Have you ever looked back after a month and felt like you were working for nothing more than just survival? Are your financial obligations overwhelming your little income? If that is the case, saving money becomes a dream and you get stuck at one place. Frustration is inevitable as it would mean that you earn from hand to mouth. I am here to assist with some wise tips to help you adjust and start saving. Let us walk through some tips on how to save money from a low salary/income. This can help you kickstart your saving journey.
a) Embrace the power of a MONTHLY BUDGET to take control of your financial future!
First, prepare a monthly budget. A budget is a plan to balance your income and expenses over a certain period. This helps you track your expenses, outline your spending limits, and give room for savings. A more comfortable method is to start with a low savings percentage and then increase as you go. This helps to make the adjustment smooth and not just abrupt. Start by saving 5-10% per month for the first month or two, then increase to 10-15% per month in the following month(s). Thereafter, aim for 15-20% per month. Depending on the size of your income, the optimum percentage of savings needed to achieve significant progress is at least 20% per month. The higher, the better, and the bigger the results.
b) Have a target in mind
Have a target amount in your mind as it determines the pace at which you should move. Then deduct monthly recurring financial obligations such as rentals, utilities, and insurance payments. Thereafter, split the other adjustable expenses such as food and transportation costs into weekly mini budgets. I used this method to track my spending, and it was easy to adjust each week to stay on course. Once you see progress in a week, you become motivated to beat the mark attained in the previous week.
c) Take action.
Be prepared to adjust your daily and weekly routines, lifestyles, and habits to see good results. The ones I outlined below are possible areas you may play around with in your action plan.
- Find Cheaper Housing/Accommodation
This is the ultimate way to make significant strides towards the savings journey. For example, as a bachelor, I stayed alone and normally left home at around 07:00 am for work, returned at around 8:00 pm, and slept at around 10:00 pm. Based on this routine, I would spend most of the hours away from home. In essence, I mainly used the apartment for the safekeeping of household items and sleeping/resting. It would not make sense to rent an expensive or stylish apartment. Therefore, find an affordable one that gets the job done, and relieve your wallet.
2. Avoid Impulse buying
Temptations for impulsive buying increase when you visit the stores daily. Make a weekly or monthly shopping list and then stick to it. That way you will know which necessary items you need. If you come across an item not on your list, follow what I term the “24-hour delay rule”. This delay allows you to sleep on it and helps you evaluate whether or not the item is essential.
3. Bulk Buying
Bulk purchasing can help you save money through bulk-buying discounts or wholesale prices. Another benefit of bulk buying is that you will not need to visit the shop daily, and this saves you time and transport money. You also limit your chances of impulse purchasing temptations.
4. Cut Unnecessary Spending
It is good to spoil yourself or your family with some goodies. But when it comes to squeezing into a tight budget, you need to make some necessary cuts. For example, it would not be prudent to have expensive classy family outings every weekend and remain with little to nothing left in the bank each month. Cutting the outings from four to two can be a good start.
5. Cut on Transport
Where possible, it is wiser to walk short walkable distances or ride a bike than use your gas-consuming car. Your body will also thank you for that much-needed exercise as it is healthy. Where reliable public transport is available, better make use of that. Another method I have used for years is picking up regular individuals who go in the same direction or destination as my workplace. I drive to work at minimum fuel cost and sometimes at zero cost as I recoup my fuel money from my regular passengers.
6. Tweaking Utility Bill
Be economical on the electricity and water. For example, my household lowered our electricity bill by switching off the electric water geyser when not in use. Our daily electricity usage declined by 4 kilowatts, which saved us around 120 kilowatts of energy per month. Doing the same for other gadgets like air conditioning units and water heating systems, can produce favorable results. Use energy-saving lights and do away with incandescent types. Also, switching off fans and lights in unoccupied rooms may sound little, but in the long run, it greatly helps. Running lawn sprinklers at day end is much better unlike running them the entire night unsupervised. Last but not least, never ignore leaking water tapes.
7. Prioritize clearing High-Interest Bearing Debts
High-interest-bearing debts should be quickly cleared off to relieve pressure on the financial resources. For example, if you took 24 months loan, but later got comfortable to settle it in 12 months, do so. Shortening the duration can save money from your wallet significantly. Thereafter, you may move to low-interest-bearing financial obligations.
8. Cut Eating Out
Eating out occasionally with the family is not bad, but making it a daily habit does more harm to your wallet. Preparing home-cooked meals for dinner is the most effective way to save money. Remember, restaurants are there to make profit from you using the same ingredients you can have at home. Therefore, make your home your restaurant.
9. Pack Your Lunch Box
This is often overlooked, and it is a long-followed culture for a working person to buy food while on tea/lunch break. Packing your home-prepared meal in a lunch box greatly helps lower such food costs. Making a cup of coffee at your workplace can save you a lot of money in the long run compared with buying coffee daily. If you have a fridge, microwave, or coffee maker at your workplace better make use of those gadgets. I adopted this method two years ago and every week I am left with extra cash in my pocket.
10. Automate Your Savings
Open a separate savings account and arrange with your bank to automatically transfer a certain amount into that savings account. Avoid moving around with debit cards linked to your savings account to avoid the temptation to use savings on impulse. That way, you will be forced to work with what is left after saving and adjust accordingly. This works if you seriously need to save.
In Conclusion
The methods may be endless, but the most important thing is to make necessary adjustments in daily routines, habits, and lifestyle. Using a monthly budget as your financial tool helps you mark spending boundaries, and set saving targets. Thereafter, your effort is needed to adjust and make saving a reality. The above-mentioned tips worked for me, and I believe they can help make a positive change to your finances too.