Do you feel like it's nearly impossible to save money based on your current
income well saving money is much easier when you're making big bucks it is
entirely possible to save money on a low income and in this video i'm gonna be
sharing with you five easy ways to exponentially increase how much you save
every month no matter how much money you make number one lower your house and
cost whether you rent or you own the cost of housing will be your largest
expense every month many financial experts suggest that the total of your
rent or mortgage payments plus bills should be no more than 35 percent of
your monthly after tax income and while this expense eats up a lot of your
monthly income it also offers the largest opportunity to find cost
reductions allowing you to save even if you're earning an extremely low income
now i want to address how this can be done from both a renter and a
homeowner's perspective so that no matter what your living arrangements
presently are you'll be able to use these tips to start making dramatic
improvements and your overall savings efforts for
renters there are numerous ways you can reduce your housing costs the first
being to find a cheaper place to live perhaps a single room in someone's house
would be adequate for your needs or you can get by in a studio apartment over
your current two-bedroom setup i know this may seem like making this change
would be quite dramatic but the savings can be quite dramatic as well for
instance the average two-bedroom apartment in the united states rents for
roughly eleven hundred dollars a month whereas the studio apartment is around
nine hundred and fifty dollars right there there's already a savings of a
hundred and fifty dollars and that doesn't even factor in the savings you
would realize paying less utilities when renting a smaller place but if you have
no desire to move then it may be time to look into ways to reduce your current
rent so some effective strategies i've used in the past can include negotiating
an exchange of your services like doing renovations for a rent reduction or
agreeing to sign a longer lease if it's tenant security that your landlord wants
when i used to rent i exchanged tax advice and monthly bookkeeping services
to offset some of my costs this simple swap of goods and services saved me
thousands of dollars over the course of my lease allowing me to save money while
earning an extremely low income so if you're a homeowner then the advice is a
little bit different well you probably don't want to move out to save money
even small things like turning off the lights and reducing your water's usage
can lead to substantial savings over time however the best way to offset your
housing costs is to rent out a room so renting in a room in your home can
easily net you a few hundred dollars a month which can help you cover your
bills allowing you to put more money in your piggy bank at months end but if you
don't have an extra room to rent out to offset your house and cost then the next
way you can lower your monthly cost is by tackling your mortgage payments so
here are a few ways to cut down your mortgage expense and start saving
yourself a ton more money first start making your mortgage payment on a
bi-weekly rather than a monthly basis so just think about this if you make your
monthly standard mortgage payment on the first of every month that's 12 mortgage
payments a year with 52 weeks in a year paying half your monthly payment by
weekly works out to 26 payments or 13 full payments per year i started doing
this as soon as i realized just how much interest you can save by switching to
bi-weekly payments so let me share with you an example to further illustrate
let's say you have a mortgage of three hundred thousand dollars at three
percent for 30 years so if you make monthly payments over the course of the
30 years you'd end up paying roughly 150 000 in interest however if you were to
switch to bi-weekly payments instead your total interest cost would be just a
hundred and thirty thousand dollars instead saving you a cool twenty
thousand dollars while still enjoying all the same benefits as you would
paying your house down while making less frequent repayments so if you'd love to
have an extra 20 000 in your pocket right now make sure you let me know by
gently tapping the like button down below thank you now the other approach
you can take to reduce your mortgage cost is to refinance so when mortgage
interest rates fall you might think about refinancing your mortgage which
involves reducing the terms of your mortgage and paying less in interest so
using another example if you had a mortgage of 250 000
and you're able to reduce your mortgage from three percent down to two and a
half percent that would save you roughly 25 000 in interest over the lifetime of
your loan pretty substantial right now keep in mind that there are costs and
fees associated with refinancing so you have to do some math to figure out if
the savings in interest is going to make it worth going through with this whole
endeavor however as you can see the savings when we're financing can be
substantial so it's definitely worth looking into if you're trying to save on
your housing costs while earning an extremely low income number two avoid
unnecessary debt so if you want to save money while making income smaller than
what you like to be making then you must avoid debt at all costs this is because
debt deters you from saving in two ways first having debt means monthly
repayments every month creditors will be knocking at your door for money which if
that debt was avoided would mean more money in your pocket amongst that and
secondly that is almost always associated with monthly interest charges
for lines of credit these rates are typically around three to five percent
which means that only ten thousand dollar balance you'll be handing over
around twenty five to forty dollars a month while this seems like a small
amount of money one compounded monthly can begin to add up when you total the
dollar value of your repayments and their associated interest charges you
can start to see how carrying that can make saving on a low income a challenge
this issue is only further exacerbated when it comes to credit card debt so
according to the balance the average credit card rate right now is around
20.47 percent meaning that getting into debt is an expensive ordeal to put this
into perspective if you're carrying the average credit card balance per us adult
of six thousand three hundred forty eight dollars which at that rate means
you're paying about thirteen hundred dollars in interest charges to the
credit card company simply by carrying that balance therefore if you want to
save money on extremely low income you need to avoid debt and their associated
interest charges at all costs number three learn to have fun on the cheap so
we all want to have fun but unfortunately for many people this comes
at a hefty cost eating out hitting the bar after work going to the movie
theater and other entertainment purchases can make a huge dent in your
budget but luckily doesn't have to so when i was younger my main source of fun
was going out to the club with my friends but unfortunately most nights
were very expensive between cabin to and from the bar buying drinks and paying
for cover most nights ran me easily a hundred dollars or more then as i got
older my attention shifted towards growing my wealth and i didn't want to
lose out on social time with my friends so this made me brainstorm new ways to
get in quality time with my friends while not breaking the bank nowadays one
of my favorite ways to spend time with my friends has been going on walks in
the summer and having moving nights in or dinner parties during the winter so
maybe this is simply due to the fact that i'm getting a little bit old but
these kinds of activities not only more fun to me these days than going out
drinking and partying but knowing i'm doing something beneficial for my
financial future at the same time is something to be proud of so in short we
all need to have fun but we don't need to spend an arm and a leg
to do it number four prioritize your spending so there's no doubt that
spending money makes us feel good maybe even as good as hitting that subscribe
button below but when you're earning a low income and have a desire to save you
need to be able to delineate your wants from your needs for instance you may
want to upgrade your phone to the newest model but you probably don't need to and
you may want to buy a new shirt to wear out this friday but you probably already
own a ton of shirts so when you're not making a lot of money you have to be
diligent and only spend on your core expenses so how do you draw the line
between your needs and your wants i like to classify anything that relates to my
survival as a need these are things like food clothes shelter and transportation
in their most basic form sure buying a ferrari is transportation but in its
most basic form taking the bus also gets you from point a to point b
one items are basically anything that falls outside your needs group so this
includes anything that is an extension of things you already own for example if
you were to upgrade your phone to the new model just to get the camera with an
extra two megapixels in it that's an example of a want item however i know
these definitions are pretty vague of what wants and needs are so let me share
with you a proven model derived from boston consulting groups growth share
matrix that you can use to make wiser spending decisions so in order to
clearly view where your priorities lie draw a square containing four quadrants
within it then give them the following titles high priority needs high priority
wants low priority needs and low priority wants so once complete start
adding items you aim to buy into these boxes this will allow you to assess
where you believe these purchases lie offering you the ability to really
consider how urgent or important some of those items are now of course you can't
restrict your spending to the bare minimum forever so if you do want to
splurge on a one item here's what i suggest set a financial goal you want to
achieve like saving a thousand dollars only once you do hit the school can you
go ahead and purchase the item you've been wanting this technique is great for
two reasons first it helps you build the habit of forming financial goals and
second it gives you time to process how badly you want the item as often we've
purchased things out of impulse and find ourselves experiencing buyers or more
soon after so if you want to ensure you save money on a low income you must be
able to delineate your wants from your needs number five automate your savings
so the final step in ensuring you save money even on low income is to automate
your savings so one of the best things i've ever done for my finances was
setting up automated deductions from my pay with my employer in essence what
these deductions allowed me to do was send part of my paycheck directly into a
savings account instead of the full amount going right into my checking
account so when i initially set up this process allocated 10 of my after tax
income to my savings account but over time i found that i'm able to actually
up this to 20 and double my monthly savings now you may be thinking that my
ability to double my savings as some kind of a fluke but you'd be wrong in
fact according to financial psychologists people who spend as little
as one hour visualizing their goals and setting up automatic withdrawals to
different accounts see on average a 73 increase in their savings after just one
month so when you think about it this makes total sense right essentially
you're being much more deliberate with your spending and this is exactly why i
mentioned that delineating your wants and needs is vitally important when
trying to save money on an extremely low income now i think the savings technique
has been so successful for two other reasons first it allowed me to pinpoint
exactly how much i wanted to save which made hitting my financial goals 10 times
easier second it took the thought of having to save off my mind allow me to
focus on other important things like improve my skills in order to make more
money i often preach that once you have solid savings techniques in place that
making more money is the number one way to save more and by freeing up my mental
bandwidth i was able to take on more freelance work earning me extra income
to boost my savings speaking of making more money check out this next video
where i share with you how you can break out of your low income rat and start
making ten thousand dollars or more a month