Saving On A Small Income
The amount you save has little to do with how much you make. According to a study of saving behavior by Harvard, more than 75% of respondents said they knew that their savings were insufficient, especially for retirement. The 7,700 households they studied were divided into 10 income groups and researchers found that the top 10% of the lowest income group had saved more than $150,000 per household while the middle-income individuals had only $45,000 in assets on average.
The most significant savings factor was the saver’s state of mind. Before you can start saving, you have to stop the spending and stop believing you need all the stuff you’ve been spending money on. Sure you want it, but that is no excuse for buying it. This way you do not end up with items; you end up with cash. Accept frugality and become a closet cheapskate by learning from your frugal friends.
There are a thousand ways to live on less without making your life miserable. Direct deposit is a great way to save small amounts at regular intervals because the money is deposited into your IRA, 401(k), savings, or money market account automatically after you have filled out the simple forms required to set up the deposit. Money games can also be effective for saving. Whenever you get a $5 bill, put it aside in a special place for saving. You could also do this with one-dollar bills, with quarters, or all your spare change. Every couple of months, deposit the money you have saved into your savings account and watch the balance grow.
Another way to save on a small income is saving any windfall payments. Any income-tax refunds, holiday money gifts, overpayment checks or bonuses should be saved in your savings account to be used for emergencies or to meet your financial goals. In most cases, this money is unexpected and would not affect your budget if it is removed from the amount available for spending. Do not overpay your taxes, which is the same as lending money to the government interest-free. Go through your tax return and see if you can plan your withholding to have the smallest refund or payment owed possible.
By carefully examining your spending, you may be able to come up with hundreds of additional ways to save money without negatively affecting your quality of life. The more that you are able to save today, the brighter your financial future will be and your risk of falling into unmanageable debt will virtually disappear.
