Ways To Save on a Low Income
Learning how to save money on a low income is possible but you need make sure that you have a savings mindset. How committed are you to saving? Lots of people start off with a savings mindset but eventually lose their focus and determination.
In a world of consumption, saving is not easy. We are being marketed and coaxed into spending money CONSTANTLY. Do not fall victim to impulse buying.
Remind yourself why you want to save. What are you working towards? How does saving improve your life? Develop a SMART savings goal and write it down. It is proven that those who develop SMART goals that are written down have a MUCH higher likelihood of success.
Create a Budget
Creating a budget is really important when trying to save. A budget is the way you decide where your hard earned money goes. If you are a beginner at budgeting, check out this step-by-step guide. You will find easy to understand directions with pictures and examples.
Identify Your Essential Spending
Essential spending includes things that are vital to your existence. To understand how to save money on a low income, you need to know your minimum costs to live. For instance, essential spending includes housing, food, insurance, and car. As luck would have it, housing, food, and transportation are likely to be your highest expenses.
Housing expenses include rent and mortgage payments, property taxes, property insurance, repairs & maintenance, HOA, and utilities.
Food includes items purchased at a grocery store for consumption at home. Essential food does not include eating at restaurants, even if the restaurant is less expensive (aka McDonalds).
If you do not have health care through your employer, then you absolutely need to set aside money to purchase your own health, dental, and vision insurance.
A car is an essential only when you need it to get to work. If public transportation is available and can get you to work on time and back home safely, then a car is a luxury. When your car is a necessity, then the only essential use is driving back and forth from work. This means, any driving beyond that which gets you to work and back home is non-essential.
I am making the distinction here because each time you drive your car money is spent on gas and causing wear and tear on the vehicle. Vehicle maintenance is expensive, making it more difficult for you to save. Not only do you need to pay for the vehicle maintenance, but you also need to pay for your car insurance – also quite expensive.
Identify Your Non-Essential Spending
When considering ways for how to save money on a low income identifying your non-essential spending is key. Generally speaking, this is the area where you are going to make changes in order to boost your savings.
Sneakers are super popular. With all the hype surrounding the latest sneaker drops from Travis Scott X Nike collabs, Yeezy, and Jordan’s, it is very easy to spend thousands of dollars. This is insane. This is American consumer culture at its finest. Do not get caught up in this nonsense. Sneakers like this are 100% non-essential. If you are having difficulty staying away from the hype, unsubscribe! Out of sight, out of mind.
For the women out there – makeup is non-essential. It is absolutely, 100% a luxury, regardless of the job. Women should walk down the street completely confident in themselves without it. When you try to grab the latest pallet from Jeffree Star, Kyle Cosmetics, James Charles, and countless others, things get out of control quickly. My advice for the women is the same as the men – do not get caught up in the nonsense. If you have difficulty staying away from the hype, unsubscribe!
Other non-essential spending includes things like any money spent at restaurants, on alcohol, cigarettes, cable, subscription services, and home renovations. Basically, non-essential spending is anything that is not vital to your existence.
Once you identify all of your essential and non-essential spending, it is time to find alternatives.
Did you get totally freaked out when I said do not buy sneakers or makeup? I simply want to make the distinction between essential and non-essential. If you really want some non-essentials, you can buy them. However, rather than purchasing the expensive Kylie Lip Kits and the latest Travis Scott X Nike’s, can you find an acceptable less expensive alternative? NOTE: Do not purchase cosmetics online from unknown sources, often times these products are counterfeit with lots of harmful substances.
The quality may not be the same, but can you survive with makeup at Target or Walmart?
Can you shop at the outlets for sneakers?
Is it possible to reduce housing expenses? Do not move to a dangerous area to save money. However, the majority of Americans spend the largest portion of their disposable income on housing. If there is anyway to reduce your housing expenses, seriously consider it. If geoarbitrage is out of the question, then that is fine, but you will need to find alternatives elsewhere.
For those not familiar with the term geoarbitrage, it means relocating to take advantage of the lower costs of living in different cities/countries.
Before going to the grocery store, make a list of what you need. Do not go to the grocery store hungry. I don’t know about you, but every time I go to the grocery store hungry, I end up buying way more than I need. Sometimes that food even goes to waste.
Have you ever seen the show, Extreme Couponing? The one where the people get $1,000 worth of groceries for less than $5. Its pretty amazing how they do it. Unfortunately, not every area of the country honors coupons in a way that would allow all of us to save 99% on our grocery bill. However, if coupons are available, use them!
If you value health and wellness, you can still purchase healthy food while shopping on a budget. When purchasing fresh fruits and vegetables, shop seasonally. Try to avoid purchasing fresh foods that are out of season because these tend to be more expensive. Have you heard of the clean fifteen and the dirty dozen? You do not need to eat 100% organic. Check out the link for a list of foods that you should buy organic and the ones you can skip.
Another great way for how to save money with low income is limiting how often you go out to eat. Whether it’s takeout or dine-in, food at restaurants is expensive. By limiting your visits to restaurants you have the opportunity to try out different recipes, have more control of the food you put into your body, and save lots of money! This is an all-around win. You may end up even preferring cooking your own meals.
Goodwill can have some great finds. From clothing, kitchen supplies, home decor, and entertainment, Goodwill is a great place to save some money. Instead of buying everything new, try buying this used. This is much better for the planet and your wallet!
Know the benefits available to you. The Federal Government and State Governments offer programs to help low income households. Find out if you qualify for help with your housing, food, and transportation expenses. Some areas even offer free tax filing services.
If you are a member of the military or veteran, you qualify for even more benefits.
Check out the Government Benefits website here for additional information.
NOTE: Government assistance programs are a temporary fix. They are there to help give you some traction so that you can work towards a better life and not need the benefits. Government assistance programs are only for those that need them. Do not abuse government assistance programs by using them as an excuse to not be a productive member of society.
Change Your Habits
If you are a smoker or a drinker then you are probably very aware of how expensive alcohol and cigarettes are. If the health concerns do not deter you, maybe the impact these two habits have on your wallet will.
When you are trying to save money on a low income, this is an excellent opportunity to break some poor health habits.
Do you have cable, Netflix, Amazon Prime, ESPN, DAZN, HULU, or any other paid subscription service? Is it absolutely necessary? Could you survive without one of them? Try cutting back on your subscription services. Eliminating a recurring monthly fee is liberating.
Wait 24 Hours
The next time you are browsing online or participating in some retail therapy and come across an item you absolutely MUST have, wait 24 hours.
Many times we want something immediately but once we buy it, we never use it and end up with buyers remorse. Even if you don’t end up with buyers remorse, often times you will feel like the purchase really was not necessary and you are perfectly happy living without it.
Go home, rest, watch some tv, eat dinner, sleep. See how you feel in the morning.
If you are behind on paying your bills, maybe some are even in collections – one word – negotiate.
Collection agencies purchase your debt for pennies on the dollar. This means if you pay them anything, then they are making money. Use this to your advantage. Do not avoid the collection agency callers. Instead, call them! For instance, if you owe $1,000 in medical expenses, tell them you will pay $500 right now if they waive the rest of the bill. Nine times out of ten they will work with you and accept a substantially lower amount than what you owe.
Perhaps you carry a balance on your credit cards and the interest is super high (anything higher than 4% is high). Call your credit card company and negotiate a lower interest rate. Since the COVID-19 Pandemic, the Fed reduced interest rates to ZERO. If a credit card is charging you 17% interest they are taking complete advantage. Don’t let this happen.
What Makes You Happy
Make a list of the top 10 things that make you the happiest. Do you like to exercise, visit your friends, spend time with family, go to the beach? More often than not, the things that make us the happiest do not cost any money. Finding out what your values are is another great way for how to save money on a low income.
Instead of spending your time spending your hard earned money, get creative and try doing things that are free. There SO MANY things to do that don’t cost money.
No Spend Challenge
Have you ever seen those YouTube videos where people have a no-spend year? That is a bit on the extreme side however, you can certainly participate. Challenge yourself to a no spend day once a week.
What does this mean?
As the name implies, do not spend any money. This includes no restaurants, no makeup, no sneakers, no retail therapy, no non-essential purchases.
- Saving money with low income is possible but it requires a lifestyle change.
- There are so many ways to save money with a low income. Use the suggestions above to help generate some ideas for ways you can save money!
- Create a budget to identify exactly how much money you bring in and how much money you save.
- Consider reducing some big ticket spending items such as housing, food, and transportation.
- Find alternatives to some of your favorite things so that you don’t feel completely deprived and discouraged.
- Define why you want to save and write it down. Use your why to keep you motivated.
- Have questions? Let me know! I am happy to answer.
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