Many people plan on saving money but fail to actually do so because of their low income. After paying for their monthly expenses, they may not have anything left worth saving. However, there is no need to be disappointed. Even if you belong to the low wage earning bracket, you can still save money by following a few tips.
If you live in a rental property, consider moving into a smaller space if possible. This will lower your monthly rent costs and you can deposit the saved money into your account. You should also look into shared rentals. If you can share the rent costs with just one person, you essentially halve the rental amount you pay every month. If you own your property and have a mortgage on it, consider renting free space. “Depending on where you live, AirBNB is increasingly popular with travelers and could be a great source of additional income. You can then use these payments to cover a portion of your mortgage,” according to Cash Lady.
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People with a low income can take advantage of government programs like food stamps or free school lunches for their kids. The money saved can be directed into a savings account. You can cut down on food costs further if you plant a small garden in your backyard. This will help you save a significant amount on the cost of fresh produce.
You might be spending hundreds of dollars a month on entertainment. It is not necessary that you cut your entertainment budget to zero, but it is advisable that you identify unnecessary costs and remove them. For instance, you may be in the habit of watching a movie every week, including going to a restaurant once the movie ends. Consider only going to theaters for movies you absolutely want to see on the big screen and watch everything else on TV or streaming sites. Similarly, if you have a habit of buying books, consider going to the library instead. If you go out frequently for drinks, restrict the habit to no more than a few times a month.
The mean transportation cost in the U.S. is about US$11,400 per year for a 2-person household. This essentially makes it the second-largest expense for most people, even ahead of food expenses! Almost 93 percent of the cost comes from owning a vehicle. If you are someone who only uses your vehicle to drive to work and for other necessities, consider cutting down your costs by selling your car. Instead, move to a rental property that is at a walkable distance from your workplace.
Stay away from debt
Only take on debt to fund expenses when absolutely necessary, like a medical emergency. For everything else, it is better to wait until you earn the money to buy what you want. The average credit card interest rate is typically around 18 percent. Considering that the average credit card balance of a U.S. citizen is around US$6,300, this would mean that you would have to pay almost US$1,000 per year on interest. This is just a waste of money. If you deposit US$1,000 per year for the next 30 years in an investment that gives you a 5 percent annual return, you will end up with about US$74,000 by the 30th year. Understand that every penny is valuable and do not squander your hard-earned money paying off interest when you don’t have to.