How to Save Money Fast on a Low Income
Starting to save is never easy, but putting money away in the bank each month is particularly challenging if you’re just starting out or have limited means. Make the cash you are able to save count for more with these tips on how to save money fast on a low income.
PUT IT AWAY: SAVE MONEY FAST ON A LOW INCOME
Saving money can be hard if you have a limited income because there are so many more demands on every dollar you try to put away. It can be hard to set cash aside long enough for your savings to begin to grow. Here we take a look at why learning to save is so important and consider some common sense strategies to help you put away more money faster.
We’ll also look at some smart ways to help you grow the money you do put away, so you can begin to protect yourself from life’s uncertainties and start to plan for the future.
WHY IS SAVING IMPORTANT?
Saving is critical if you want to achieve financial independence. Without savings, you will always be vulnerable to unexpected expenses and unforeseen events that can set you back for months or even years. As a result, you will never be able to plan for a more secure future or aim for financial dreams like owning a home or enjoying a secure retirement.
Owning a home or retiring can seem impossibly far off or simply unattainable when you are younger. Begin by focusing on the smaller goals, like setting aside enough “working capital” so you are no longer living paycheck-to-paycheck, starting an emergency fund, and getting money into an interest-bearing account where it can grow.
STRATEGIES TO SAVE MONEY
Learning to save is a good habit that will grow with you. Start small, even if it is literally just a couple of dollars a month. Saving what you can is a positive lifelong practice no matter how much you earn. Here’s how to maximize what you save and make your savings grow faster.
CREATE A BUDGET
Making a monthly budget and sticking to it is essential if you are to save money at all. A budget will allow you to establish how much money you have available, where it is going, and how you can best allocate it so you can start saving.
If needed, get help from a friend or family member to create your budget. Make it part of your routine to check on it regularly—daily when you are first starting and at then at least weekly so you can stay on track.
SAVINGS FIRST
When creating your budget, adopt a “savings first” approach. Prioritize setting some money aside before doing anything else. Trim your monthly expenses until you have something to put away and, even if you have debts to pay, make sure you are saving something for yourself. This way, you’ll be able to see how your money grows and you can envision a better future.
A good way to do this, once you have a budget in place, is to set up an automatic debit order with your bank or credit union that will move 5%, 10%, or 20% of your paycheck (or whatever you can afford) from your checking account into your savings account as soon as you are paid. That way the money is separate from your day-to-day spending and can begin to grow.
LIMIT DEBT
That said, eliminating your existing debts and avoiding more debt is essential if you are going to maximize your savings potential. As you make your budget you should look to:
Pay off high-interest debt: Credit card balances, outstanding store credit, and lengthy car loans are all sources of high-interest debt that can slow down your savings for months or years to come. Pay off these debts now or consider consolidating them into a low-interest personal loan.
Limit future borrowing: Just as important, do everything you can to avoid further debt. Borrowing more means you will be paying more interest in the future, rather than earning it on your savings.
Avoid payday loans or income advances: If you are relying on payday loans to make it through the month you are either not budgeting correctly or are not in control of your spending. Until you do so, you will never be able to free up the cash you need to start saving for yourself.
SPEND SMARTER
Every cent less that you spend on your regular monthly expenses is money that you can save. Look for cheaper ways to buy groceries, household necessities, clothing, and personal supplies. For example:
While our area has plenty of options for organic and healthy foods, consider buying groceries at Greater Goods or Price Chopper, which often have less expensive organic options of their own.
Buy clothing standards like t-shirts or stockings at Big Lots and wait for sales or end-of-season mark-downs at stores. Check out local thrift and vintage clothing stores for standout jackets and accessories to transform your look for next-to-nothing.
LIMIT DISCRETIONARY SPENDING
Be honest with yourself about what is truly a necessity and what is not. For example:
Streaming services and app subscriptions add up fast. If you must have a streaming service, choose one at a time even if you have to wait to watch the latest season of your favorite show. Alternatively, check out your local public library. Many offer extensive free audiobook and ebook downloads and sometimes even streaming services.
Nights out on the town are fun but expensive. Limiting your dining out can be an effective way to save money fast. Or, free up your finances by taking advantage of free local attractions, like the many riverside trails in Binghampton’s Otsiningo and Confluence parks and the Two Rivers Greenway rail-to-trail project.
START AN EMERGENCY FUND
Before you can start saving in earnest, you need to have a little money in reserve to protect you from unforeseen events, like a job loss or unexpected home repairs.
Ideally, experts say you should have anywhere from 3-6 months' worth of income in your emergency fund. In reality, anything you can put away for an emergency is money well-saved. Keep this cash separate from your day-to-day expenses but easily accessible in case you need it.
REWARD SMALL VICTORIES
Savings is a long game, so set achievable goals to keep you going. Replace your daily on-the-go latte with a weekly sit-down cappuccino at Strange Brew Café or your frequent UberEats deliveries with a monthly brunch with a friend at Park Diner.
REACH YOUR SAVINGS GOALS FASTER
With your budget in place, your debt on the decline, and your spending under control, it’s time to think about where to keep your money to help you reach your savings goals faster.
While a regular checking and savings account covers your day-to-day budgeting and spending needs, in order to grow your money over time you need to establish a long-term relationship with a financial institution that understands your current situation and where you’d like to be in the future.
Of course, it must also have the products you need to turn your hard-earned savings into assets you can bank on.
CHANGE YOUR INSTITUTION
Believe it or not, your neighborhood credit union is as much a part of your local community as your favorite diner, bookshop, or vintage thrift store. And when it comes to savings, local credit unions are often set up better than big banks to get you where you are going faster with lower fees, better interest rates, and friendlier, more personal service.
GHS Federal Credit Union has been helping locals in Broome, Chenango, and Tioga counties achieve their financial goals for more than 80 years with sensible, affordable products designed to help you save more, faster.
OPEN A MONEY MARKET ACCOUNT
If you’re ready to start setting aside a few dollars every month but still need to keep it handy, or you’re looking for a good place to build your emergency fund, a GHS FCU Money Market Account is a convenient choice.
A money market account allows you to set aside cash in a separate deposit account that earns significantly higher interest, but gives instant access to your savings up to 6 times a month via check writing or ATM withdrawals. Your money is also federally insured in the same way as your checking or regular savings account.
STEP UP TO A SHARE CERTIFICATE
When you’ve built up a small nest egg that you’re able to do without for at least a few months, a GHS FCU Share Certificate offers a safe, flexible, and predictable way to grow your money. It’s a great way to keep your hard-earned money safely tucked away—especially if you’re in the habit of dipping into your savings prematurely.
Invest your money for a fixed period in any GHS share certificate and you’ll know up front exactly how much money you’ll get back and when—guaranteed. Your money will earn strong, market-related interest rates, while a prepayment penalty will reduce the temptation to dip into the good stuff before the time is right.
Best of all, GHS share certificates are secured up to a value of $250,000 by the NCUA, making them just as safe as any GHS checking, savings, or money market account.
BUILD FOR THE LONG TERM WITH GHS FEDERAL CREDIT UNION
At GHS Federal Credit Union, we build for the long term. If you ask around, you’ll find many of your friends and neighbors have had financial relationships with us for years. They appreciate our local experience, expert services, and competitive products.
When it comes to effective savings, you need a partner that will stick with you. At GHS, we help our members stay the course today and build for a better tomorrow with sensible products like savings and money market accounts as well as share certificates.
All GHS share certificates offer:
Competitive, market-driven rates
Flexible terms and fixed dividends
Predictable, guaranteed earnings
Optional automatic renewal upon maturity, so you can keep on earning
It’s a great time to take advantage of the guaranteed returns and risk-free returns of a GHC share certificate. Contact us today about opening an account, or click below to learn how our share certificates can set you up for long-term savings success.