10 Ways To Save Big on a Minimum-Wage Salary, According to Experts
Written by
Cynthia Measom
Edited by
Rebekah Evans
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Saving money on a minimum wage salary might seem impossible, but, it’s amazingly doable. The key is to keep yourself from becoming overwhelmed.
Don’t think about how much you’ll have to sacrifice to achieve your goals. Instead, take baby steps. Even putting away just a few dollars consistently can make a big difference down the road.
Here are 10 expert-approved ways to save big if you’re earning minimum wage.
Keep Track of Every Expense You Make
You likely know what budgeting is even if you choose not to use it. However, if you don’t budget, you should start.
“Keep track of every expense you make,” said Steven Kibbel, certified financial planner (CFP) and senior editor at InternationalMoneyTransfer.com. “This will help you identify unnecessary spending and make necessary cuts. To help visualize this, a basic spreadsheet or application can be used.”
Automate Modest Cost Savings
It might seem painful — or even impossible — to take money out of your paycheck each month to pad a savings account, but there are ways to ease those feelings.
Kibbel said, you could potentially create a financial safety net without even thinking about it. He said to set up small automatic transfers from your paycheck — like $5 or $10 per check — into a savings account.
“Consistency is the key,” he added.
The money will be gone from your account before you know it, and better still, you’ll get so used to it, you won’t even think about it anymore.
Cut Substantial Expenses First
“Occasionally, the biggest adjustments have the greatest effects,” Kibbel said. “You can make savings happen by moving to a smaller place, cutting back on transportation expenses or renegotiating fees like auto insurance.”
Boost Your Income
If lining your savings account is a priority, earning some extra income is a way to do it.
“Boost income by taking on a side gig or freelancing work, if at all possible,” Kibbel explained. “Even a small quantity of extra money might be allocated only to your emergency fund or savings.”
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Set a Savings Goal
Kibbel said to aim for saving 5 to 10% of your salary, even though he acknowledged that it’s difficult to save on minimum wage.
“Start by setting up a separate account to receive tiny amounts — $10 or $20 per paycheck — automatically. Saving becomes ingrained as a result, even if it seems unimportant at first,” he said.
Streamline Your Expenses
Even if you don’t think so, there are probably some expenses you have each month that you can reduce or totally eliminate — at least for a while.
“Prioritize cutting back on or getting rid of any extra costs to make it viable,” Kibbel added. “One way to free up money for savings is to stop eating out one day a week or to temporarily suspend subscriptions that are not absolutely necessary.”
Build an Emergency Fund
The thought of having to save the expert-recommended three to six months’ worth of expenses to build an emergency fund can be overwhelming, so Kibbel said to start small.
“Start with a $500 to $1,000 emergency fund,” he said. “This helps you avoid using credit cards or loans and provides a buffer for unforeseen costs.”
Make Use of Windfalls
It can be tempting to splurge on a down payment for a new car or take a vacation if you receive an unexpected influx of cash, but that’s not a smart move.
“Increase your savings by utilizing any unforeseen revenue, such as bonuses or tax returns,” Kibbel added. “You should put all of your windfalls, no matter how tiny, into savings or an emergency fund.”
Reduce Housing and Transportation Costs
“To save costs, think about moving to a more cheap house, getting a roommate or taking public transit,” Kibbel said. “These are the two biggest spaces where you can give yourself some financial wiggle room.”
Take Advantage of Employer Benefits
“Contribute, even if it’s only a little amount, to retirement plans like a 401(k) with a corporate match,” Kibbel explained. “It’s a straightforward approach to begin retirement savings and is effectively free money.”
You might not want to take additional money out of your paycheck, but if you understand the power of compound interest, you won’t be able to pass it up.
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