Are you serious about financial management and want to know how to save money on a low income? You have come to the right place!
Asides from helping you navigate tricky situations, saving money helps you meet your financial obligations, and build wealth.
Saving money on a low income can also help you avoid debt, which relieves stress.
There are many other reasons why you should save money. Some of them include:
Despite your low income, having money set aside for emergencies helps you in a testing situation.
An emergency fund provides financial security in times of need. It can help you avoid taking out high-interest loans.
For those who have children, the cost of education is increasing. Each year, student fees rise, making it more difficult to pay for education without going into debt.
With proper planning and commitment, you can ensure that your children are not sent home from school over unpaid fees.
● Meeting life’s goals
Whether you want to get married, go on a foreign trip, or buy a house, saving money on a low income can help you achieve those goals.
Saving money from an early stage is the best way to achieve your dreams without getting in debt.
Some savings accounts offer high interest, which helps you grow your savings at the same time.
The importance of a savings account simply cannot be overstated.
● Accumulating wealth
Yes, saving your money can help you build wealth. If you want to focus on building wealth, you must save money.
When you do so, you develop excellent financial practices and increase your cash reserves. It also helps you invest, which is the only way to build actual long-term wealth.
Save money on a low income
Saving money in Nigeria despite your income status may sound difficult but it’s really not.
The goal is to develop the habit of saving and then, grow your wealth from there.
Some tips that can help you through this process include.
1. Save what you can
If you have to wait till you earn ‘enough’ money before you start saving, you may never get around to it.
Saving as a practice is not dependent on how much you earn. All you need to do is to establish the intention to save something off your earnings.
Once you get in the habit of saving money, no matter how small, it won't feel unusual when you start earning more.
2. Save first
Understandably, the expenditures are piling but saving first and spending later is one key to saving money on a low income.
You can start by keeping aside about 20% of your income for savings every time you get paid before doing anything else.
This way, you'll be saving every month and have a clear idea about how much you'll have by the end of the year.
Even if you have debts to pay, make sure you're saving something for yourself because emergencies always arise.
3. Reduce your expenses
Whether it is your rent, the money you spend eating out or fuelling your car, you will need to reduce your expenditure.
Higher rents or mortgages, and more upkeep expenses are detrimental to your savings goals.
Smart shopping can go a long way if you've been struggling with how to save money with a low income. Sometimes living a bit below your means is the best way to build wealth in the future.
Cancel subscriptions you are not using, where possible, and redirect the money to your savings.
4. Pay off debts
To really save money, you will need to pay off those loans.
Debts can hold you back from reaching your financial goals. This is because the interest keeps growing, making it impossible to pay off the entire amount for a very long time.
When you make your budget, set aside a small portion each month to pay off existing debts, and make sure that you pay off high-interest debts first.
5. Start saving
Making the decision is easy, but without action, it’s still just a plan.
Start saving money despite the size of your income. It's a good idea to open a bank account that's dedicated to saving only.
On the other hand, you can also opt for a savings app as they are quicker, efficient and pay higher interest rates.
Saving Money on a Low Income: How to Begin
As stated, when it comes to saving money on a low income, getting started is the hardest part. Saving money doesn't come naturally to many.
However, with the following tips, you can kickstart your savings journey without a hitch.
● Set a specific goal
Because you are a newbie, you can ease into it by setting a specific goal.
It could be something small like changing your phone or buying that mid-priced household appliance you always fancied.
When you've reached that goal, set another, but this time, something more challenging.
Slowly, you will begin to develop the habit until it becomes your nature.
● Set a budget
If you're accustomed to spending your entire paycheck, changing that habit will take some budgeting and spending plan.
Ease into it by setting a budget for yourself. Set aside the money you would ordinarily spend on small things like soft drinks for instance. You will soon realise that it amounts to a chunk of your income.
If you don't have a budget or a spending plan, sit down and write one out.
● Automate your saving
It can be easy to forget to deposit money into your savings account each week or month. It's also easy to spend it before you save it.
You can avoid both problems by setting up automatic deductions into your savings account.
This feature is mostly available with mobile apps.
● Keep separate accounts.
Keep your savings accounts separate from your salary or expenditure account.
This will help you avoid the temptation of spending your savings.
Where possible, do not request for your ATM card to avoid any temptation.
Also, it makes better sense to open a savings account at a different bank from where your accounts are located. If your savings aren't easily accessible, you're less likely to dip into them unnecessarily.
● Pay bills on time
Paying your recurring bills when they are due gives you room to properly save your money and save some extra funds.
In some cases, when you don't pay your bills on time you will be charged a late fee or penalty.
Ready to kickstart your savings journey? Visit nairaCompare, Compare savings accounts and start saving!