When you live paycheck to paycheck, it feels impossible to save money. Every cent you get seems to go straight to necessary living expenses and bills—and the “occasional” night out needed to maintain your sanity.
That doesn’t mean saving is impossible. Use these simple ideas to start saving as much as you can. Even just $10 each month will add up over time. As you start making more money and advancing in your career, you’ll be able to save more because of a higher income and a great financial foundation.
Before you know it, you’ll be financially comfortable and ready to take on the challenge of #adulting like a pro.
Track Your Spending
Saving 101: track every cent that goes in and out of your bank account. Spend a month logging every dollar that you spend, on a piece of paper, spreadsheet or app. This allows you to create a financial profile of yourself. As you look over your month of spending, ask yourself the following questions:
- How much am I making each month?
- How much am I spending each month?
- Where did I spend the most money?
- Where did I spend the least?
- Did I spend more than I made?
These questions, along with the rest of the money saving ideas below will allow you to build a strong financial foundation for saving.
Cut Back on Spending (While Still Indulging)
You don’t have to cut out all your favorite luxuries to start saving money. Instead, consider how you can cut back, while still enjoying the little things you cherish, like your morning coffee stop.
To save $10 a week, make it at home every Tues and Thursday. If you love doing big dinners with your friends, suggest having dinner at your place once a month, where everyone can save by making food and bringing drinks, rather than spending at a restaurant.
Don’t forget to look at the big expenses too, like housing. Are you overpaying for your apartment? Is moving to a less expensive spot the smartest financial option for saving money? What about your car? Could you sell it and use public transportation?
These are hard questions, and the process of transition can be stressful, but in the end, you may be able to save a lot more money.
Make a Debt-Pay-Off Plan
Debt is one of the biggest struggles for the Millennial generation, and there are many ways to tackle it so you can focus on saving despite a small salary. Start by looking at interest rates. If you have a lot of high interest rate debt, paying down the one with the highest interest first, while you continue to pay your minimum monthly payments on the other cards, is the best first step.
“You’ll save on total interest paid by knocking out the worst interest-accruing culprits first. This approach is particularly useful if it’s going to take years to pay off your debts, as the interest rates will have a substantial impact on your finances,” explains Robert Berger, personal finance expert for U.S. News.
Berger recommends two other methods as well:
- Snowballing: Choose an amount you can afford to pay on your debts each month and stick with. “With the snowball effect, you continue to make the same overall payment to your outstanding debts, and your payments remain constant even as your minimum required payment shrinks,” says Berger.
- The psychology method: Pay off your smallest debts first. Berger explains: “The theory behind this option is that paying off small debts in full gives you a victory that helps keep you going.”
Create a Budget—Stick To It
So many people cringe at the idea of creating a budget, but they work. They keep you accountable for where your money is going and help you to avoid that end-of-month scramble when you’ve spent too much to pay your bills. This is especially valuable with a small salary. Every penny counts, and making sure it’s going to the right place is critical for saving. Here are a few tools you can use to get started.
Budgeting Calculator: This simple calculator needs just two things from you: total income and total spend. With that, you’ll get a total savings or debt amount along with the percent of your income that you saved or spent. This gives you one important piece of information: if you spent more than you made and by how much. Use this as a benchmark. If you overspent, make a goal to avoid that this coming month and check back again. Track overtime to see if your efforts are working.
Pocket Guard: If you struggle with money management and math, this app makes everything simpler. You can see your financial big picture with simplified information. The best part: you can find savings on monthly bills through the app.
Mint: This app is a great way to set a budget and then track whether you stick to it, and if not, where you overspent based on categories. This will help you to continue the process of cutting back while managing your budget.
Look for Secret Savings
There are some not-so-obvious places that you can trim down your expenses. And in many cases, you have to look for the savings yourself. Here are a few of these secret savings ideas from Jessica L. Anderson, financial expert for Kiplinger:
Change your tax withholding: Keep more of your take-home pay now, versus getting it back at tax time.
Raise your car insurance deductible: “Upping your out-of-pocket outlay from $250 to $1,000 can save you 15% or more off your premium,” says Anderson.
Bundle when you can: Think cable, phone, and Internet. Sometimes, adding something you don’t need (basic cable, for example) will actually lower the total cost—this happened to me with AT&T service.
Get credit cards with rewards: Some credit cards now allow you to simply deduct travel costs, so you can get your money back for an Airbnb or rental car, not just flights.
It may feel impossible to save on a small salary, but it’s not. Use these tips and tricks to better understand your financial landscape and lay the groundwork for a strong savings as you grow in your career and make more money. With a budget in place and a knack for finding “secret savings,” you’ll be #adulting in no time.