly difficult but possible. It’s important to understand what your priorities are and create a values-based spending and saving plan.
Once you do, you’ll be smarter and wiser with how you spend money, and ultimately, you’ll be able to save more.
If you want to live within your means, you need to pay attention to your income and expenses. Otherwise, it’s impossible to break out of the cycle of living paycheck to paycheck.