Saving money is important at any income level, and, to begin with, any income at all: 1% of your salary can provide a solid cushion. Whether that will be for an emergency fund, retirement, or nothing in particular except the peace of mind that the roof over your head will stay put for another month, anyone with even a nominal paycheck can do it, with practice. Here’s how to save money when you’re broke.
Understanding Your Financial Situation
Before thinking about good ways to save, it is necessary to know where your money goes. Too many people jump into savings before considering what they spend, which makes it impossible to find areas to improve.
Assessing Your Monthly Income and Expenses
The first step is tracking your monthly income and all of your expenses, from your fixed costs (rent, utilities, insurance, etc.) to the more variable costs (groceries, entertainment, dining out, etc). Tracking your spending for a month or a couple of months is a great starting place, and the data you collect will show you exactly where you need to cut back.
Tip: Set a Realistic Savings Target Once you’ve evaluated where you stand in terms of income and expenses, shoot for a realistic goal. Let’s say you earn $2000 a month and you’re spending $1800 a month. Aim to save $100-$200 a month. It’s easier to put away small amounts regularly than to save a big sum in one go.
Creating a Budget That Works for You
Once you are aware of where your hard earned money is going, it is time to create a budget that helps you save and reach your goals. A budget is a plan to spend your money towards necessities, savings, entertainment, etc.
50/30/20 Rule: Describing it All Simply
The 50-30-20 budget rule is a standard that tends to be advertised regularly. Here’s how it breaks down:
- 50% goes to necessities: These are expenses you have to pay for every single month, like rent, utilities, groceries, etc.
- 30% for wants: This includes things you want, like dinner, entertainment or a vacation.
- 20% for savings and debt repayment: This money is used to build your savings, pay off debt, or both.
This is a general rule that’s easy to follow, so even if your bills are tight, you’re getting back on track. Of course, the percentages can be adjusted depending on your circumstances. If you’re paying off debt, for example, you might want to allocate more than 20% into savings and debt repayment.
Tip: Keep Track of Your Spending You don’t have to do all the math yourself. Apps like Mint and YNAB (You Need A Budget) do it for you—and help you keep to your budget, too!
Cutting Unnecessary Costs Without Losing Quality of Life
Saving money doesn’t have to mean scrimping and loafing on what you enjoy in life. Saving means cutting back without reducing the quality of your life!
Smart ways to save at every income level
No matter your pay stub size, there are smart ways to save.
High-Yield Savings Accounts and Their Benefits
Another way you can put your money to work for you is by putting it into a high-yield savings account. Most savings accounts pay very little interest so your money isn’t growing very fast but high-yield savings accounts generally pay very much higher interest rates so that your money is growing more rapidly.
Tip: Consider Compound Interest High-yield savings account: A high-yield savings account is traditionally used to earn money through compound interest. This means the interest you earn earns interest over time. The longer you leave your money, the more you make.
Eliminating Debt to Increase Your Savings Potential
Debt can present one of the biggest barriers to saving money. High-interest debts, like credit card bills, can gobble up your money in the form of interest payments. If you want to increase your savings potential, you must strive to pay down high-interest debt as fast as you can.
Tip: Snowball or Avalanche?
Two popular methods for paying down debt are the debt snowball and avalanche methods. Using the snowball method, you pay off your smallest debt first while making minimum payments on the others. Once you pay off that debt, you move on to the next smallest. With the avalanche method, you focus on paying the highest-interest debt first, resulting in overall lower interest paid.
Both can be beneficial, but the avalanche method will help fleece you of less money in the long run.
Using Tech to Wrap Your Budget and Save
There’s nothing wrong with using technology to this end. You can download several apps on your phone to help you check prices, save receipts, and track spending.
Tip: Automate Your Savings Set yourself up with automatic transfers to a separate savings account so that you are definitely saving each month. Most banks have that option in their mobile apps, and you can set it to transfer a particular dollar amount from your checking account to your savings account.
There are also savings tools like Qapital and Digit that gently round up each of your purchases to the nearest dollar and contribute the change to your savings account.
Building a Long-Term Savings Plan
Saving money isn’t just about stashing away a few dollars out of your paycheck each month. It’s about setting yourself up for long-term success, too. A long-term savings plan can help you protect your financial future and ensure that you have enough money to pay for life’s big goals — retirement or buying a house, for example.
Tip: Set Specific Goals for Your Savings. Know what you are saving for. Don't just save "because." Know instead that you are saving for “a 10% downpayment on a house” or “a $10,000 emergency fund." Once you know what you are saving for, start breaking it down into bite sized chunks.
Strategies to Save Money Quickly on a Low Income
If you are subsisting on a low income, it can seem that saving money is an exercise in futility - but it’s not so! So with these hints get saved!
- Cut Back on Unnecessary Spending Examine spending habits and cut back wherever possible: eating out less, curtailing entertainment costs, eliminating unnecessary subscriptions, etc.
- Look for Ways to Earn Extra Income If possible, look for side jobs or freelancing. Freelance your skills on Fiverr, drive for a rideshare service, or whatever else you can do to supplement your main income and speed up the savings.
- Use Coupons and Discount Apps Never buy anything without seeing if it’s on sale: Apps like Honey and Rakuten help you find coupon codes and cashback on online purchases.
How To Save Money Online
Saving money online is easier than ever. With a few tools and techniques, it is easy to find discounts, avoid impulse purchases, and save money in the process.
- Use Cashback Sites and Apps: Try services such as Rakuten or Swagbucks to earn cash rewards for purchases you make using the affiliate links.
- Buy in Sales: Major online retailers are likely to have seasonal sales and promotions such as Black Friday, Prime Day, and Cyber Monday. If you’re planning to buy something big, hold off to get a lower price.
Tip: Use Price Comparison Websites Purchasing something big online? Save some cash by searching Google Shopping or CamelCamelCamel first, which will track prices over time and let you know of drops — or will show you prices in the past so you can make sure you’re getting a deal.
How to Save on Salary
Saving from your salary is one of the surest routes to accumulating wealth steadily over the years. Even if you're living paycheck to paycheck, there are ways to prioritise savings.
- Save first: Put aside some of your take-home salary before you spend on anything else, so that saving always comes first.
Tip: Review Your Expenses Regularly Every few months, review your expenses to see if you have any fat to trim. Can you downgrade your phone plan? Cut back a little on your monthly entertainment expenses? Those monthly savings add up quickly.
5 Tips on How to Save Money
If you’re looking for some easy ways to save, here are five tips you can implement today:
- Set a Budget — and Stick to It: Monitor where your money is going and plan limits to spend on each category.
- Automate Your Savings: Schedule automatic transfers to your savings account so that you start saving before you even know it.
- Shop Sales and Use Coupons: Always be on the lookout for deals whenever shopping online or offline.
- Trim Unneeded Subscriptions: If you’ve been hitting “pause” on that streaming service now and then, cut ties. Drop the gym membership you don’t have time for. Unsubscribe from magazines you don’t read. The extra money will come in handy.
- Use Cash Back and Redeemable Point Programs: If you already routinely purchase specific product lines, use credit cards or apps with cashback/point rewards for those brands.
Instant Money Loan
Saving is important but sometimes, life throws some unexpected costs at you and what do you do? Well turn to that instant money loan. As the ads go, you might just get the money you need in just a couple of hours. Loans are often very high in terms of interest and using a loan as a permanent solution to your cash flow crunch may be a disastrous decision.
Conclusion
Saving money is one of the most important things you can do for yourself financially, no matter how much you make. Learn about where you stand, budget in a realistic way, and put some effort into savvy saving habits, and you will crush your goals. Just remember, saving takes time, and the more of it you do, the better off you will be! Whether you are saving from your salary, looking to know how to save money fast on a low income, or even how to save money online, just remember little steps forward each day will get you to financial freedom!
FAQ
What is the 50/30/20 rule in budgeting?
It’s a simple rule where 50% of your income goes to necessities, 30% to your wants, and 20% to savings and debt repayment. This helps you keep your spending and savings in balance.
What type of savings account is best for saving money?
The best type of account for saving money is the high-yield savings account.
How do I save money fast on a low income?
Focus on cutting non-essential expenses, look for side income opportunities, and use coupons or cashback apps. Every little bit adds up over time.