Want to know how to rise from a low income family? You need to focus on saving money.
Believe it or not, even when you are earning the minimum wage, you can still afford to put aside an amount each month. Some people are too preoccupied with their expenses that they lose sight of the fact that they can be in complete control of their finances. You do not have to live from paycheck to paycheck. You can actually make a decision to improve your finances despite the amount of money that you are taking home each month.
Of course, that is easier said than done. However, difficult does not necessarily translate to impossible. There are sacrifices that has to happen along the way and you can bet that at times, it can be a painful process.
According to an article published on CNBC.com, there are 3.3 million Americans who are earning the federal minimum wage. This statistic include those who are earning even less. This is according to the data provided by the US Bureau of Labor Statistics. Starting January 1, 2015, a lot of states will increase the minimum wage. This is intended to help consumers have more money to spend on their needs. It is expected that other states will increase the minimum wage as well. This is all in response to the call of President Obama to increase the minimum salary in the country so that households will have more in their budget.
But if you think about it, this minimum wage hike will soon be irrelevant because in the near future, people will be asking for another increase. Knowing the way the government responds to these requests, it will take a long time before the next wage hike will happen. And how will the consumers cope? They will go into debt. What they cannot pay in cash will be purchased in credit. And that brings a whole new set of problems.
Thankfully, this can all be avoided if we make it a point to save more.
Tips to save even if you earn the minimum wage
Saving money on a minimum wage is tough. We have said that. However, with some determination and willpower, you can start saving. Those who save are the only ones who have a chance of improving their financial situation. That is because they have the extra money set aside to spend on emergencies. They have money set aside to make investments that will grow their wealth. They have the money saved to allow them to improve their knowledge and skills so they can qualify for a higher pay.
Here are some tips that will help you save more despite your low income.
- Concentrate on the essentials. First of all, you need to do something about your expenses. While earning more may seem like the only way to get that extra money for savings, your expenses are already there in front of you. Take a look at what you are spending and concentrate on what is essential. If it is not essential, then do not spend on it. Depending on how much money you take home each month, you need to consider just how far you will go to cut back on your expenses. If you have to get rid of the cable, then that is what you should do. If you need to move to a smaller home, then do it. If you need to bike going to work, then do that. Your financial situation will dictate that you need to sacrifice in order to accomplish your goal of saving money.
- Be creative and search for the economic alternative. Believe it or not, there is always an economic alternative to everything that we spend on. Even food. You can learn how to bake your own bread, cook your own meals, and sew your own clothes. Concentrate on what you want to experience and then find an economic way to get that experience. For instance, if you love eating out, just cook a great meal and set up a place in your backyard or have a picnic in the park. If you want to go to the gym, go to the community center. Always seek out the freebies. You can start by looking at websites like ICraveFreebies.com or Freebies.org. These sites will update you of great freebies that you can avail.
- Detach yourself from material possessions. Sometimes, our need to buy unnecessary things are brought about by our materialistic tendencies. You need to detach yourself from the need to own material possessions just to make yourself feel good. If you remove the impulse to buy, you will definitely be saving money. Focus on the experience that you get out of material things and you will realize that you do not need branded or designer outfits to feel fashionable. You can wear clothes from the thrift shop and still look chic and fabulous. You can learn to create your own accessories and not feel bad about not being able to buy them from a store. Read about experientialism and you should be able to know the difference between loving the experience of having material things over the ownership.
- Deal with high interest debts. Another way that you can save more money is to deal with the high interest debts first. If you have debts, you need to know that not paying them will make your situation worse. You will be saving money if you can eliminate these because the interest is actually eating up a huge chunk of your budget. If you have high interest credit card debt, you need to pay as much as you can towards them because the longer you have a balance, the more interest will be capitalized into what you owe. If you eliminate this, the money you have allocated towards your debt can go to your savings.
- Discipline yourself. Lastly, you have to discipline yourself. This will not directly help you when it comes to putting money into your savings account. However, it can help you develop the habits that will aid you in saving money. If anything, you will learn self control so you can avoid making unnecessary purchases. You will learn how to create and strictly follow a budget plan.
Sometimes people are discouraged to save more because they know that it is only a small amount. Please do not be one of them. A small amount is better than none. So keep on saving even the pennies that are left in your pocket at the end of the day. That can amount to something big when the time comes.
Setting up goals usually help you save more
Given the difficulty of saving money with a limited income, you need all the help you can get. For low income earners, learning how to budget and save money at the same time can be a real challenge. But one thing that can help you out is goal setting.
There are three benefits to goal setting.
- Keeps you focused. When you have a goal, you have something to look forward to. No matter what happens, you can keep your eyes on your target so you will not be waylaid. You can use this to gain self control. By making a saving money a goal in your life, you will be more motivated to say no to unnecessary expenses.
- Encourages you to look at the bigger picture. We have mentioned that saving despite a low income is difficult. If you have a goal, it will encourage you to look at the bigger picture. While the sacrifices that you will make will still hurt, you will know that it is all for a good cause.
- Helps you align your financial decisions. Lastly, goal setting can help in saving money because you are able to align your financial decisions. This is related to keeping your eyes on the bigger picture. When you have a goal, your decisions will all be leading you towards it.
According to PositivePsychologyNews.com, goals that are specific and also difficult usually lead us to heighten our performance. That being said, you know that if you have saving money as you goal, your psyche will let you work harder to achieve that – even though you have a low income.