Anybody with an impressive salary can easily save a part of their monthly income. But saving money when on a tight budget - is the biggest challenge. If you are not able to save and account has zero balance at the end of the month, you've come to the right place. In today's blog, I'll teach you how to save money on a low income.
Why Must You Save Money on a Tight Budget?
Irrespective of your income and monthly expenses, it is mandatory to have a savings account. It will offer you financial security and mental peace. You won't be constantly anxious about the future as you know you have started saving for retirement in your 20s.
Apart from that, an emergency fund is equally important. It will work as a safety net with which you can cover sudden huge expenses (like medical bills). At the time of any emergency, your emergency fund will stop you from applying for an expensive loan.
Ways to Save Money Fast on a Low Income
Have you been struggling to save some money for rainy days? Then perhaps it is time to cut back on unnecessary expenses. First, sit on your work desk on a Sunday morning and identify all the nonessentials (things that you don't need but still enjoy). Some common examples are dining out, watching films at the theater, getting your nails done, etc. Here are a few realistic ways to save money:
1. Find cheaper ways to travel
Do you feel that your trips stand in your way of saving money? Don't worry, I won't advise you to stop traveling.
You can have 2-3 fabulous trips per year even without digging a hole in your pocket. Wondering how?
Begin with choosing less popular travel destinations as they can be as beautiful as the over-hyped ones. Then, book flights and accommodations in advance and never travel in the peak seasons (like the Christmas holidays). You can stay in guesthouses and hostels as they even have kitchens where you can cook some of your meals.
Lastly, utilize public transport as much as possible and also rely on your own feet whenever possible. If you follow these travel trips, you can make wonderful memories and start saving money at the same time.
2. Cancel subscriptions
We all have some subscriptions that are of not much use. Ask yourself: After working full-time, do you really have the leisure to watch movies and web series on all the OTT platforms? Then why keep paying those channels when you can't utilize them fully? My suggestion is that you subscribe to one OTT platform per month and watch all your favorite shows. Next month, you can switch to a different platform to binge-watch the new releases there.
Then there are also memberships that get renewed automatically and probably don't even remember which ones are those. So, you can quickly get rid of these kinds of additional expenses without compromising on your lifestyle.
3. Spend less money on food
When I ask you to spend less on food, I don't mean you should starve yourself. Eating nutrient-rich foods is a must as health is the biggest wealth one can possess. So, if you have balanced meals at home, the month-end food bill won't be that high. You can even save time and electricity by prepping your meals in advance.
Moreover, food served at restaurants are not just immensely expensive but also not good for the body. If you feel tempted to eat outside occasionally, avoid posh restaurants. Instead, look for local eateries and food joints with good ratings.
4. Say yes to free activities
Have you started to dread weekends as you always end up spending more on Saturdays and Sundays? I have a perfect solution to that problem.
Who says you can't have fun when you don't spend money? For instance, a romantic movie night can be arranged at home with some dim lights, home-made snacks and pasta, and comfortable seating. Similarly, reading a book, taking a stroll in are a scenic place, etc., are rewarding yet free activities. You can also visit local parks, religious sites, public libraries, and museums instead of shopping malls.
5. Set a budget
When it comes to saving money, making a budget is compulsory. Let's understand why:
You know your major expenses like housing costs, groceries, fuel, education of kids (if you're a parent). Then there are temptations from every corner: like sudden pizza cravings, a relaxing weekend retreat, a rejuvenating spa experience, or a sale on Amazon. And before you know, you are penniless on the 30th of the month.
This is where setting a budget comes into the picture. The moment your salary gets credited, a certain percentage (however small) of it should go straight to the savings account. Promise yourself that you won't touch that money as that'd be a clear indication of overspending. This habit will help you save money fast.
6. Pay off your debt
We all hate debts, but let's face the truth: sometimes they are unavoidable. However, the longer the debt's duration, the more interest you pay. So, even if you have to take a debt at some point in your life, time to get out of it quickly.
There are many advantages of paying back debt on a person's overall financial identity. It will free up the cash flow and you can add that money to your savings account. If the debt levels are low, you can make timely payments. This will have a positive impact on your credit score, and you will be eligible for larger loan amounts in the future.
How to Set Savings Goals
Since you're finding ways to save, having clear, well-defined goals will help you save money by staying focused. Think what amount you can save in the next 12 months. This is a short-term goal. Making the down payment for your dream home, on the other hand. is a long-term goal.
When you have such fixed goals, you will have an inner motivation to save money each month. That's because when you reach the finish line, you will get your reward - like a nice apartment or your own business.
How to Increase Your Savings
We all know it's easy to save money when one has a lot of money. However, when a person's salary is not that great, and responsibilities are many, investing can be a gamechanger.
There are all types of investment plans - depending on whether a person wants to take risks or not. So, don't take a rash decision but analyze your options based on the risks and interest rates. While investing in the stock market can give your amazing returns, the risks are high. Therefore, do the necessary market research and if you're not confident, FDs can be reliable. Learning how to lower your taxable income through smart tactics is also important.
The Takeaway
So, the first step towards saving money is having the willingness to make a positive change in your life. With this mindset, create a plan to save by putting money aside, investing, and exercising discipline. Once you are able to save money by following the above-mentioned tips, you will fall in love with the process. Then you will always stay on track and a few years from now, you will be incredibly proud of yourself.
