Many people feel stuck in the cycle of going paycheck to paycheck. Having a low income, high expenses, and previous financial missteps make it feel impossible to get ahead. But it's possible to start saving money. It would be best if you had a plan to make it happen.
The Importance of Saving Money
Why save money? Bankrate's survey found that only 40 percent of Americans could say an unexpected expense of $1,000 out of their savings. So if an emergency room visit or car breakdown happened, more than a third of respondents would have to borrow the money from friends or put it on a credit card. That option puts one into a deeper financial problem where they have to pay interest rates on that borrowed amount.
The recent COVID-19 pandemic has put the importance of saving money to a new level. Many industries have been hit hard by this unexpected economic downturn, resulting in layoffs, reduced hours, or uncertainty for many employees. Answering the question of why save money has led to increased saving by many Americans.
Ways to Save Money on a Tight Budget
Even though you can only afford to put away a small sum, it’s still important to save for the future. There are many ways to save money on a tight budget if you work to find them.
Are you aware of how much income you’re bringing in and what your monthly expenses look like? Maybe you have a question about how to save money from monthly salary? Many of us have a general idea, but you have to down to the details if you are serious about saving money.
Creating a monthly budget starts with looking at your paychecks over the last several months and expenses. You will likely be surprised how much you’re spending on certain things. Start budgeting by determining what your budget should look like based on this information for the next month. Cut down on expenses like eating out, subscribing to cable, and shop for groceries at less expensive options instead. Saving $10 to $20 per category will make a nice start to saving.
How to Save Money From Monthly Salary
Managing salary efficiently is another way to save money. Automate your savings by having a little amount put into a separate savings account each time you get paid. Increase your income sources by taking up a side hustle.
That extra source of income can be used to pay down debt or go towards savings. That’s why side gigs are such a great idea on how to save money from monthly salary. It's extra money that you didn’t have before that can be used to reach your financial goals.
Why Having Emergency Funds Is Necessary
Starting an emergency savings account will help weather unexpected financial events. When you’re already on a tight budget, a financial setup can inhibit any progress you have been making. Having emergency funds to cover these costs can keep you on target to meet your other financial goals.
Setting up emergency savings should be among your first financial goals if you don’t have one already. Start small by focusing on saving one month’s salary. Keep increasing your goal until you have saved several months of income. You’ll be glad you have it the next time you have to pay for car repairs.
Tips to Save Money
If you have emergency savings, keeping a budget, and managing salary but still want to find ways to save money, read on. These tips to save money should help maximize your savings capability.
Cut back on the big expenses. Consider getting roommates to lower your living costs. Or find a less expensive place to live. Could you move within walking distance or nearby public transportation and sell off your car? Look at how all the big items in your budget and figure out ways to reduce them.
Pay off your debt. Credit cards with high-interest can hit your wallet hard. With a double-digit interest rate on most credit cards, the interest is expensive if you’re carrying a balance. Focus on paying off your credit cards quickly. That money can then be freed up to do more for you.
Shop smart for groceries - Make a weekly list before heading to the grocery. Only buying the necessary things are also the best tips to save money. Choose less expensive grocery options that still offer great food at lower prices. Look at the weekly specials and plan your meals around them. If you’re eating out a lot when you’re working, brown bag instead. You could still enjoy a Friday lunch out with your co-workers as a treat.
About the Author
Anjana Paul is a banking professional who is passionate about helping others make better choices when it comes to money. In her spare time she is a freelance writer with years of expertise in the financial industry. She primarily writes about topics such as student loans, building credit, budgeting, retirement and other personal finance topics.