If you can learn how to save money on a low income, you will be able to quickly build up a financial buffer that will help protect you from debt.
Savings are important for everyone. If you can save money on a low income, you will have the security of cash to fall back on in the event of an emergency instead of relying on quick loans to save the day.
You should hopefully be able to pay less for the things you do buy, by making payments in full up-front rather than paying on credit and incurring interest.
1. Walk more frequently
Not taking into account the health benefits of taking more exercise, walking instead of taking a car will save you money.
Small local trips in your car could be costing AUD 50 per month.
Long drives are obviously harder to avoid, but it is all too easy to get into the driving seat for a visit to the nearest shop.
Before you get into your car, consider if the journey you are making is one you could make on foot (or perhaps on your bike, if you have one).
Walking more often and starting the engine a little less frequently, could give you a good sum of money to set aside at the end of each month.
2. Withdraw cash from your bank account
If you cannot see the money that you are spending, it is hard to keep track of it.
Spending cash makes you aware of where your money is going. It may make you evaluate your purchases more carefully.
Spending on a card is too easy. This is why people often struggle with mounting credit card debt, despite promising themselves that they would only use the card for emergencies.
If you are on a tight budget, withdraw your cash at the start of the week. This will hopefully help you to control your spending and ensure you do not go into next week’s budget.
As a bonus, any change that you have left at the end of the week is ready to deposit into your savings jar.
3. Choose the best bill payment method
Often, purchases are cheapest when they are paid for in one go. This includes paying the annual rate for your car insurance or booking a holiday with full payment upfront.
You will need to have some money saved up to cover your biggest purchases, but as a result, you will not be paying as much overall.
If you cannot afford to pay the full amount, choose your installment option carefully.
But remember that you will need to have the money in your bank to cover each payment.
If you are paying by Direct Debit and do not have enough to cover the payment, you risk expensive overdraft charges.
Make sure you record when all your payments are going out and have sufficient funds.
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