Tips for Building Up Your Savings Account on a Small Salary

tips-for-building-up-your-savings-account-on-a-small-salary

We can’t all be like Bill Gates. According to CNN, approximately 25 million Americans live paycheck to paycheck. When money is tight, saving even the smallest amount can seem like a monumental task if you’re just trying to get by. How do you save money on a minimum-wage paycheck or lower salary? When it comes to managing your finances, it’s important to think about the future more so now than ever. Even on a lower salary, you can save little by little. Here’s how:

Tackle High-Interest Debt

Tackling debt head-on now will help you save money in the future. This is especially true when it comes to debts with high interest rates, such as personal loans or credit card debt. Start by prioritizing high-interest debt, and work toward paying that off first. Keep in mind, credit unions have relatively low interest rates.

Trim Down Your Biggest Expenses

Focus on how to reduce your largest expenses first, because they make the biggest difference. For example, housing tends to be the biggest expense for most people, followed by automobile payments. If you’re renting, consider downsizing to a smaller home or apartment, or think about taking on a roommate or two to split the bills. If you own a home, look into refinancing your mortgage  at a lower rate.

Related: Download the Financial Survival Guide and get on your way to financial  success.

Look for Free Money

Seriously, who says no to free money? Low-income families may qualify for the earned income tax credit when filing their federal tax returns. According to the IRS, the earned income tax credit can sometimes be thousands of dollars. That should help keep some of your hard-earned money in your savings account.

Set a Budget and Stick to It

This may sound obvious, but you can save more by spending less. If your guilty pleasure is online shopping or pricey skin-care products, feel free to indulge just a little while staying within your budget. Set a maximum spending limit for the month and don’t cross it. Learn to spend in moderation, and don’t be too hard on yourself if it’s challenging at first. After all, practice makes perfect.

Look at the Small, Routine Stuff

Instead of going out to eat, can you pack a lunch and bring it to work? Instead of taking the bus or a cab, are you able to walk to work or ride a bike? And, if you just can’t survive a Monday morning without coffee, can you brew that cup at home instead of paying $5 at a coffee shop for a grande vanilla latte? These smaller expenses may not fatten your wallet at first, but at the end of a busy work week, it all adds up. Then multiply that weekly number by four for the month, and you could see substantial savings.

In the end, there is no grandor overly complicated secret to saving money. Much of it comes down to your daily spending habits and discovering where you can make slight adjustments. If you need a little extra cash flow on top of it, get creative: Consider selling clothes that are collecting dust in the closet. Start a side hustle on Etsy. Use coupons. And most of all, be diligent if you want to see the positive, long-term effects.

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