One of the hardest things to do when your income is low is saving money. Many folks in this bracket don’t even bother with it because it seems nay impossible.
But is saving money on a tight budget really impossible wherever you are in the world, be it the UK, USA, Canada etc?
Savings for me is a choice you can’t compromise on. You have to do it. No matter how small your income is, it is important to be able to squeeze that extra penny to be saved.
There are a lot of advantages to saving money.
The following are tips and strategies that will help you in your money-saving on a low-income journey. It is also a useful guide if your income is high.
Best Tips On How To Save Money on Low Income
1. Write Down Your Budget
The very first step you want to take when embarking on a savings journey is to find out where your money goes monthly. This is particularly important because it allows you to check for the disparity in your expenses.
There is always something that you shouldn’t be wasting too much money on but you find yourself doing it anyway. This is mostly out of habit.
There is no better way to get an overview of your money flows monthly than documenting it. You can choose to document manually with a piece of paper or virtually through apps like Evernote.
You can also make use of this household budget calculator.
You must resist the urge to do mental math for this.
2. Set Up a Plan of Action
If you’re setting up a plan of action for budgeting on a low income then I want to believe you know where your money is going.
By this I mean you have documented your expenses for a month and scrutinised where your money is leaking.
Only when you know the unnecessary things you’re spending money on can you know how much you can possibly save.
Once you identify the leak, you can then proceed to have an action plan for saving. You need to create a savings goal for yourself.
And get rid of the notion that you are making too low an income to save.
The truth is that even if you are a high-income earner if you don’t have a healthy saving habit, you’ll still find yourself unable to save. Saving money is a habit that you must nurture.
So even if it’s £10 a week that you can save, start with that. The key to the goal is that you must start from somewhere.
3. Reduce Your Accommodation Costs
Accommodation costs are low-key some of the highest expenses that we spend money on.
What most people find out after finding a way to reduce their accommodation costs is that they have more money saved.
How then can you reduce your accommodation costs?
The easiest way to reduce this is to downsize. You might want to look for a less expensive property to rent. Or consider moving to a less expensive area or town.
Although, you must factor in the nearness to your place of work and commuting costs when making the above move.
What you wouldn’t want to do is spend less on accommodation then spending much more on transport.
One of the ways people save money on accommodation is to rent out a spare room to a lodger. This can save you money because then you’ll be earning on your property.
I was once a beneficiary of this type of arrangement when I got my first job at Worcester City Council. A co-worker rented his spare room to me.
And if you live in an area close to tourist attractions, why not consider renting your spare room as AirBNB?
4. Become A Parkinson’s Law Devotee
If you are a fan of productivity then chances are you’ve heard of Parkinson’s Law before this. Parkinson ’s Law states that the more time given to complete a work, the more time it’ll take to complete it. Work expands with the time given.
This can also be applied to finances. The definition in finances would then be: expenses expand to fill the unnecessary wants that occur as a result of increased income.
You might be wondering how increased income relates to your low income. The truth is that you started earning your low income one day. You were probably jobless or on a lower income before now.
What you should have noticed is how your expenses increased with your income. But should it always be so? No matter the income bracket you belong to, you must always be minding of your spending.
You can read this post about how to save money faster with Parkinson’s Law.
5. Cut your expenses
One of the ways to budget on a low income is by learning how to make do with less. This is quite similar to the Parkinson’s point above.
Speaking from experience I can tell you that increasing your income can be hard but reducing your expenses is easier.
Some of the things you can save money on include utility providers, groceries, mortgage and so on.
An often overlooked expense that people often overlook is eating out. Why not cultivate the habit of preparing your own meals? Even if you’re bad at it, you’ll eventually get better.
Debt can easily pile up when these expenses regularly go unchecked. In fact, you will sometimes incur more debt to cover such debts.
Research from Santander suggested that UK households spend an average of £3,329 per year, on water, council tax, broadband bills, energy and electricity.
While these are essential expenses you can still save money by switching to cheaper alternatives where possible.
You can also find a way to reduce your shopping if you are a shopaholic. You can easily ditch that designer clothing for thrift wears. It’s not a shameful thing to do. You can neglect or postpone that luxurious holiday you’ve been looking forward to.
You can check out this article on how to effectively plan a household budget.
6. Set Financial Goals
Another habit you want to develop in your savings journey is setting realistic financial goals. Only you know how much your income is so you are the one responsible for cutting your coat according to your size.
It isn’t an easy thing to live within one’s means but it is a better option than struggling. The truth is that we can make do with several expenses we see as essential. Cutting these extra costs is a step in the right direction.
You have to be realistic with yourself and be able to challenge yourself. No matter how much you earn, there must still be a little you can save.
If not earning enough is your excuse for having unhealthy spending and savings habit. You can always pick up a side hustle to boost your income.
But I must warn you if you can’t learn to save when you have little you still won’t save when you have more. Saving money is a habit and it must be nurtured and developed.
7. Sell Some Household Items
One of the easiest habit to cultivate as an adult is the hoarding habit. We sometimes develop personal attachments to some of our belongings and loathe the idea of losing them. This is even after it is no longer useful to us.
Over the years, what you’ll find out is how much junk you are keeping in your house. Sometimes we keep them based on the sentiment that they’ll be needed one day.
But this is the fifth year and you still haven’t needed them. I say it’s time for a big spring clean. Comb through your house or garage brutally for items of no real use with financial value.
You’ll be surprised by what people are looking for. There is always one person or the other looking for thrift buys.
I should know this; I started my eBay journey by selling a few items of no use in the house. I later went on to cutting deals with manufacturers in my chosen niche.
8. Buy Second Hand
The truth is that there are so many other people on this same journey as you. What this means is that you can also buy what others are selling.
For the time being, you can say NO to new items and a big YES to used items. You can decide to go for second-hand items like home appliances, clothes, furniture and even mobile devices.
Buying second-hand items is a sure way of getting the things you need at a lesser price and without really compromising on quality.
9. Figure Out Your Entitlements
One of the things people often overlook is what they are entitled to. We become so engrossed with making ends meet that we forget that we are legally entitled to some benefits.
A way of discovering the benefits that I’m owed is using the entitled to benefits calculator. You can easily find out if there are working, tax credits benefits and so on available to you.
You will be obliged to provide some personal details and information about the people you live with if any. But it is a sure way of discovering an additional form of income.
I like to call these benefits financial support.
There are several ways to save more money on a low income and the majority of them fall under ‘cutting expenses’. Because let’s be honest you can’t save when you’re always spending without control.