3 Min Read
Establishing some savings is an important step in setting yourself up for financial success in your future. But did you know there are more ways to save than just stashing your funds away in a savings account? In fact, once you calculate how much you should save a month, there are several ways to make your money work for you in a better way and to make sure you have funds for your Golden Years.
Best Ways to Save Money Every Month With Low Income
1. Find Money to Save in Your Paycheck
The first step in saving money is to really find where your extra funds lie in your financial picture. A simple way to get started in this process is to track your spending for two to three months. This will let you know exactly what you're spending your money on and how much money you have leftover at the end of it all. Additionally, you'll be able to see where you may be able to cut out spending a bit by having all of your transactions right in front of you.
With Monorail, you can set goals that match your financial picture. Once you set your budget and find your extra funds, you can use the app to split up your deposits to go toward several goals whether that's investing or saving.
2. Reduce Your Debt Payments
While spending money on your debt may seem counterintuitive to save money from your paycheck, this is more of a long-term option. If you put more money toward your debt payments (credit cards, mortgage, student loans, etc.), you will ultimately save on interest and potentially pay off your debts faster.
Once you pay off your debt, you can contribute what would have been your monthly payment to your savings account instead. If you are able to, opt for making bi-weekly payments instead of one monthly payment on your debt accounts. Since interest is typically compound, so this will decrease the interest owed more over time and remember always to pay more than your minimum payment when you can.
3. Automate Savings
Check with your financial institutions on their options to automatically transfer funds from your checking to your savings. Most banks and credit unions offer some type of service where you do not have to transfer the funds yourself. The benefit of having an automatic transfer set up is so that when you have your paycheck deposited, the funds are put into your savings without even giving you the chance to spend it or reduce the amount you want to put in your savings.
If you want to go one step further, check with your employer if you can have funds directly deposited into multiple accounts. If you're able to do this, you can have a portion of your paycheck placed directly in a savings account rather than having to set up an automatic transfer or have it in your checking at all.
Having savings goals in mind can ultimately propel you to financial success. Once you've figured out how you spend your money, think about what you actually want your money to go toward. Do you want to save for a downpayment on a home? Pay off those student loans faster? Or save for that vacation you've always wanted? Understanding where your priorities lie can get you on track. Keep in mind that financial goals don't always have to be big like a home downpayment. They can be goals like saving $100 a month for an emergency fund or paying $100 over the minimum payment on your credit card. These priorities and goals should be attainable to you that align with long and short-term achievements for you.
5. 50/30/20 Rule
If you're unsure how to split up your income, look no further than the 50/30/20 rule. This simple savings method means you'll save 50% of your after-tax income for needs like housing payments, bills, groceries, and debt payments, 30% for wants like extracurricular activities such as shopping and dining out, and 20% toward savings like a 401(k) or savings account. This rule can go hand-in-hand with figuring out where the extra funds are in your paycheck and budget.
6. Use Your Employee Benefits
A great area to explore savings options is with your employer. Many employers offer some type of savings or retirement benefit that may even include a dollar match up to a certain percent. A common benefit that is offered is a 401(k). Check with your employer to see if they offer this and especially check if they match your contributions. It's never too early to start saving for retirement, and you'll be set up for a more comfortable financial situation when your golden years roll around.
The Bottom Line
Saving money is going to be unique to your own financial journey. No matter how big or small your savings contribution is, the important thing is that you are taking that step to set yourself up for financial success.
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