There are many reasons people struggle with saving money. Many factors that we are sometimes are unaware of. In this article we will discuss some of these reasons. 11 reasons you are struggling to save money 1.Cost of living It would be an injustice to talk about saving money without acknowledging the cost of living. The inflation rate keeps rising which means prices are hiking while our income remains the same. High costs of living, such as housing, healthcare, and education, leave little room for saving after meeting essential needs. 2. You don't Budget (or stick to it) A budget is to your finances what water is to your body. You might survive a day or two without it but in a long term you will feel the effects. Without a clear budget, it's challenging to track income, expenses, and savings. Overspending becomes common, making it difficult to save 3. You live beyond your means Spending more than you earn will leave you with nothing to save. Spending more than w...
Living on a low income as a family is difficult in this economy. Covering day-to-day expenses can be difficult when the inflation grows faster than income earned. There are, however, ways you can manage your money effectively.
Assess your Financial situation
Before you can even start saving and effectively managing your money, you need to assess your financial situation and be honest with yourself.
How much you make and how you spend it plays a huge role in obtaining financial freedom.
Learn your own spending patterns and dig deeper to what leads to them. How does your past, present, and future influence your savings and expenditure.
Your state of mind will definitely affect your use of money. Suze Orman discuss this very same principle in her 9 steps to financial freedom.
Learn more about the impact of mental health into finance.
How to budget on a low income
Limited income makes it harder to budget. When you earn a little, oftentimes it will seem like you have more expenses than you income could cover.
What you can do is list all expenses and then classify them into three categories. The needs, wants, and luxuries. Your needs are the basics that you can not survive without. This includes shelter, utilities, transportation, debt, etc.
The wants are those things that you can do without but offer you comfort. Your internet, Netflix, etc. And luxuries are things such as a cup of coffee every morning from your favourite cafe.
You need to then focus on covering your needs and savings first. The truth is you will never be rich if you don't save. Saving money will lead to a more comfortable future. Turn your savings into a bill. Pay it as you would any other bill.
With left of over money you can cover your wants and luxuries.
How to pay off debt on low income
Paying off debt is challenging on any income level. A low income household might struggle more than others. However you have to strategic with your repayment.
You need to create a plan on how you will repay your debt and stick to it. Firstly, make sure to pay off the minimum payments. Never miss a payment. Then dedicate a percentage of your income into paying off your debt.
Do not create new debt. It is easy to fall into a pitfall of debt when you're living on low income. This is due to having little to no money and yet life keeps happening. Emergencies arise whether you have money or not. This leads to people taking out short loans and so forth.
The best way to combat this is to create an emergency fund.
Ways save on monthly expenses
When you live on low income you must be savvy with your spending. Know exactly where your money go and try to reduce your spending as much as you can. Here are some ways you can do that.
Track your spending
Before you can save money on bills, you need to know where your money goes. Tracking your expenses will help you learn your spending habits and where you are overspending.
Get rid off automated subscriptions
Automated subscriptions take your money before you have even evaluated whether you still need them or not. Getting rid of automation will give you time to constantly audit which subscriptions you actually use and which you don't.
For example, if you pay a gym membership fee but only get to go once a week then maybe working out from home is the way to go.
Only buy what you need
Getting into a habit of evaluating your consumption is the best way to save money on bills. When you buy only the things you need, and not what you might need, will save you tons.
Reduce transportation costs
Transportation costs is one of the tricky costs to save on. Mainly because fuel price is always rising and you need transportation for almost everything thing. To get to work, church, see family and friends, and just about anything. Finding ways to save on transportation is key.
You can use lift clubs or carpooling for transportation to work which is cheaper than paying for fuel on your own. You can also use public transport which is also cheaper.
Stop buying clothes
Challenge yourself to not buy clothes for the next two years. Only wear what you already own and fix your clothes when needed. This will help you save money while you also learn to appreciate what you have and get value for your money.
Save on groceries
You can shop at cheaper grocery stores and use their reward program. Also make a list before going for shopping so you can buy only what you need. Use generic/store brand. If it offers the same nutritional value, then why spend more than needed.
How to increase monthly income
Earning passive income is a great way to increase your monthly income. You can rent out parts of your home to earn rent income.
You can also earn income from a side hustle. Generating more income will afford you more luxuries and a chance to grow your savings.