Most people want to save money for emergencies and the future. They know they only have themselves to fall back on. Still, various surveys found out that nearly 70% of Americans have less than $1,000 saved up in bank accounts. Another study said that about 78% of Americans are living paycheck to paycheck. These numbers will get worse because of the impact of the coronavirus pandemic. But don’t lose hope yet. If anything, this pandemic should have taught us how important it is to prepare for life’s sudden changes.
Get Your Finances in Order
Have you always been cash-strapped? Determine the reasons why you’ve always been scraping the bottom of the barrel. Businesses that spend on holiday light installation do so because they will profit from it. How about you? What are you spending on that has no real value? It’s okay to spend your money as long as the things you spend it on are going to benefit you in the future. Otherwise, cut these leisurely things off until such time that you have the extra money for it.
Keep Housing Costs at Bay
The general rule is to keep housing expenses below 35% of your net income. Do not subscribe, buy, and rent more than you can afford. Keep your expenses down to the bare minimum.
For renters, find cheaper options or get a job as the property manager so you’ll get a free apartment. For homeowners, consume power and water more efficiently. You can also rent out a room in your house. Maintaining your house in good condition will also prevent costly repairs in the future.
Tackle Your Debts
Why is your take-home pay way below your gross income? Is it because you’re paying off debts? While you can’t cut your credit cards, try not to use them unless necessary. Start paying off high-interest debts, too. Personal credit and credit cards have high-interest charges and annual fees. You can also consider consolidating your debts. You’ll pay a higher amount, but it also means finishing them off earlier or at the same time.
Don’t Take the YOLO Lifestyle Too Seriously
While it is true that you only live once (YOLO), chances are high that you’re going to live until the ripe old age of 90. If you’re paying off debts until you’re 75 years old, that will dampen your YOLO lifestyle. Yes, it’s fun to see the world, but you have to stop traveling too much if you can’t afford it. Find out a way to travel and not accrue any debt.
Buy Only What’s Necessary
What’s necessary is not what others have. If your neighbor has a brand-new Audi, that is not necessary for you. Your service provider offering to upgrade your smartphone is not a necessary expense. It is tempting to buy a new phone or car. However, do this only when your savings are on a comfortable level. Don’t succumb to peer pressure.
Even with a low income, saving money is possible. You have to be creative in how you’re going to go about it. You also have to sacrifice leisure activities and purchases willingly.