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How to save money when your income is low?

How to save money when income is low?

Photo courtesy Susan Bughdaryan on Unsplash.

A person should save at least 20% of his salary every month. 50% of the salary for living expenditures, 30% for lifestyle expenses, and 20% for savings is a good rule of thumb for a monthly salary. This is the minimum amount a person should save and anything above that is a good saving where you can save enough for your retirement. But people with low salaries may find it difficult to save money after accounting for lifestyle and other mandatory expenses. There is rent to be paid, transportation costs to be accounted for, and other expenses for a normal living. There is also peer pressure where people try to show that they are successful in life by maintaining a high standard of living.

Even when you are getting a low salary and after taking inflation into account you can try to save money by following the following steps-

1) Prepare a budget. This way you will know the amount of money that is coming in after the deductions and taxes. Every month monitor your expenses; where the money is going, on the discretionary and the non-discretionary expenses. After a few months, you will know what the mandatory requirements are and where you can trim down on the unnecessary expenses.

2) Some of the debts you would have incurred would have a high-interest outgo. Tackle the high-cost debts first like credit cards and personal loans and try to retire these costly debts. Doing this would save you money.

3) Save on housing costs. In metro cities, accommodation is very costly. It can form one of the major spendings from a personal budget. If your family size is small you can consider cutting down on the size of the apartment which can save you money. The other option is to shift to an apartment of the same size in the suburbs which would definitely be cheaper. If you are not married you can consider sharing an apartment or moving to a coliving space where the rent would definitely be lower.

4) Make investments first. Once you receive your salary instead of making investments at the end of each month invest at the beginning of the month. This way you will be compelled to save money. You can automate the transfer from your salary account to a mutual fund systematic investment plan.

5) Eat out less in restaurants. People eat in restaurants for different reasons. It may be for social reasons, other times it could be for entertainment, and yet other times it could be for convenience when you don’t want to cook at home. According to a survey Americans eat out 4.9 times a week.

There are the food delivery platforms like Swiggy and Zomato where you can order food and have it in your house if you don’t wish to go out. But the restaurant food and the food delivered at home are definitely costlier than home-cooked food. In the beginning, try cutting going to restaurants and ordering food from outside by once every month and slowly try to reduce the outside food even less. The food cooked at home is much healthier and can save you a lot of money.

Cook food for your office lunch and carry it from home. This would save you extra money by not ordering from outside.

 6) When you purchase a car it comes with many expenses associated with it like upkeep and maintenance. There are other costs like renewing the annual insurance. Check for the insurance online and compare the costs. This would save you a few thousand rupees. Learn some DIY car repairs that can save you some extra money.

7) When you live far away from your place of work using a public transportation system would help in saving fuel costs as it works out much cheaper than using your car. An alternative could be using a carpool and sharing the fuel costs with your friends who are traveling to the same place.

8) There is a list of paid television channels offered by the DTH operators. You need not subscribe to most of the paid channels. There are hundreds of paid channels and you would not be watching most of them. Select your favorite ones which you watch the most. This way you will be able to save money by not subscribing to the channels that you don’t view.

9) There are ways to get creative about other entertainment options. You can join your local library where you can borrow books. Keep an eye out for free fairs and other outdoor concerts in your area.

10) Saving money on groceries is possible when you buy the food grains and groceries in bulk. Shop at the wholesale shops or look for the best discount online.

11) When making a purchase online search for coupons, discounts, and cashback deals. Cashback websites are becoming popular nowadays to save money on online shopping. The websites not only offer cashback but also discount coupons for e-commerce websites. The best sites for earning cashback and discounts are; CouponDuniya, GoPaisa, CashKaro, TopCashback, and Pennyful.

12) Try to use generic brands. A generic brand is a consumer product that lacks a recognized name or logo. This is because they are not advertised heavily, the products are cheaper. They are packed in a simple way. Generic products are common in the food and pharmaceutical industry. Many people believe that the generic brands are inferior in quality but this is not the case and the generic brands can be comparable to the named brands. When you visit a supermarket you would find products of the supermarket next to the branded products and they are of good quality.

13) As soon as you get a job start saving for retirement. The employee provident fund contribution is 12% each both from the employer and the employee side. The small investments in the employee provident fund add up to a big amount by the time of retirement.

14) Every time you get a bonus instead of just spending on white goods and entertainment look for options where you can invest the money to get good returns. Invest in mutual funds where the returns can be good over a period of five years.

15) Whenever possible withdraw money from your bank’s ATM. If you withdraw money from another bank’s ATM it would be charged after 3 free withdrawals.

16) Put your bills on auto-pay. This will ensure that the bills are paid on time and prevent late charges.

17) The habits like smoking and excessive drinking are a drain on your budget. Try to keep away from these habits.

18) There are many festivals and celebrations in India and rather than trying to spend excessive money on gifts try to make your own cards or purchase gift from the wholesale market.

Even when your salary is low it is possible to save money by being frugal and keeping away from peer pressure. Following other people’s costly habits not only increases your stress but also makes you prone to spending more. Always plan and spend within your budget and try to reach life’s goals and that would lead you to the path of success.

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