Last updated in July 2020
Learn how to save money on a low income. Saving money is not easy for most people. If you are earning a low salary, like 17% of Brits, saving becomes even more of a challenge. You may even think that saving money is impossible for you.
The good news is that even on a low income, you have some room for savings. In fact, you may be surprised by how much you can save. Oftentimes, the reason for not having savings is a lack of money management rather than a low income. Luckily, this can easily be fixed.
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How to save money on a low income
Saving money starts with changing your mindset, whether you are on a low income or not. Having the right mentality will make saving money so much easier and you may even come to enjoy your life more than before.
Adopt a frugal lifestyle
A frugal lifestyle is the key to saving money on a low income. Once you realise that goods do not make you happy, you will be less affected by consumerism. Make the most of what you have and only buy what you truly need. This, you can save money and live a happier and more fullfilled life.
Money as a finite resource
You also have to accept that you do not have an endless supply of money. You may think this is obvious, and it probably is. However, only a few people really act like they understand this concept. Having limited money means you should think carefully about what you spend it on.
Ask yourself whether that coffee to go or that takeaway meal is really worth the time you spend working for your money. And the answer may be yes which is fine. However, more often than not, it will probably be no.
Budgeting is a key skill when it comes to managing your money. My Never Be Broke Again workbook can help you mastering budgeting skills. Best of all, it is completely free.
Budgeting helps you to understand how much you earn, how much you spend, and how much you can save. Importantly, a budget will also show you where you spend excessively and identify your potential for savings.
Cut your expenses
Spending less money is essential when learning how to save money on a low income. When making your budget, you divide your expenses into categories, such as food, transport, childcare, etc. This helps to identify which areas in your life you spend too much on.
Cutting expenses also comes back to adopting a frugal lifestyle. If you need fewer materialistic possessions to be happy, you will also spend less.
Yet it is not all cake and honey. Sometimes what you need is a red pen to cross out unnecessary expenses, such as store-bought lunch and takeaway coffee. This may be hard at first, but your savings account will thank you.
Increase your income
What if your expenses are so low that you cannot possibly reduce them further? If that is the case, then you have no other choice but to increase your income.
If you have time on your hands, you can look into setting up a side hustle. Side hustles will provide you with a regular, steady second income stream. Some are fully flexible, such as matched betting, others require you to stick to a schedule more.
However, I recognise that a side hustle is not the right solution for everyone. If you are busy, you may prefer easier alternatives. These allow you to pick up some money on the side with little effort. In return, you will not be able to make as much. Some ways to make some extra money include:
How to save money on a low income summary
Learning how to save money on a low income may not be easy at first. It requires you to change your mindset and focus less on materialistic possessions. Budgeting is a key skill that can help you master the art of understanding how to save money on a low income.
There are two values you can manipulate to save money, your expenses and your income. Generally, it is easiest to slash your expenses but you can also save money by increasing your income.
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