It might sound impossible if you try to save money with a small income because there is a good chance you are barely making ends meet. A small income normally leads to some financial belt-tightening around the house. Moreso when you already have a family you need to support. This makes it more difficult to budget and even save money.
You could only be making enough just for all your basic needs. This is why saving for the future seems to be out of reach at the moment. You barely have enough to set aside for things that you want much more to save for the future. If you do get the chance to have some extra money at the end of the month, it normally goes to paying bills which are already past due.
These are just some of the possible scenarios why you are finding it close to impossible to save money with a small income. Everything is accounted for and at times, you barely get by with all your financial obligations in life. You are too consumed in trying to live day to day that you do not get the chance to plan for your future.
It is really a tough task to try and save some money when you are only making enough money to cover your expenses. There is no way you cannot look past your living expenses and you could have other debt payments to go with that. If you want to be able to start saving for the future, there are some things you can look into to get started. They will not be a walk in the park but it simply goes to show that there is a way and that it is possible.
Focus in paying down high-interest debt
Even before you start thinking of ways to save money with a small income and desperately trying to identify how to have the money, look at your expenses first. Focus on what you can control at the moment and in this scenario, your expenses and debt payments are some of them. One way to do it is to focus on the accounts with the highest interest rates at present.
When you start to talk about high-interest debt, there is a good chance that your credit card payments are on top of the list. You could be using your card to make ends meet and have been relying heavily on it. As a result, you are only able to make the minimum payment on it causing the payments to drag on. You are essentially just paying the interest and barely making a dent on the actual amount you owe.
If you focus on paying this down by making extra payments to finish it faster, you get to free up whatever amount goes to it every month. It also takes off a huge load of financial stress over your shoulders. On top of this, you also get to save money which would have gone to interest payments only and probably some fees and penalty.
Explore getting into a debt consolidation program
As you are trying to save money with a small income and targeting your payments first, it could be a big help if you consider a debt consolidation option. What this does is that it allows you to combine most, if not all of your debt payments under one account. If you are tackling credit card debt, what you can do is consolidate all your payments on a 0% interest card.
Take note though that these types of offers are usually valid for a specific length of time only. The idea is to pay everything down within that promo period. One thing you have going for you when you choose to do this is that you could be paying a lot less every month at 0% interest rate. This can help you get started in saving money.
Consolidating your debt under one account also affords you a more convenient method of paying down your financial obligation. Instead of having to constantly monitor several accounts from different lenders with various amounts, due dates, and even interest rates, you only have to focus on one account. This lowers the possibility of overlooking a payment and incurring avoidable costs.
Find a way to cut down on your biggest expense item
If you want to save money with a small income, you also need to start looking at your regular expenses. With the help of your household budget, take a look at your biggest expense item. Value Penguin shares that Housing represents the top expense item of American consumers so this is a good place to start cutting down costs.
If you are renting, try looking for a less expensive house to live in. If you are still single, you can even ask friends to be your housemates to help save on rent. If you bought a house and paying a mortgage for it, one idea is to talk to your lender and explore refinancing the loan. This can work if you have significantly improved your credit score from the time you took out the house loan.
If food is a big expense item, you can always try to batch cook in advance and even buy your ingredients in bulk. This way, you get to save money as well as eat delicious and healthy food. Preparing the meals every single time would take time and commitment. However, if you just keep started and consciously continue with it, it will become a habit sooner or later.
Look for free money to help save money with a small income
As you try and save money with a small income, you need to always be on the lookout for free money. It can come in the form of a coupon when you go out grocery shopping or even looking for scholarships and grants for that post-graduate studies you are getting into. If you are working, check if your company offers a 401k matching program. This is free money you can make use of to help you increase your retirement nest egg.
Look for a side hustle
As soon as you talk about trying to save money with a small income, one of the first ideas that will pop into your head is getting a side hustle. CNBC shares that even with 1 out of 3 Americans relying on a side gig to make ends meet, they still struggle. However, it is always better to have one and be able to diversify your sources of income.
One of the most obvious benefits this gives you is the additional amount of money you get to earn every month. This can be a big boost in helping you save money. Another advantage to this is that you will always have a fall back in case your main source of income is impacted. There are a lot of ways to get a side hustle nowadays.
Technology has made it easier where you can work at home at your own pace and still earn some extra cash. There are numerous online jobs you can take up depending on your hobbies and interests. Speaking of hobbies, there are people who make the most out of it to earn cash. These income-positive hobbies allow people to bring in some more money as well as enjoy their time doing it.
Make sure you have an emergency fund
One of the things you might overlook as you try and save money even with a tight budget is your emergency fund. Get started in creating and strengthening the fund over time to help you overcome unforeseen situations in life. If you are just starting out, focus on building the habit first even with small amounts. The more you do it, the easier it will turn out to be as it becomes a positive financial habit.
It is not easy to save money with a small income because of the challenges it brings but it is doable. If you want to see some real changes, you need to create a plan and commit to it regardless of how difficult it becomes. You will reap the benefits in the end where you can end up with a strong financial future ahead of you.