How to Start Saving Money On a Minimum Wage Paycheck
Living on a minimum wage budget can feel like you’re stuck in a never-ending cycle of getting out and falling back into debt. You know it’s important to get out of debt and begin saving, but a large bill comes in and you’re back to square one.
What’s more, it seems like every article on budgeting and saving is geared toward those making a middle-class or two-person income – but what if you’re living on a single, full-time minimum wage budget?
While every situation is different, here are a few action steps you can take today to begin saving:
Making Debt a Priority
As long as you have debt, any money you spend is money that you don’t have.
- Tackle debts with higher interest rates first. Make the minimum payment on smaller debts with smaller rates while putting a little extra toward the larger payment. Once that large debt is paid off, appropriate that same payment to the next largest debt. Continue the process until your debts are paid off!
- Consolidating your debt could also be an option for you. Through consolidating, you only have to worry about one payment a month, not multiple smaller ones.
- Don’t take on new debt if it’s not absolutely necessary. It’s easy to fall into the “What’s one more?” trap. We all do it – put just one more tank of gas on the credit card or one more trip to the grocery. Those small additions, though, quickly add up to a sizeable payment.
Open an Interest-Accruing Savings Account
Banking with a non-profit financial institution like Signet Federal Credit Union, you’ll find that interest rates for savings accounts are typically higher than other banks. And, with Signet, you can opt for a number of savings account types: traditional savings, special savings, Christmas savings, vacation savings, Health Savings Accounts, and Coverdell Education Savings Accounts. These savings accounts typically require around $5 to open the account.
Download a Budget App
Budgeting apps are a great way to begin tracking and managing where your money goes. Here are a few of our top suggestions:
- Mint: Create a budget, track your spending, get alerts when bills are due and keep track of what you owe all in one app!
- You Need A Budget: This app functions on a single principle – every penny has a purpose. While you do pay a fee for this app, it offers live online budgeting classes and a built-in “accountability partner” feature.
- Wally: Wally is a personal money management app that lets you set and achieve financial goals, compare income to outgoing expenses, and track where your money is going each month. The best part? It’s free!
Use Cash and Save Pennies
Use your budget app to determine how much you can spend on groceries, personal items, etc., then opt for cash for every purchase you can. Each cash purchase generates some change, and saving those pennies can add up quickly. Just think, 50 cents saved every day equals $182 at the end of the year!
Again, every situation is different, including yours. These steps are simply suggestions, but your needs and budget are unique. For extra help, swing on by a Signet Federal Credit Union branch and visit a financial advisor today!