A lot of American consumers wants to save money in the midst of all their monthly expenses. But at the end of the day, it is a struggle for the majority due to low income and high expenses in the household budget. There are some who are able to earn over and above what they need but mismanaging their finances seems to just put them in perpetual debt.
But consumers need to understand that it is possible to set aside a savings amount even with low income. The amount that you make should not hold you back in trying to prepare for your future needs. It has more to do with the way you spend the money more than anything else. Of course it does not hurt to have a high salary and be able to save money but spending plays a big part in the overall financial management.
Newsmax.com shares that about 46% of American consumers are only saving about 5% or less of their income. This is way below the rule of thumb which should be at a minimum of 10%. Low savings can lead to a lot of complications such as low reserve funds like your emergency fund and rainy day fund and even low self esteem.
For low earners, it is a challenge to save some funds but not totally impossible. They would be pulling double duties as they watch their spending and try to increase their income as well. The increase can come from their present work or looking for a sustainable side hustle. it can even be looking for higher paying jobs to bring in more to the budget.
How you can plug your expenses
The other side of trying to earn more is trying to save money by putting a tight grip on your expenses. There are areas in your budget that you can carefully study and reassess to be able to free up some funds. Here are some of the areas in your budget you might want to look at to be able to plug holes in your finances.
- Using your emergency fund for small expenses. This is where a rainy day fund comes in because the importance of an emergency fund as well as its effectiveness diminishes when you use it for small needs. You need to build up a decent amount for your rainy day fund to cover the small unexpected amounts. This ensures that your emergency fund is intact for the big needs.
- Not attending to minor home repairs. It might surprise you that attending to small home repairs can help you save money because it still comes out as a cost at the end of the day. But as you spend to address these repairs, you are also avoiding possible bigger expenses when these small problems become full blown nightmares. That leak in the faucet can end up costing you hundreds of dollars because it might suddenly burst and leave your carpet, walls and even electrical wiring affected.
- Increasing your lifestyle. A big bump in your salary is a great opportunity to start being aggressive in your financial dreams. But you need to keep your eye on the ball and your financial goals and save money to reach them. One of the culprits to this is increasing your lifestyle and expenses and your budget cannot keep up. You need to target to live within or even below your means to be able to set aside some funds in your budget.
Here are more things you might be losing money on:
- Failing to recycle items around the house. Kab.org shares that an average person produces about three pounds of garbage in a single day. Imagine how much food you can save when you do not throw away excess food but rather put them in the fridge and reheat them as lunch food for the office tomorrow. Recycling can help you save money and eventually plug holes in your budget.
- Leaving the TV on the whole day. Paying for your electricity is not cheap and you need to simply turn off appliances that you are not using. This is quite easy with other home appliances but the television set is another thing. People normally just leave them on even if they are not watching the program only because they do not feel comfortable with a silent household. There are some people who thought that they already closed their units but it is actually left on standby mode and consuming electricity.
- Washing your clothes too often. You can still be clean without having to wash your clothes every other day. You can actually save money when you schedule your laundry day apart. You can do it once or twice a week depending on your need and the number of clothes you use up on any given day.
- Going to the grocery without a list. When you are looking to cut down your grocery bill, you do not have to look far. One of the techniques you can use is actually pretty simple – a grocery list. But more than the list, you need to make sure that you follow your list and not deviate from what you actually need to buy by picking up items that are not on the list.
How to do well with your current job
As you try to save money, you should not forget that you need a steady source of income to have a actual funds to budget. This usually refers to your primary job or even the business that you are running. Here are some of the things that you consider when trying to make sure that you have a steady source of income.
- Take into account your performance and output. Coming in everyday into the office and clocking is not enough to get you ahead in the game. Whether you are an employee or you own the business, you need to put in the effort in whatever job is at hand to produce meaningful results. This can get you either promoted or more clients for the business.
- Explore furthering your skills. It is a simple process, you need to earn to save money and keeping that earning secure is important. One way of doing that is to keep learning and expanding your skill set to make you better at what you do. If you are a photographer then never stop learning and being on the lookout for new equipments that can further enhance your skill. If you are working as an art director in an advertising company, you might want to keep exposing yourself to different creative works to inspire you for the projects you are handling.
In a consumer-driven economy, it is difficult to get ahead when you are actually encouraged to spend. If you want a house, you can take out a mortgage loan and if you want to have a brand new car, you can take out an auto loan. You can even take out payday loans or even title loans when you find yourself in a tight spot with your funds.
But you need to remember that it is important to save money as you earn to make sure that you are able to address any unexpected expenses in the future and even help you setup your retirement fund which will be your only source of funds when you decide to call it quits with your job. Saving is hard but not totally impossible and you just need to put in the hard work to make your funds work hard down the line.