Do you have trouble saving money? Does the problem stem from trying to save money with a small income? I know the feeling all too well.
Seven months after I got married, my husband had to have an unexpected surgery that left him out of work for two years.
This means that we were down to a one income household with no time to prepare. Did I mention that my husband was the breadwinner?
So there we were, down to the smaller of two incomes and a ton of medical bills. Saving any amount of money felt impossible.
I felt like there was no way that we could save money and dig ourselves out of this financial hole.
Now, I know that I was wrong. There are plenty of ways that you can save money, even with a small income.
I know that your situation may not be as drastic as mine, or in some cases even more drastic.
It is so easy for someone to tell you to get a second job or increase your income, but sometimes this is not an option. It surely wasn’t an option for me.
I knew that I could not handle a second job at the time, but I also knew that something had to be done. My late night pondering eventually paid off and we were able to save money as well as gain control of our financial situation.
I think it would be selfish for me to keep this information to myself. Each step that we took to save and create a better financial situation for ourselves is explained below.
I want to help everyone that may be facing the same struggles or stuck in a financial hole.
Organize your finances
Take some time to get organized. This is the first step to being able to save money with a small income. Being organized takes all of the guesswork out of your plan.
This simple step is very helpful when you are at the point of being discouraged. It makes it easy to see where you have come from and where you are headed.
To accomplish this step, carve about 45 minutes out of your day where you can work peacefully. Grab a sheet of paper and last month’s bank statement. Now, write down your monthly income and expenses individually.
You want to be able to see where every penny of your money goes each month. I know this is going to look scary. You may even feel the need to quit before you start, but I encourage you to keep going.
This step is done with a paper and pen to make your situation real to you. You can physically see and feel yourself writing down your real income and expenses.
This exercise may even open your eyes to a few things that you want to cut from your budget immediately.
These are the feelings that I want you to have while evaluating your situation. If you feel the need, go ahead and make a few calls to eliminate the expenses that are weighing your budget down at this point.
Once you have your income and expenses organized, you can move on to the fun step. It is time to create your savings goals. Take a new sheet of paper and write down all of the things that you want to save money for.
These can be long term or short term savings goals. I would also like for you to go a step further and write down anything that you hope to accomplish in any area of your life in the next few months.
Don’t forget to put an anticipated date beside each goal and accomplishment.
Adding an anticipated date gives you that extra push to work hard at saving money and accomplishing everything that you have written down.
Yes, this is another writing exercise. I still want you to feel every emotion regarding your goals.
It is also fun to check items off of your list and add a completed date when you accomplish them. These goals are your milestones. Celebrate when you reach them!
Create a plan
You guessed it, the next step is to write out your plan. I want you to have a clear plan of action that you can follow and hold in your hand.
If you want to save five dollars per check, you need to see that step on paper when you feel like you want a five dollar footlong instead of setting the money aside.
Your plan is going to be personal so I won’t walk you through it step by step. I will, however, give you a few pointers.
A book called The Total Money Makeover by Dave Ramsey talks about covering your “four walls”. The four walls are your basic necessities including food, shelter, clothing, and transportation.
Cover your four walls at all times. This is essential to your plan. Create your action steps to reach your goals only after you have made sure that your four walls are covered.
Try to save a small amount of money from each paycheck. It may take a while to reach large savings goals, but you will get there. Saving money is a marathon, not a sprint. Tailor your plan to fit your life.
**Bonus: If you are ready to start saving money, I recommend using this savings tracker. Click here to download your tracker and start saving.**
Create a budget
If you want any chance of saving money with a small income, you will need to create a budget. A budget is basically a plan for your money.
Budgets are helpful for everyone, no matter their income situation. This is a great way to execute your plan for saving and spending according to your goals. You get to tell your money exactly what it needs to do before you get paid again.
In order to save money with a small income, you need to create a very simple budget. This budget will be completely focused on controlling your spending.
Create categories for things that absolutely have to be paid each month. After that, choose one or two categories of indulgences like movie dates or nail appointments.
I know it sounds counterintuitive, but you won’t be able to save money unless you are able to have a least a little bit of fun.
Any money left over will go directly to your savings goals. This way of budgeting will teach you over time how to spend in moderation and save as much as possible.
It will become clear that you can go out with your friends and have fun, just not multiple times per week (or month).
You will have to make some sacrifices, but once you reach your savings goals, you will be so grateful for the sacrifices.
Stick to your budget
Now that you know the importance of having a budget and you’ve created one, you need to stick to it.
This is essential if you want to save money and aren’t able to increase your income.
It may be difficult to stick to a budget in the beginning, but you will get the hang of it in no time.
In order to stick to your budget, you will need to track every transaction. Anytime you spend or receive money, you need to document it and add or subtract it from the money that you have budgeted.
The easiest way to do this is by using a budget app. Anytime you enter a transaction, your app will do the math for you.
The app will also tell you if you are going over your budget, in which case you will need to reevaluate your spending or your goals.
If you’re interested, try YNAB free for 34 days.
Generate extra money
Another quick way to save money with a small income is to generate more money. I’m not saying get another job because I know it’s not that easy, but there are ways to generate additional income.
In addition to that, you can sell gently used clothing to consignment shops like Plato’s Closet, but nothing beats a good old fashioned garage sale.
Starting a side hustle is also a great way to generate extra money without a huge time commitment. A side hustle is a way to make additional money with little to no effort.
My favorite side hustle is blogging, but I have also done freelance writing and been a virtual assistant.
When my husband was out of work, he had a side hustle with a company called Appen where he evaluated people’s statuses on social media.
It was easy and the extra money helped keep us on track with our goals.
Related: Side Hustles To Replace Your Income
Take advantage of cash back programs
Cash back programs are imperative when saving money with a small income. While you won’t get rich with your savings, these programs can make a huge difference in your budget.
Cash back programs work with retailers to provide discounts to their members while shopping.
The amount of cash that you get back per purchase depends on the program but can range from 1% to 40%.
My favorite cash back program is through the Ibotta app. This app allows you to shop at various retailers and submit your receipt for cash back on certain items.
I mainly use it for groceries, but there are plenty of other offers as well. There is currently over $50 sitting in my Ibotta account ready to be transferred to my bank. I love it!
Another program that I love is Ebates. This program allows you to go through their website to shop online and provides instant savings that can be cashed out at any time.
Ebates participants are retailers such as Amazon and Walmart. Before you shop online, sign into your Ebates account and be prepared to rack up in cash back offers.
Pay off debt
I’m sure you already know this, but paying off debt is a great way to save money even with a small income. Debt is easily the biggest thing holding you back from your goals.
Most debt outside of medical bills charges you interest until the debt has been paid. If you’re only paying the minimum payments towards your debt, the interest adds up quickly.
Think about this. You owe $2,000 on a credit card and your minimum payment is $25. Let’s just keep this simple and say that you get charged $10 interest every month.
This means that you are only paying $15 towards your debt each month. $10 of your minimum payment goes directly to interest.
That means that in one year you will have paid $180 towards your balance and $120 towards the interest and you’re still left with a total balance of $1,820. That is exhausting!
Paying off debt will allow you to reach your savings goals faster than you realize. If you aren’t in a place to pay off your debt completely, focus on paying down your debt slowly and be sure not to create any new debt.
I know saving money with a small income seems like a lot now, but it will pay off in the end.
If you need a bit of motivation, hang everything that you have written down in a place that you see every day. Get excited each time you see your goals and know that you’re that much closer to reaching them.
During the times that you are discouraged, think about how good you will feel when you reach your goals. Don’t give up on yourself.
You now have the tools that you need to succeed. You know each step that you need to take to become intentional with your money. I believe in you and I know that you will become successful if you follow the steps.
Comment below from time to time to update me on your progress if you feel comfortable. What is your biggest setback when attempting to save money?
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