Saving money can be tough until you get organized. Once you establish a habit and get into a regular savings routine, it’s a breeze – but that’s the hard part. The way you save money should be whatever works best for you. Try out different savings methods and techniques. If you’re paid salary, use this to your advantage to save more money fast.
Advantages of a Salary Income for Saving More Money
Being paid salary can prove to be beneficial for your savings. It’s more predictable, being a set amount every pay period. If you can get a good grasp on your spending habits and regular expenses, you’ll be able to create an effective budget plan and know exactly how much you can afford to save.
If you’re paid by the hour, the amount you receive each pay period can vary quite a lot. This is even more true if you’re paid by tips or commission. Sure, you can save based on a percentage of your income rather than a dollar amount – but that makes savings timelines and goals rather challenging.
Let’s say you’re saving for a nice down payment to help you get approved for a car loan. You make $30,000 per year and can comfortably save $250 per month. If you want $5,000 saved up for a down payment, it’s easy to plan ahead.
$5,000 $250 per month = 20 months
If you decide that you want the car faster or you want a larger down payment, just adjust the numbers and see what you need to do. If your pay isn’t consistent, you’ll have to plan based on trends in your pay and the average amount you receive.
How to Save Money on a Small Salary Every Month
Even if you are paid a smaller salary, you can still use this concept. Or, in the event that you have a minimum pay with the potential to earn more on top of it – set a savings amount from your base salary and add bonus savings on top of it!
Working with a smaller salary may extend your deadlines a bit, but don’t give up. Keep saving and working towards your career goals. Eventually, you’ll have a substantial savings, and your salary won’t be so small anymore.
Think of it this way: have you ever heard the saying “How do you eat an elephant?”
One bite (or dollar) at a time.
Separate Your Salary Savings By Goal
One effective way to make the most of your savings is to separate your savings by goal. This allows you to not only save for multiple things at once, but also to prioritize them. This can be done with different savings accounts, which is very easy to do when saving with direct deposit. You can also easily accomplish this within the same savings account by keeping a separate spreadsheet of your different goals and how much you have put towards them.
You should always make sure that retirement is one of your savings goals. Especially if your company offers competitive 401(k) plans with company matching. Starting when you’re young gives you a tremendous advantage. Setting aside a small amount each month can turn into a huge sum of money by the time you retire.