4 Ways To Save Money On A Low Income

If every pay cheque you earn is just enough to cover your expenses, it is probably the last thing you can imagine. If you are in a situation where you are worried about how you can survive on a low income, saving could be one of your last priorities. However, if this is not quite your situation and you are instead focusing on a goal such as saving for a house or looking for strategies for effective money management for low-income families, here are 4 tips that could help:

Is Your Income Low, Or Is Your Expenditure High?

Our first tip is to take a look at the overall picture of both your income and your spending, at all the money you spend. No matter how much or how little you earn, there is never a guarantee of financial well-being. In fact, a higher-income household that is heavily in debt is further behind than a family that takes home much less and has no debt - that family could build up its savings despite lower income.

Knowing your income may be as simple as looking at your pay cheques, but knowing that your spending is often much more difficult. The best way to start is to record everything you spend money on, either on paper or in an easy-to-use expense tracker. After a few weeks, you should have enough information to see if there are places where you could spend less to save more. You might be surprised at how quickly this works to boost your savings each month, even on low incomes.

Remember To Save Money As If You Were Paying Yourself, and Pay Yourself First

You may never have thought about it that way, but most of our income goes toward paying other people. Canadians usually pay their rent or mortgage, food, household bills, and other costs first before they think about their savings. But, if you first take care of anything other than your savings, then when you finally make it, there probably won't be much money left to save.

Saving money is like paying for yourself because the money stays in your pocket, not somebody else's. These funds can then be put into your savings goal, work for you in TFSA and RRSP investments, and help your family in financial distress. Therefore, you should pay for yourself, make it a top priority. In other words, decide how much money you want to pay yourself each month, and do so before, not after, paying for your other expenses.

Save Money in Different Bank Accounts

When your income is low, you want to make sure that every dollar counts. By organizing what you earn in various savings accounts, you help get everything where it belongs. Another advantage is that it can make managing your money easier, especially if you automate the process.

• Have the main account into which your paychecks are deposited.
• Set up one or more savings accounts if you want to. For example, you could have separate accounts for your emergency fund, vehicle or house repairs, clothing for your children, savings for a house, etc. Depending on the bank or credit union, you may have to pay service fees for additional savings accounts.
• Use your budget to decide how much money you want to put into each savings account each month.
• Set up recurring automatic transfers from your main account to your savings account. You can do this from your online bank; call your bank if you want help.

If you then need to tap one of these accounts. You can do so without worrying about taking away any of your other savings goals. If too many accounts are confusing. Just use one account and use a notebook or spreadsheet to track how much money is available for each goal. There really is no wrong way - find out what works best for you.

Make The Most of Your Income On A Budget

Our final and most important tip for saving on a low income is to put it all into one budget. A budget is actually nothing more than an idea for how you want to pay out your money. It can help you keep your spending down, focus on yourself, and decide how to organize your bank accounts. Whether your income is high, low, or in between. A smooth budget will always assist you to save money and achieve your financial goals.