SAVING 101 FOR NEW INCOME EARNERS
Most of us want to save money so we can build wealth and plan for the future. We have goals we want to reach or things we want to buy, like a dream home. However, this can seem impossible when you’re surviving on low income or you’re a new income earner.
According to research many Kenyan households are living paycheck to paycheck. When money is tight, saving any amount can be the last priority on your list. You’re just trying to get by.
So how do you save more money when you’re making minimum wage? How can you reach your financial goals on a low income?
When it comes to finances, it’s important not only think about the now but also the future. Even if you’re earning a minimum wage, you can still save little by little. Here’s how:
Tackle High-Interest Debt First
In order to start saving more, you have to tackle your debt head-on. Specifically high-interest rate from personal loans, or credit cards, because they force you to pay outrageous fees and interest charges.
When paying off debt, you need an attainable, yet challenging plan to pay it off. Start by prioritizing your debt so you’re paying off the ones with highest interest first.
Cut Down Your Biggest Expenses
Trying to save money when you have low income can be very difficult. Sometimes it feels impossible to cut down even a shilling or two every month.
Aside from the usual money saving ideas, like cooking meals at home and canceling your Pay TV bill, what more you can do? Instead of trying to cut back your small expenses, focus on the larger ones so you can make more of a significant impact.
For most people, housing costs tend to be biggest part of their expenses. If you’re renting, consider downsizing to a smaller home or living with roommates.
If you own your home, take at look at whether or not refinancing your mortgage for a lower rate would be beneficial. You can also rent out a room or parking spot for additional income.
Keep Your Budget Lean
To save more, you have to take control of how much you spend. Choose the categories you want to indulge in, and keep the rest of your budget as lean as possible. You’ll have to make sacrifices but it’s not impossible. Just learn to spend in moderation.
Start a Side Hustle
If you can’t cut costs anymore than you already have, consider diversifying your income by starting a side hustle to earn extra money. Aside from your full-time job, you can get a job on the side to provide another income source.
Many side hustles can be done right from your own home in your spare time. Think about what you’re good at doing, what kind of hobbies that can earn money, or what you already enjoy that can be turned into a side job.
Popular side hustles include freelance writing, data entry, and graphic design. Saving money when you make minimum wage is certainly hard but can be done. It’s important to understand what your priorities are, and create a values-based spending and saving plan.
Once you do, you’ll be smarter and savvier with how you spend money and ultimately, be able to save more.
What’s another way to save more money while earning minimum wage? What are some tactics you’ve tried in the past when your income was low? At Sumac Microfinance Bank, we’d love to hear from you and to get your comments on how we can help you save better.