Saving money when you don’t earn a lot can seem impossible, but it is possible. By budgeting and cutting expenses, you can reach your savings goals. Start by identifying your biggest costs and figuring out ways to cut them. For example, you can save by eliminating subscriptions or reducing the number of restaurant meals you eat out.
Start a Savings Account
A traditional savings account is a safe way to put away money. Banks or credit unions typically offer it and allow you to set aside money for a specific purpose without giving you easy access. It may be worth opening a savings account at the same bank you use for your checking account to make transfers easier. However, shopping around for the best rates and features is important. Some people prefer to have a separate savings account for splurges. It allows them to have some discretionary spending money while progressing toward other goals. Another option is to use mobile banking apps. Consumers carry their smartphones nearly everywhere, so a mobile banking app may let you rapidly handle various financial demands whenever you desire, including saving money when you don’t make a lot. In essence, it functions as a bank in your pocket or bag.
Create a Budget
One of the best things you can do to save money when you don’t earn a lot is to create a budget. A budget will help you see where your money is going and how much you spend each month. To make a budget, gather your pay stubs and any other income you may receive each month. Then, determine your monthly spending by reviewing your credit card and bank statements. Once you know your spending, compare that amount to your income. It will help you identify areas where you can cut back. For example, if you’re big on food spending, try cooking meals at home instead of eating out. You can also reduce your entertainment expenses by limiting your activities to free or low-cost options like hiking, visiting the library, and game nights.
Utilize a Credit Card With Cash Back Rewards
Credit cards that offer cash back give you a percentage of your spending back in addition to other rewards. Depending on the card, these rewards can be redeemed in different ways, including as a statement credit, points on the card issuer’s website that you can redeem for products and services, or even actual cash directly deposited into your checking or savings account. To make the most of your money back, find a card that offers high rewards in the categories where you spend the most. For example, if you often purchase gas or groceries, look for a card with a high rate of rewards in those categories. Some credit cards also provide access to exclusive shopping portals and other deals, allowing you to earn even more rewards.
Avoid Interest on Your Credit Card
The simplest way to avoid interest charges is to pay your balance in full each month. But this requires discipline, especially during times of financial stress or temptation. A credit card is an incredibly convenient tool for making purchases but it can also be costly. U.S. households with revolving debt pay an average of $1,155 in interest annually. Many strategies for avoiding interest charges include paying your balance in full each month and transferring your existing debt to a 0% card with an introductory period. But the best approach is to avoid them altogether. By making financial sacrifices and paying off debt, you may get closer to your financial objectives. Then you can focus on building a secure future for yourself and your family.
Take on a Side Gig
A side job is a great way to make extra money. You can find many options online and through local services. You can also work as a freelancer, become a virtual assistant or start a pet-sitting business. Whatever you choose, budget any up-front costs into your plan. Your full-time salary may not allow you to achieve your financial objectives, so a side job might help you save money, pay off debt, and more. And you might even have a lot of fun in the process! For example, this writer’s daughter worked for a concert venue last summer and used her employee discount to score hundreds in savings. That’s a win-win situation for everyone involved!