11 Tips to Save on Low Income
Saving money is very difficult when you are not making that much money. There is a saying that goes, "Money comes slowly and leaves quickly," and for majority of people this saying rings true.
It is very difficult to make the money come in quicker, but we do have some control over the speed in which the money is leaving. We can use strategies to slow down the money leaving in order to save more money.
In this video I give "11 Tips to Saving on a Low Income."
1. Understand how income works
Income is not based on how hard you work. Income is based on the type of work you do and the industry that you are in. There are two ways to make money (1) physical labor and (2) mental labor. Understand that you can make more money (and save more) if you can use your mind to make money vs. your body.
2. Connect time with money
If you work on a wage or salary, money represents your time because you are selling your time in exchange for money. Before you make a purchase you should ask yourself, "Is this _______ worth ________ minutes of my time?" When you spend money on a bunch of useless stuff, you are throwing away your time.
3. Understand the difference between a want and a need
A want is something you can live without like a Netflix subscription. A need is something you cannot live without like food, water, and shelter. There are very few things that you actually need in this world. If you focus on satisfying your needs and not spending money on wants, you will save a lot of money.
4. Think small
The problem that many people have with saving money is they are thinking too big. They are thinking of ways to save hundreds of dollars; however, it is much easier to save $1 than $100. When saving, think small and try to cut every expense by $1 and at the end of the year you will save thousands of dollars.
5. Don't spend a lot of money to work
Working isn't free and if you are on a low income you could be making a lot less than you think. You might be spending a lot of money on things like commuting and eating out. Make sure that you are not spending too much money on things related to work because those are things you get nothing out of.
6. Track all expenses
In order to save the maximum amount of money, you first need to see where your money is going. Track all of your expenses in whatever way works best for you. Once you track it for a month or so, you can see areas that you might be overspending and can save.
7. Cut out the easy things first
Once you track your expenses, look at the areas that are easiest to cut out. Things like coffee, eating out, and entertainment are areas that you can easily cut out to save money. Tracking your expenses will make you more conscious and avoid spending money in certain areas.
8. Then, lower the more difficult things
Majority of your spending will come from rent, transportation, and food. These areas are more difficult to cut out than a cup of coffee, but if you really focus, you can lower these expenses. Look at these areas and think on how you can save money and these are the areas where you will save the most amount of money.
9. Pay yourself the difference
"Pay Yourself First" means that you should pay your own saving and investment accounts first. We use most of the money we work hard for to pay other people. However, once you are able to cut out some expenses and save money, you should use that money to pay yourself.
10. Separate the money
Banks have different accounts for different reasons. You should divide your money in different accounts so that you know what money is for saving and spending. When you pay yourself, you should put that in a different account so you do not spend it.
11. Use the money to make more money
There is only so much you can save if you are making a low income. In certain industries, it doesn't matter what position you are in, there might be a cap to how much money you can make. Invest in yourself to learn new skills in how you can get out of the low income environment and saving will become easier.