It’s hard to save money when you’re living paycheck to paycheck, but it can be done. I did it for a couple of years myself. It was hard, and a lot of sacrifices were required, but I did manage to pull it off.
Here are four tips on how you too can save money when you’re living paycheck to paycheck.
Saving Tip #1: Save, but start small
When you’re living paycheck to paycheck, you probably don’t have much left over after all your bills and expenses. For some of you, you probably don’t have anything left over at all! Obviously, this can cause a lot of problems when you’re trying to save.
Here’s a tip: save a small amount everytime you receive your paycheck and treat that amount as an expense.
It doesn’t matter if you’re “just” saving $5, $10, $20, $50 per paycheck. Keep doing it every month.
You’re not going to be rich by saving $5 per paycheck, but you know what you’re going to be?
Disciplined. And that’s something that you must be if you want to go on this journey to financial freedom.
Why? Well, you said it yourself. You don’t have anything left over after expenses. What we’re going to do here is to change that mindset. You can have something saved despite the number on your payslip if you do it correctly.
And that is, prioritizing your savings before all your expenses.
Saving Tip #2: Cut down on expenses
The next step is to cut down on your expenses in order to have a little bit more left over every month.
Here’s a short activity that we’ll be doing right now.
Get a piece of paper and a pen. Done? Okay. Let’s do this. Don’t worry, it’ll take no longer than 5 minutes.
Write your average monthly income at the top and encircle it. Now, make two columns. Label one “bills”, the other “other expenses”.
Now, write down all your regular bills as well as your other expenses. Other expenses can come in the form of transportation money or groceries.
Now, sit back and take a look at your list.
Ask yourself, where can I cut back on my expenses? Do I really need that monthly cable when I only watch a handful of shows–that I can watch on Netflix– anyway? Do I absolutely need to have the highest plan for my mobile phone?
Don’t forget to look at the “other expenses” column too. Oftentimes, people tend to overlook their small purchases, which can lead up to a lot of money without us noticing.
Sure, your grocery budget may just be $400 a month, but it doesn’t matter if you go out and have a grande cup of Starbucks every morning on your way to work. You can’t save money that way.
Again, this is where discipline comes in. You have to be disciplined enough to not give in to frivolous purchases.
That’s why you have to have a budget.
Saving Tip #3: Learn how to budget wisely
Budgeting is not just for people living paycheck to paycheck, unlike what other people seem to believe.
Budgeting is for everyone. It doesn’t matter if you’re young or old, rich or poor: you have to budget wisely in order to make sure that you’re not living beyond your means.
See, even if you’re earning $100,000 a year, if you’re spending $120,000 (most likely through the use of credit cards), then it doesn’t matter– you’re going to be in debt sooner or later.
Budgeting is important, especially when you’re living paycheck to paycheck. This is where every single expense should be a necessary purchase. There’s no space for unnecessary purchases here. (But remember, taking care of yourself is necessary too! So don’t hesitate to create a category for self-care.)
Take a look at our list from earlier and spend another 5 minutes allocating your monthly income. Think hard and determine how much each item really needs. You can even automate your budget and expense tracking, regardless of whether you’re using Android or iOS.
If you want to learn more about budgeting wisely, feel free to subscribe to my newsletter and receive a free copy of my eBook, ‘The Dos and Don’t of Wise Budgeting’.
Saving Tip #4: Create other income streams
This is the most important step of them all, at least in my opinion.
When I was in college, I was limited by the allowance that I received from my parents. They were already wise budgeters at this point, and I was part of that wise budget. 🙂 They gave me only what I needed– nothing more, nothing less.
So what did I do? I created other income streams to earn money for myself. Through this, I was able to save money and even invest the leftovers!
There are a lot of ways that you can create more income streams, especially if you have plenty of free time on your hands. Some of the most common, and less hectic, part-time jobs include babysitting, pet-sitting, and house-sitting.
If you don’t want to work for someone else, you can also set up your own small business, or go online to earn money, right in the comforts of your own home!
There are a gazillion ways to create more income streams. Your only limit is yourself.
As you can see, it is possible to save money even when you’re living paycheck to paycheck. You just have to be disciplined enough to put savings first, cut down on expenses, and budget wisely. You also have to be creative enough to create more income streams for yourself.
Always remember, determination and perseverance coupled with hard work will always get you results. Start today, and tomorrow you’ll well be on your path to financial freedom!
Any thoughts on saving money while living paycheck to paycheck? Share your ideas or experiences in the comments down below!