There is much focus on building an emergency and retirement fund, but have you ever wondered how much money do you need to make to start saving money? What if you are barely covering your basic needs? Is it realistic for you to save money? The answer is yes! As long as you are employed, you can begin saving right away. Below are some tips to make it happen.
- Prioritize your basic needs.
It is important that you can cover your monthly expenses before you start saving money. This means having the ability to pay for your essentials, including rent, groceries, utilities, insurance, and car or debt payments. If you are struggling to cover these, look at where you are spending your money. Maybe you need to prioritize your basic needs instead of your gym membership or paying for streaming services. Look for ways to cut your expenses so that you can make ends meet. Consider taking a roommate, cooking more often at home, or commuting to work to save money.
- Pay off any high interest debt.
If you are carrying high interest credit card debt, your focus should be on eliminating debt first rather than saving. Chances are, you are paying more in interest each month than you would be earning on your savings. Put all your energy into kicking the debt so you can be in a better financial position to save money. Come up with a debt payment plan to expedite the process. Set up a monthly budget to streamline your spending, too.
- Create space for savings.
Examine your spending habits and be on the lookout for areas that you can cut so you can start saving sooner. Discretionary spending is the easiest place to start. Even if you only cut back $50 a week, this will immediately place you into the right financial path. Make your priorities clear – it is easier to have fun when you are financially secure. Do not sell yourself short.
- Start small.
There is no magic amount to earn to be able to save money. The numbers are not important here. It only matters that you start, no matter how small. Save as much as you can each month and build it up as you create more sources of income.