It is difficult to live on a shoestring, particularly if you are also paying off debts. But with being smart with planning and thinking, it is easy to save and have the finances under control again. The following 10-step guide gives tips to save even when little money is available to save and debt hangs over you.
1. Reduce and Prioritize Non-Essential Expenses
The initial action you can undertake on a lean budget to conserve is trimming wasteful expenses. Begin by noting down all your expenditures on a monthly basis, ranging from mandatory bills to recreation-based. Rank them in decreasing order of expense, and identify where you can trim back.
For instance, conserving 100 a month from a cable subscription can be 1,200 a year. Small steps such as skipping restaurants or canceling redundant subscriptions have a cumulative impact over decades. Make sure to pay attention to reducing things that yield long-term effects.
2. Ask for a Raise or Promotion
Increasing your income is another effective way to free up funds for savings. If you’ve been in your job for a while and have taken on additional responsibilities, it might be time to ask for a raise or seek a promotion.
With the current tight labor market, almost every employer would be very happy to pay extra to keep their talent. Pitch on your contribution and achievements, and go bold to your employer.
3. Start a Side Business
If a side cannot be done, earn some extra money through a side business. There are opportunities in the gig economy, from freelance to part-time work.
For example, you can sell spare items on the internet, provide tutorial services, or run a small business such as babysitting or dog walking. Having some additional working hours throughout the week can substantially increase your earnings and allow you to save.
4. Rent Out Unused Space
If you have unused space at home, consider leasing it out to earn extra money. It can be an additional bedroom, garage, or a backyard accessory dwelling unit (ADU) you lease on sites like Airbnb.
Leasing unused space can create a steady stream of income to assist you in paying bills or paying off debt faster.
5. Strike Debt Strategically
Debt will usually be the biggest hurdle in saving, so you need to tackle it first. Begin with making a list of all debt, such as credit cards, loans, and mortgages. Eliminate the debt that is costliest to you in the long term because it has the highest interest rate first.
If you are tight on funds, request lenders to reduce or eliminate their interest charges, or have them pay. For structured aid, you may seek the help of a nonprofit credit counselor or debt consolidation through DebtsFreeHome.
6. Be in a Position to Obtain Better Insurance Quotes
Insurance is something that we all contribute to, but you might be paying more than you need to for policies. Take a moment to comparison shop for insurance rates on your car, home, or health across companies.
Even a modest drop in your premiums will save you hundreds of dollars per year. Mark it on the calendar to go over your insurance policies once a year.
7. Cook at Home and Meal Prep
Dining out or ordering out will soon be emptying your wallet. Cooking at home not only saves you money, but you’re also healthier. Menu plan your meals for the week, make a list, and stick to it.
If you’re employed outside of your home, pre-pack lunches so that you won’t be spending on pricey lunches. Eat out on special occasions and penny-pinches without the enjoyment being ruined.
8. Save for Retirement and Health Savings Accounts
As you’re pinching pennies, you might as well save something for the future. If your employer has a 401(k) plan, at least save enough to get any company match—free money.
Also, if you hold a high-deductible health insurance policy, consider saving in a Health Savings Account (HSA). HSAs offer three channels of tax savings: contributions are tax-deductible, interest accrues tax-deferred, and distributions for eligible medical expenses are exempt from tax.
9. Reduced Housing Costs
Housing usually represents the biggest monthly bill, so minimization of this cost when possible is very important. If renting, look into switching to a lower-priced residence when your lease is up.
For homebuyers, refinancing your mortgage may reduce your housing payment. Even slight decreases in housing expenses can make money available for savings or paying off debt.
10. Modify Your Tax Withholdings
If you’re getting a big tax refund, chances are that too much is being taken out of your paycheck. Determine if you can adjust your withholdings through the IRS Tax Withholding Estimator.
By decreasing the amount withheld, more dollars will end up in each paycheck that you can use on debt, savings, or an emergency fund.
Final Thoughts
Sacrificing pennies when one is on the tightest budget, particularly in debt, entails patience, discipline, and an adequate plan. By eliminating extravagant spending, building your income, and clearing off debt in an orderly manner, you can be in command of your money and create a prosperous future.
If you have debts, call DebtsFreeHome to schedule a free consultation. Their professionals can assist you in exploring debt relief and developing a customized plan for financial freedom.
Small steps taken regularly can result in radical changes after a while. Act now and start the process towards a healthier financial future.