Saving money when you live paycheck to paycheck can be an enormous challenge. However, even though you are making enough to cover your bills and slowly pay off of your credit card debt, you are one catastrophe away from having your financial situation spiral out of control. It is best to have some money in savings in order to make sure you have a buffer when your car breaks down or when you need to go to the emergency room. Here are some ways you can start to save when you feel like you don't have any wiggle room.
1. Put away your ones.
When you get paid, whether by direct deposit or paycheck, siphon off the "odd" numbers toward your savings account. For example, if you get paid $657, take those seven dollars into savings. Whenever you move any money into your bank account, keep this same habit. You'll be amazed to see how quickly your nest egg grows when you "save your ones"-- the amount that the teller might have given you in one dollar bills if you were paid in cash.
2. Stop paying fees.
You know when you're out and about, and need cash? A $2.50 service charge at the ATM adds up over time. If you need cash, plan ahead and take some cash out from the bank when you make a deposit, or choose to come back at another time in order to make your purchase.
Also, there are some sneaky fees, such as fees that come from paying your rent late, interest for a late cell-phone payment, or fees from overdue library books. If your current budget is preventing you from meeting your obligations on time, meet with a financial adviser so that you can come up with a pan that helps you to save money you might be losing.
3. Stop the subscriptions.
Did you sign up for a free trial of a movie streaming website or game hub? These usually start monthly withdrawal from your bank account after the month trial is over. Be your own financial advisor, go without, and use this money to build up a savings account instead. Even $10 a month is better than nothing.
4. Snowball your debt and save at the same time.
You may actually be making enough to put money in savings, but you're spending all your extra money to pay off student loans or credit cards. This is good, but you should still be working on getting some money in savings.
The reason? Well, if you do meet an emergency and don't have any money to pay for it, you'll need to put it on your credit card, making getting out of debt even more difficult, and leaving you broke for when the next unexpected expense arises.
Snowball your debt by paying off small debts first, and then, when they are paid off, putting some of that money toward a larger debt, and half into savings. Once the larger debt is paid, do the same thing with the next largest. The amount that goes toward your debts will grow, as will the amount you save. When you have a sizable emergency fund (usually about $1000 dollars), you can reduce the amount you save and increase how much goes toward debt.
5. Save all unexpected income.
Did you get birthday money from an aunt with a crisp $20 bill inside? Instead of spending in on a belated birthday trip to a favorite restaurant, out it directly into savings. Other sources of unexpected income might include:
- selling some of your possessions
- working a side gig, like babysitting for the neighbor or teaching some music lessons
- rebates from credit card purchases
These tips can help you to save money, so that your debt does not keep spiraling out of control. You can save, even if you life paycheck to paycheck, and feel the financial freedom that saving money brings.
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