The rules change when you’re working with limited cash, but it’s more important to save money for the future. Financial problems can easily put you down if you don’t know how to manage your money properly. Learning to live a comfortable life and still save on a budget means taking control of your finances. This article looks at three tips for saving money when your income is low.
Compare Expenses and Income
The first step is to understand your financial situation each month. The term “financial situation” in this regard means your income and your expenses. To determine this, collect all the relevant financial documents you need. These should include your pay stubs, check register, and credit card statements. Add up all sources of income to figure out your gross income. Next, total up all the essential monthly expenses, which should include all debts and monthly mortgage payments. Once you have the two totals, compare your expenses with your monthly after-tax income. In essence, the income should be more than the expenses. If you find that it is the other way around, then you need to analyze your expenses and figure out what to drop. The process of determining your monthly income and expenses is called budgeting.
If you are working on a budget, then you need to shop smart. Always be on the lookout for deals that can save you money. The first thing you need to do is to learn about the sales cycle at your favorite stores. You can do this easily by inquiring from the sales clerks. Understanding the sales cycle will allow you to save money on necessary purchases and therefore not blow your budget. Additionally, you can buy some items from thrift stores or dollar stores to save some money. Pay attention to sales fliers and use coupons when possible. Also, use cash when paying for purchases. Credit card fees contribute to your overall expenses and should be avoided at all costs in order to better manage your finances.
If you have a savings account at your local bank, start using it. If you don’t have one, make it a priority to open one as soon as possible. Come up with reasonable saving goals according to the cash you remain with after deducting your expenses. This can be as little as $10 per month. This is just to make you get used to the idea of saving. As time goes by, your expenses reduce, and your income increases, you can adjust the amount you save to at least 3 months worth of living expenses to be on the safe side. This amount will help you face any emergency that comes your way, such as losing your job or medical expenses.