Do you feel like it’s nearly impossible
to save money based on your current income while saving money is much easier
when you’re making big bucks it is entirely possible to save money on a low
income therefore in this video I will share with you seven practical ways to
save money on a low income and if you’re new to the channel then hit the
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tip number 1 lower your housing costs whether you rent or you own the cost of
your housing will be your largest expense every month many financial
experts suggests that the total of your rent or mortgage payments plus bills
should be no more than 35 percent of your monthly after-tax income and while
this expense eats up a lot of your monthly income it also offers the
largest opportunity to find cost reductions essentially allowing you to
save more money even if you’re earning a lower income for renters there are
numerous wastes you can reduce your housing costs with the first being to
find a cheaper place perhaps a single room in someone’s house will be adequate
for your needs instead of continuing to rent a two-bedroom apartment but if you
have no desire to move then it may be time to look into other ways to reduce
your current rent effective strategies can include negotiating an exchange of
your services like doing renovations for a rent reduction or agreeing to sign a
longer lease if the tenant security is what your landlord wants when I used to
rent I exchanged tax advice and monthly bookkeeping services for a few extra
hundred dollars off my rent this simple swap of goods and services saved me
thousands of dollars over the course of my lease allow me to save money while
earning a low income and if you’re a homeowner then the advice is a little
bit different well you probably don’t want to move out to save money even
small things like turning off the lights and reducing your water usage can lead
to substantial savings over time however the best way to offset your housing
costs is to rent out a room rent a gun room in your home can easily net you a
few extra hundred dollars a month which can help cover your bills allowing you
to put more money in your piggy bank at month’s end tip number two avoid debt if
you want to save money while making an income smaller than you’d like then you
must avoid debt at all costs this is because debt deters you from
saving in two ways firstly having that means monthly
repayments every month creditors will be knocking at your door for money which if
that debt was avoided would mean more money in your pocket at month’s end
secondly debt is almost always associated with monthly interest charges
for lines of credit these rates are typically around three to five percent
which means that on a ten thousand dollar balance you’d be handing over
around twenty five to forty dollars a month well this seems like a small
amount of money when compounded monthly it can begin to add up when you total
the dollar value of all of your repayments and their associated interest
charges you can start to see how caring debt can make saving on a low income a
challenge this issue is only further exacerbated when it comes to credit card
debt as of 2019 credit cards calm reports that the average interest rate
on credit cards is seventeen point six five percent meaning that getting into
debt is an expensive ordeal and if you’re carrying the average credit card
balance per US adult of six thousand three hundred and forty eight dollars
which at that rate means you’re paying about one thousand one hundred and
twenty dollars and forty two cents and interest charges to credit card
companies therefore if you want to save money on a low income you need to avoid
debt and their associated interest charges at all costs tip number three
limit entertainment costs we all want to have fun but unfortunately for many
people this comes at a hefty cost eating out hitting the bar after work going to
the movie theater and other entertainment purchases can make a huge
dent in your budget but luckily doesn’t have to when I was younger my main
source of fun was going out to the club with my friends but unfortunately most
nights were very expensive between calving to and from the bar buying
drinks and paying cover most nights Remmy $100 easily as I got older my
attention shifted towards growing my wealth and I didn’t want to lose out on
social time with my friends this made me brainstorm new ways to get in quality
time with my friends while not breaking the bank one of my favorite alternatives
has been going on walks with my friends but some other ideas i’ve come up with
include having dinner parties at home rather than at a restaurant and watching
a movie on netflix rather than going to the theater in short we all need to have
fun but we don’t spend an arm and a leg to do it tip
number four understand your wants versus your needs there’s no doubt that
spending money makes us feel good but when you’re earning a low income and
have a desire to save you need to be able to donate your wants from your
needs for instance you may want to upgrade your phone to the newest model
but you probably don’t need to you may want a new shirt to wear out this Friday
but you probably already own plenty of good shirts when you’re not making a lot
of money you have to be extra diligent and spent only on your core expenses so
how should you draw the line between want and need items I like to classify
anything that relates to my survival as a need these are things like food
clothes shelter and transportation in their most basic form sure buying a
Ferrari is transportation but in its most basic form taking the bus also gets
you from point A to point B one items are basically anything that falls
outside your needs group this includes anything that is an extension of things
you already own for example if you were to upgrade your phone to the new model
just to get a camera with an extra two megapixels in it now of course you can’t
restrict your spending to the bare minimum forever so if you do want to
splurge on a one item here’s what I suggest
set a financial goal you want to achieve like saving a thousand dollars once
you’ve hit the goal you can then go ahead and purchase the item you’ve been
wanting this technique is great for two reasons first it helps you build the
habit of forming financial goals and second it gives you time to process how
badly you want the item as often we purchase things out of impulse and find
ourselves experiencing buyers are more soon after so if you want to ensure you
save money on a low income you must be able to delineate your wants from your
needs tip number five spend wisely on groceries the average amount of money a
family for spends on groceries is estimated at nearly $1,000 a month which
makes it one of the higher monthly expenses we typically incur however with
a bit of planning and the strategies I’m about to share with you it’s not
unreasonable to be able to cut that number in half the first step in cutting
your monthly grocery bill is to plan your meals ahead of time this will not
only be a step in the right direction from a health perspective but it will
also ensure that you only when you absolutely need you see whether
you realize it or not we waste a lot of food a 20-18 study in science daily
found that Americans waste on average uptown to food a day
which if avoided commune big savings in the grocery department besides avoiding
waste planning ahead will allow you to buy foods that are on sale meaning that
your typical $250 a week grocery bill can easily shrink to $200 or less
ultimately putting more money in your pocket at month’s end the second step in
reducing your grocery costs is to eat less meat meat is by far the most
expensive grocery item you can buy it which makes it an easy target when
trying to reduce your bill now I’m not saying you need to become a vegetarian
in order to save money but by cutting down your meat consumption or replacing
it with cheaper options like beans you will be able to cut down your grocery
bill drastically the final tip that will help you reduce your food bills is to
only bring cash when going grocery shopping all too often people find
themselves at the grocery store hungry and eager to fill up their shopping
carts which is facilitated by the seemingly endless ability to spend on
credit instead plan out your purchases ahead of time and only bring enough cash
for those items you need so you don’t let your hunger get the best of you tip
number 6 practice zero-sum budgeting when practicing zero-sum budgeting you
are intentionally spending every single dollar you make but not in the way it
sounds zero-sum budgeting involves allocating your income towards each of
your expense line items and in your marking any leftover funds towards the
savings or investment account let’s use an example to illustrate this budgeting
method say you were earning $2,000 a month after tax at your job
using the zero-sum budgeting method you would allocate this entire $2,000
towards your monthly expense line items typical expenses include rent car
payments gas groceries and entertainment but using this method you would also
create a line item for savings once this listing is complete you would
then allocate your entire $2,000 to the light items which forces you to put part
of your income and savings the strategy is particularly effective for those who
typically get to the end of the month and realize they have no money left for
savings but with the zero-sum budgeting method as long as you stick to your
initial budget you will be sure to see your bank balance grow tip
number seven automate your savings the final step in ensuring you save money
even on a low income is to automate your savings one of the best things I have
ever done for my finances was setting up automated deductions from my pay with my
employer in essence what these deductions allowed me to do was send
part of my paycheck directly into a savings account instead of the full
amount going right into my checking account when I initially set up this
process I allocated 10% of my after-tax income to my savings account but over
time I found that I’ve been able to up this to about 20 percent and double my
monthly savings now I think this savings technique has been so successful for two
primary reasons first it allowed me to pinpoint exactly how much I wanted to
save in fact by using automated deductions you can set your deduction to
the amount you have designated as monthly savings in your zero sum budget
which helps you tie the two money saving techniques together second it took the
thought of having to save off my mind allowing me to focus on other important
things like improving my skills in order to make more money I often preach that
once you have a solid savings technique in effect that making more money is the
number one way to save more and by freeing up a mental bandwidth I was able
to take on more freelance work earning the extra income and ultimately boosting
my savings thanks for watching if you want to go from the life you have to the
life you deserve then hit the subscribe button now