11 Tips on how to Save Money on a Small Salary
Saving money is one of the first habits to learn when it comes to wealth creation, but the question many usually ask me is “what if I don’t earn so much?” It can seem like you cannot “afford” to save money on a low income but never underestimate the power of starting small. If you are on a low income, I know it is a huge challenge, but the most important thing is to choose progress over perfection.
Although you will need to think outside of the box, it is completely possible to save money when you are not earning as much as you’d like. Saving is a habit, a lifestyle irrespective of how much you earn.
Today I will share real tips that can help you save money.
1. Set financial goals for yourself.
Having a financial goal is the most important thing when it comes to saving money. Think of what you need 3 to 5 years from now and break the financial commitments to weekly or monthly plans. What is your target?
2. Create a budget
The word “budget” throws people away because they assume it is too technical or stressful. The first rule to budgeting, however, is to create one that works for you! Unless you have a plan for your money, it can be extremely easy to spend it. With a budget, you can include your savings goals.
You can save more on a low income when you take deliberate steps like creating and sticking to a budget.
3. Try the cash envelope method
A budget is a tool that will help you live frugally. It allows you to see your numbers clearly and know how much you've to spend on what. But to make this even more effective, you can use what’s called a “cash envelope system” and I’ll advise you do this weekly instead of monthly.
It’s simple — get an envelope for all major expenses and label them according; Envelope A can be for feeding, Envelope B for transportation, etc. With these, you can see exactly what you spend from each envelope daily and what you have left for the week.
The bad side here is that it can get stolen or lost if not kept safe ☹So you might want to do this digitally by keeping tabs with every inflow and outflow as well as how much you have left to spend on each expense weekly. Once you have an understanding of what you usually spend money on, then you can work on adjusting those habits.
4. Save unexpected cash gifts
I know it can be tempting to spend unexpected cash gifts but putting this aside as savings will help you hit your savings target faster. You already survive on your current income so you can act like you did not receive any extras. Also, if you have any debts, you can use all or some of this to pay up as this will improve your overall financial status.
5. Live Prudently
To save money on a low income, leaks need to be thoroughly blocked. Lean spending is the hallmark of wealth creation. To avoid temptations, always make a list of all you need as well as their estimated price. This can help you stay in check while shopping. Also, focus on buying things that really matter and avoid spending money impulsively. Don’t be pressured to buy branded items, your time will come soon — You are not alone.
6. Check Your Housing Cost
Evaluate your accommodation cost and adjust where necessary. Personally, if you are living in the same state as your parent, live with your parent. Do not let your ego affect you. Also, a simple way to test if you are overspending on your housing is to divide your annual rent by 12 and then ensure the cost of your rent per month is not more than 25% of your income. For example, if your rent is N500,000 per year and you earn N120,000 per month. Divide your rent by 12, that’s about N41,666 per month. Based on these figures and the 25% “rule” your rent should not exceed N30,000 per month (that’s 25% of N120,000 and it means your annual rent should not exceed N360,000).
If your monthly rent takes more than 25% of your monthly income, you need to decide: move to a cheaper apartment or increase what you earn per month.
Another option is to live in a shared space till you’re able to afford more. Say you don’t want to move from the apartment that costs N500,000 a year, you can get a housemate who will split the rent with you. This means you begin paying N250,000 per year which is N20,833 per month. Instead of exceeding your 25% monthly budget for rent, you’re able to stay way below it and can do more with your money.
7. Sell items you no longer use
These days, people are happy to buy outfits and pre-used items that still look/work well. They are even called “thrift” items now. Truth is that most people have more than enough clothes. Look through your closet for items you no longer wear often and organize a clearance sale. It does not have to be anything serious; you can use your existing social media to spread the word.
Be careful, this income is not to be spent. 🌚 You already ‘survive’ on your current one so you should save whatever you make from this. You can then invest what you have saved so that your money can make you more money. 😉
8. Get a side Hustle
You can get extra income to complement your regular paycheck through legitimate side Hustle that doesn’t conflict with your current job commitment. To eventually save more, you should earn more and side-hustles can help. Use your talent to earn, do ushering jobs on weekend, offer services to bake cakes for a cake company, kids’ birthday photographer, etc.
9. Reduce Eating Out
Food spending can wreak havoc on any budget. With the constant temptation to eat at a restaurant, sticking to a food budget can feel like an impossible challenge. One of the best ways to avoid regular eating out is through meal planning. If you already know what you are supposed to eat for dinner, it is easier to go home without stopping at your favorite take out place. Manage your unnecessary cravings to meet your savings target.
10. Automate your savings goals
Making the choice to save money can be difficult. Forcing yourself to make that same choice many times each month can be unrealistic. You are more likely to spend all of the money in your checking account. Unless you move your savings automatically, you risk spending your intended savings. You can sign up with Piggy Vest, Cowrywise, etc.
11. Find free or affordable entertainment
One area of your budget that is entirely variable is your entertainment budget. You have the power to overspend in a big way with entertainment. On the flip side, some frugal fun can allow you to pad your savings without feeling deprived.
Here are a few ideas of entertainment options that don’t break the budget:
· Visit friends for movie nights.
· Host dinner parties instead of going out.
· Go for a hike.
· Practice cooking with your significant other.
· Look for free museums to explore.
Do some research in your area to find the best frugal entertainment options
Saving money on a low income can be discouraging, but don’t allow it to stop you from reaching your income goals. Take a minute, to be honest with yourself about your current finances and your financial goals.
If you can relate with these tips, kindly share and please clap 👏🏽for me, I will be honored. ✌🏽
