Did you know that about 56 percent of Americans are unable to cover an emergency expense of $1,000?
This statistic is frightening to know especially when many of us have expenses that exceed $1,000 or can easily add up to $1,000.
All it takes is for something to go wrong, and then boom—the money we didn’t have saved is gone.
The great thing is you can start saving money fast today, even on a low income.
How Much Money Should I Have Saved?
You can start with $1,000 to cover emergency expenses such as car repairs. Then, work your way up to about 3-6 months’ worth of expenses, which experts recommend.
From there, you decide whether to keep adding to your savings or begin investing, as investing grows your money further than saving could.
I was able to save $10,000 within 8 months.
That was the most money I’ve ever saved so far and so quickly on a low income.
Saving money fast is achievable no matter the income level.
Here are five steps you can do now to get your savings going.
How To Save Money Fast On A Low Income
Have A Realistic Savings Plan.
Review your expenses and income to understand what you’re working with.
The amount everyone can save in a specific timeframe will differ because of our unique expenses per person.
See where you can cut costs or if you have any extra money you didn’t know you had.
As you review your expenses and income, you can create a specific savings goal achievable within a timeframe that allows for flexibility within your budget.
Being realistic and planning what you can save allows you to save without becoming overwhelmed.
A financial plan involves a budget, which gives your money a job, and a detailed savings plan, which helps you keep track of your financial goals.
Saving money fast on a low income is about how much money you can keep, but with no organized system, your money has no job and will leave quickly through splurges and unexpected expenses.
Pay Yourself First.
Every time you receive your paycheck, pay yourself first by deducting a set amount towards your savings goal.
After reviewing your budget, your mind recognizes that your essential expenses have set numbers or ranges. Your mind then ensures you set aside enough money for those important expenses.
When you pay yourself first, you treat yourself as one of your essential expenses. You put aside your set savings amount each pay period to reach your savings goal.
Whatever is left over after the money for your expenses (now including yourself) is what you have to spend.
This method prioritizes your savings goal while ensuring money is set aside for all the other important bills.
Hard To Save? Make More Money.
If you find it hard to save with your income, it’s time to make more money.
Making more money has many great benefits, two of which are that it allows you to have extra disposable income, which can help you save money faster and pay off other expenses.
There are many ways to earn extra money; try to find one that works best for your current lifestyle.
Don’t Touch It.
I know this may sound obvious but it’s true. Try to refrain from spending your savings as you save for your goal.
Split up your money between different accounts, if possible, for various purposes.
For example, have an account for daily spending, another account with bills money, and your long-term savings in another account. That way, you do not dip into long-term savings to spend on bills or buy groceries.
Some banks, such as Capital One, allow you to have multiple accounts free of charge, or you can use different budgeting methods, such as cash envelopes, to separate your money.
If it’s hard to resist dipping into your savings, open a high-yield savings account to stash the money away without easy access.
Ensure this account is not linked to a debit or credit card, as this makes it harder to access the money for everyday use.
The only way to access the money is through transfers, which will take a couple of days to a week to enter your spending account. Hopefully, you won’t need to use the money immediately by then.
Put Money Away Consistently.
With consistent contributions comes consistent growth; this goes for all investments.
Consistency is pivotal if you want to see your savings grow. If you find it hard to be consistent, try to make saving money fun.
A great way to do this is by my personal favorite which are savings trackers. There are a wide range to choose from and they keep you accountable with your savings goal.
The Benefits of Building A Savings Stash
The benefits of having savings are a plethora, but a few are:
- To have money to help out in case of emergencies or unexpected expenses that may come about, also called an emergency savings
- To achieve life goals goals such as buying a home, funding your child’s education, prepare for big vacations, retirement and more
- It provides you with flexibility and stability with work. Your savings are there if you need to take time off for medical reasons or a sabbatical.
Ultimately, personal finance will always be individual, and saving money in a way that works for you is important.
Saving money fast on a low income involves being realistic and specific about your savings goals, paying yourself first, making more money where you can, and making consistent savings contributions.
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