The only way to get ahead financially is to stash away some money so that it can build over time and increase your wealth. Those who make six figures can stash away funds relatively easily in most locales. However, those who make a very low income that's not much above minimum wage can have more trouble doing so, but this does not mean that it is impossible to achieve. Here are four tips that those who make little money can use to save money.
1. Cut Expenses To A Minimum
The very first step to saving money is spending less. Especially when you are on a low income it is essential to make sure that you are spending the least amount of money possible. Do your best to only buy essentials. There will be few pennies that are available for luxuries, and you might have to get creative to save, but it will be well worth it in the long run. This could mean getting a roommate or two to cut housing expenses. It might also mean walking or biking to work or the store to avoid unnecessary transportation bills. These might seem like massive sacrifices to make, but they are necessary to ensure that the monthly outflow of funds is lower than the monthly inflow.
2. Pay Yourself First
It's frequently been said that those who fail to plan are planning to fail. This is definitely the case when it comes to saving money. The first “bill” that should get paid is to yourself, to your savings account. If you pay out all of the money you think you can afford to save first and then base all of your other expenses around what money you have left, it can really push you to be more frugal. Paying yourself first can definitely make your budget tighter, but it can also force you to get more creative when it comes to figuring out how to pay all of your bills.
3. Make Savings Automatic
After figuring out how much to pay yourself each month, you should set up your account so that this amount goes directly into your savings or retirement account automatically. Many financial institutions like Deseret First Credit Union will be more than happy to set up an automatic transfer so that you forget that this money was even taken out. Also, at Credit Unions like this you can even use sites like https://www.dfcu.com/ to be able to transfer money to your savings account online. However, if it automatically goes into savings, you'll be less likely to find another use for it, and the amount saved can go up more and more over time.
4. Look For Ways To Increase Income
While a low income can make saving difficult, it's not an excuse to avoid finding other avenues to earn additional income. It is likely that you'll have additional hours in the day after work that can go toward finding other creative ways to make money.
There are many websites that allow users to complete tasks to earn a few spare bucks every month. This money can then go toward additional savings. Also, any raises that might come from your main job should also go directly into a savings or investment vehicle so that your lifestyle does not creep up to meet your new income.
Overall, saving with a small income can definitely be a major challenge. However, there are many Americans who have been able to overcome this challenge and build a nest egg over the long term. Following these four tips can help you on your way to increasing your wealth.