Most of us want to save money so we can build wealth and plan for the future. We have goals we want to reach (like traveling) or things we want to buy (like a dream home). However, this can seem impossible when you’re surviving on low income.
According to CNN, 25 million American households are living paycheck to paycheck. When money is tight, saving any amount can be the last priority on your list. You’re just trying to get by.
So how do you save more money when you’re making minimum wage? How can you reach your financial goals on a low income?
When it comes to finances, it’s important to not only think about the now but also the future. Even if you’re earning a minimum wage, you can still save little by little. Here’s how:
1. Tackle High-Interest Debt First
In order to start saving more, you have to tackle your debt head-on. Specifically high-interest rate from personal loans, or credit cards, because they force you to pay outrageous fees and interest charges.
When paying off debt, you need an attainable, yet challenging plan to pay it off. Start by prioritizing your debt so you’re paying off the ones with highest interest first.
Then, as you go forward, avoid accumulating any more high interest debt, especially credit cards.
2. Cut Down Your Biggest Expenses
Trying to save money when you have low income can be very difficult. Sometimes it feels impossible to cut down even a dollar or two every month.
Aside from the usual money-saving ideas, like cooking meals at home and canceling your cable bill, what more you can do? Instead of trying to cut back your small expenses, focus on the larger ones so you can make more of a significant impact.
For most people, housing costs tend to be biggest part of their expenses. If you’re renting, consider downsizing to a smaller home or living with roommates.
If you own your home, take at look at whether or not refinancing your mortgage for a lower rate would be beneficial. You can also rent out a room or parking spot for additional income.
David’s Note: Make sure to understand the terms of a refinance though. What generally happens is that along with a reduced monthly payment, a refinance also extends the loan term. Be comfortable with the fact that it will take you longer to pay the loan off if this is the option you choose. Also remember to shop around for the best deal, because there are a ton of people willing to help you get a refinance and some will charge less than others for their…