Save More on a Small Salary
Saving money can be a challenge in the best of circumstances, but when you have a small salary, it can feel impossible to put money away and plan for your future. Rest assured, it can be done. There are many things you can do to start saving money, regardless of your income — even a little bit at a time is better than nothing.
If you’re ready to start building your nest egg, use these creative ideas to cut expenses, track spending and free up the money you do have coming in.
Track Your Spending
People who want to lose weight are told to track their eating — saving money on a small budget requires the same diligence. If you want to manage your money effectively, the first step is to track where it’s going once you get it.
You may not realize that $120 goes to gas or $300 a month goes to groceries. When you start tracking your expenses, you can then take the next step in getting control of your finances — creating a budget. Start with a tool like Mint, which will categorize all your spending for you. If you spend cash rather than using a credit card, stick to manual tracking:
“If you tend to make more cash transactions, you’ll need to hold onto your receipts and jot your purchases down in a notebook or in an Excel spreadsheet,” suggests Alexa with Single Mom’s Income. You can track in a Google Forms sheet as well, which is accessible wherever you have Internet.
Set a Benchmark and Small Goals
The best way to save on a small salary is to figure out where you’re starting, whether that’s in the green or the red. Luckily, you only need two numbers to figure that out — money in and money out. If you haven’t categorized your spending yet, you can still use this online budget calculator to set a benchmark. The tool will give you a number that represents how much you’ve overspent or saved. Use that as your benchmark and now set a goal.
The key is setting simple goals that are attainable. Remember, it will take time to reach a place where you can build savings; simple, achievable goals will help you get there. For example, your goal might be to simply cut down spending by $100 next month.
Even if you’re not saving just yet, you’re staying aware of spending, which will lead to your ultimate goal of building savings.
Start Meal Planning
If you work full-time, buying lunch may be the only option thanks to a busy schedule. At an average cost of $11 per lunch bought, however, if you stop buying lunch just one time each week, you could save a whopping $552 annually, according to LearnVest. Make that two less lunches a week for more than $1,000 in annual savings. This is one of the best opportunities for savings — so start meal planning this week. Here’s how:
- Pick one day a week to prep everything. This is usually Sunday for those who work Monday through Friday.
- Decide what you want to eat for the week. You can make a big pot of veggie pasta, chili, chicken and roasted sweet potato, etc.
- Make a large batch and portion it out into to-go containers so you can grab it on your way out in the morning.
This habit has the added bonus of helping you establish healthier eating habits as well, making it a win-win.
Pay off High-Interest Debt
There are several tactics you can use to attack your debt balance — some of the most successful strategies have you paying less on interest right away. Make a list of all your debts along with the interest rate for each one, then focus on paying the highest amount possible toward the one with the highest interest. Pay the minimum for all others, freeing up some cash for this effort. If possible, you can even defer smaller loans to make this easier.
Start a Side Hustle
Unlike just getting a part-time job or a second job, a side hustle is a great way to make extra money by doing something you love or are really good at. If you refinish old furniture, you can turn this into a small side hustle. If you can market it, you can do it to make income on the side.
Not sure what your side hustle should be? Here are 99 ideas you can start today.
Maximize Your Employer’s Savings Opportunities
If you’re employed, look into company retirement plan options. Many employers match your 401(k) contributions, allowing you to save a lot more without doing anything extra. Even without a matching program, it’s wise to get your 401(k) set up. When you do, your money is typically pulled from your paycheck before taxes, and you never see it cross your hands — making it much easier to put away.
While it sounds scary losing a piece of your already small paycheck, even just 10 percent of your pre-tax dollars can make a big difference.
Start Saving
Use these ideas to start saving more this week. Build a nest egg that you can turn to in an emergency or for your next big vacation, and you’ll feel less stressed about the financial “what-ifs” in life.