The question on the tip of everyone’s tongue, especially during the current state of affairs where pinching pennies has become an important facet of every single-income and low-income household is: how to save money from your salary without sacrificing too much?
It might be quite difficult when you start since adjusting the lifestyle that you’re used to for the sake of saving money is likely to be challenging (and sometimes painful).
But, if you’re serious about wanting to get out of financial woes and have some money stored up in your savings account so you can treat yourself and your family once in a while, then it’s time to tighten the belt and start restructuring your personal finances.
Basically, what I’m saying is that if you want to start saving money, you’re going to have to review your budget and patch up any holes that your hard-earned money is draining out of.
1. Cutting the budget down
If you want to know how to save money from salary, start with your current personal budget. Set aside some time to go through every payment that you make in a month and properly categorize expenses.
Once you have it all neat and organized, identify the necessary expenses like living expenses, utility bills, debt payments and any other extras.
After that is done, take a look at your utilities first and see where you can save.
The light doesn’t have to be on all the time, everyone’s cell phone time can definitely be cut a bit shorter and you can probably shorten baths to quick showers. In the same vein, the water doesn’t have to be running when you’re brushing your teeth either.
As far as living expenses go, try swapping over to public transportation. Get more out of your clothes by taking care of them and not buying a new pair of jeans every month. These may seem like small-time budget savings, but trust me, they’ll pile up over time.
That said, one of the biggest costs in this area is usually food. If your current financial situation can’t keep up with all of your monthly payments, it might be time to ditch the restaurants and takeaways and rather stick to making your own.
Yes, it is a time investment, but one that’ll be quite a big budget saver in the long run.
The trick to saving money when it comes to home-made food is meal planning. Browse available coupons and upcoming sales at your local grocery stores and then construct your meal plan accordingly.
It might not be as exciting as choosing what to eat on a daily basis, but it’s one of life’s best budgeting tricks.
As for the extras, these usually cover your Netflix or Hulu subscription and any other luxuries, all of which are viable options for the chopping block as much as you may dread it.
The main goal here is to look for areas where you can cut corners with your budget and all of the above categories have some hidden expenses that leech your money away.
Money that you could be putting into a savings account that you can set aside as an emergency fund in case you need it for an unforeseen medical problem or to tide yourself over if you end up out of a job.
Your debt payments, on the other hand, should be the only things that you don’t tweak and should, in fact, be prioritized since they’re your (somewhat) fixed expenses.
2. Pay your debts on time
If you keep up with your payments on a routine basis, your interest rates on them will start decreasing which ultimately means you’ll have to pay up less in the future, saving you a good amount of money in the process.
If paying all of them at the same time ends up being too much of an expense, target the ones with the highest interest rate and aim to pay them off first because they’re the ones that cost you the most money.
The most likely culprits here are:
• Student loans
• Credit card debt
• Car payments
At the end of the day, keeping up with this is sure to relieve much of the financial pressure you might be feeling and you’ll be able to relax a bit.
This is however only a viable strategy if you can cut off at least 2% of the existing interest rate on your total debt payments and only if you can make the down payments on your new loan.
That’s because meeting a down payment initially will potentially lead to a lower interest rate on the new debt maximizing the chances of your refinance strategy being a success.
3. Open a savings account
Surprisingly, a lot of people ignore this when trying to figure out how to save money from salary. Having a savings account can help stop you from splurging your paycheck on some momentary temptation.
Believe me when I say that looking at a lower amount in your checking account will make you think twice about impulse buying something on Amazon or similar.
A simple trick of the mind, but one that’s rather effective.
You can set this up by either doing it manually every time you receive your salary or by setting up a direct deposit from your employer so the paycheck is properly portioned off (and you can’t change your mind!).
Alternatively, you can ask your bank to automate the transfer by indicating the desired amount and date of your payday.
4. Take a side hustle on
The two simplest ways of solving a looming financial crisis is to either spend less or earn more and trick number four refers to the latter.
If your current position doesn’t allow for any overtime, take a side hustle to earn some extra monthly income, part-time stuff that you can do whenever you have free time just so you can have a bit more extra money available to you.
After all, time is money in every sense of the word, and if you’re willing to turn yours into a bit of profit, this is arguably the best way to do it.
It’ll help support your monetary troubles by pushing you a bit further ahead and assist with monthly expenses which will help you meet your financial goals more easily.
5. Consistency is key
As solid as all of this advice may be, it’s only as solid as your persistence.
There aren’t really many simple ways to instantly save thousands of dollars.
It’s a long road filled with plenty of bumps and setbacks that will challenge you throughout your journey.
Those who give up early usually don’t end up seeing the fruits of their labors and in mere moments, they can undo all of the hard work that they put in.
Spending money is easy, but saving money is a real challenge. That’s why it takes a dedicated mind to push oneself ahead of the curve and out of the red into the deep blue ocean or net positive gain.
The best way to train yourself to keep going at it is to not have one long-term goal but to add a few short-term ones as well so you can feel that sense of accomplishment, that slight dose of dopamine that’ll serve as fuel to propel you forward.
Set up several finance and savings goals that you want to reach.
They’ll be your steps along the ladder to reach that long-term goal and will give you that desperately needed motivation to keep going through with your savings plan.
To answer the question of how to save money from your salary? posed earlier, it takes a proper mindset, one that’s able to keep your bank accounts in check and not spend your hard-earned money based on impulse.
Try to start off slow with the luxury cuts so you don’t feel their loss too harshly. Don’t rush, take it one step at a time and I can guarantee you that you’ll come out of it with a blooming savings account and enough money to cover any unexpected expenses!