11 Tips for Building Your Savings Despite a Low Income

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When you are squeaking by on minimum wage or seemingly not much more, it might seem like there is little hope for you to get money into savings.

After all, working full time on the federal minimum wage of $7.25 an hour brings in a whopping $15,080 a year before any taxes.

But even if your budget is down to the bare bones, there still are things you can do to build your savings. Following are 11 ideas worth considering.

1. Get out of debt

A "debt free" bullseye
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When money is tight, you can’t afford to be sending money to a car financing company or credit card company.

Think about it this way: If you had no house payment, no car payment and no credit card payment, what’s left? The only monthly expenses you might need to cover would be utilities, insurance, gasoline and food. In many areas of the country, you could do that on $15,000 a year.

We’ll talk a little more about affordable housing options in a minute, but for everything else in your life, make living debt-free a priority.

2. Track and budget your money

budgeting
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If it feels like you have no extra cash to divert toward paying off debt — or to set aside for savings — it’s time to go back to basics. Start budgeting your income and tracking your spending.

Tracking your expenses will help you identify any problems in your spending habits that you might be overlooking. Budgeting your money will force you to think about the best use for every dollar before you spend it, ensuring you spend more wisely and in turn reach your savings goals faster.

You Need A Budget, or YNAB, is arguably the best budgeting program out there. It’s not free but boasts that it will pay for itself, with new users saving an average of $600 in the first two months of use and some $6,000 in the first year.

To learn more about YNAB, check out “Here’s the Key to Saving Money and Reaching Your Financial Goals.”

3. Hoard windfalls

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Make smart use of any extra cash you get — windfalls such as gifts of money or tax refunds.

For example, if you make minimum wage and have children, chances are you’re entitled to the Earned Income Tax Credit. That could mean you get thousands of dollars from Uncle Sam each year.

Until you get on firm financial ground, resist the urge to spend windfalls. Put a couple hundred dollars in the bank as an emergency fund and ship the rest off to your creditors. If you’re debt-free — hooray! — bank at least half of the windfall before you think about spending a cent.

4. Save your pennies

Ljupco Smokovski / Shutterstock.com

Start a change jar and put your coins into it every night. At the end of the month, roll up the coins and put them in a savings account.

You won’t retire rich off the money you collect, but you could end up with $10 or $20 a month to pad your savings account. That’s not much, but when you’re making $7.25 an hour, every little bit helps.

5. Skip processed food

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Processed food often is unhealthful. You will feel better and save money on health care in the long run if you say goodbye to boxed foods and frozen meals.

If you need some menu inspiration, check out budget cookbooks from your local library. “Family Feasts for $75 a Week” and “The $5 Dinner Mom Cookbook” are two you may find worth reading.

6. Park the car

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After housing, your car is probably your biggest money pit. You need to pay for insurance, registration and gas, plus you might have a monthly payment on it.

You’ll free up tons of money in your budget if you can get rid of your car or at least drive it less often. Depending on where you live and your personal situation, you may be able to:

  • Use public transportation exclusively.
  • Sell one vehicle, if you’re a two-car family.
  • Sell your car and buy a cheaper one.
  • Carpool with a co-worker or friend and split the car costs.
  • Combine errands and appointments to minimize gas costs.

7. Rethink child care

Phase4Studios / Shutterstock.com

Child care is crazy expensive. If your household has two income-earners and both make minimum wage, you might come out ahead if one adult stays home with the kids. Not only will that eliminate day care costs, you’ll also save on gas and other work-related expenses.

8. Sell what you can

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Get serious about saving by scrutinizing everything you own.

You could have a yard sale to sell old clothes, trinkets and kitchen gadgets, but think bigger. Sell the furniture you don’t need. Sell your movie collection. Sell the TV. I’m serious! The kids will find something else to do.

9. Find a roommate

W. Scott McGill / Shutterstock.com

Finding affordable housing can be a nightmare. Subsidized housing is available, but wait lists are long and the properties aren’t always in ideal locations.

If you can’t find a place with cheap rent, the next best thing may be to get a roommate. Another option, if you live in a house, might be to rent out a room. If you don’t want a full-time roommate, consider renting a room out to travelers on a vacation rental website.

10. Move somewhere cheaper

Africa Studio / Shutterstock.com

Maybe despite your best efforts, you simply can’t find an inexpensive place to live. In that case, it may be time to do something radical — move to a new city with a lower cost of living.

That isn’t permission for you to simply pack up and go without a place to stay or a plan for what to do when you get there. Instead, do your research first and line up a job in advance.

11. Make more money

g-stockstudio / Shutterstock.com

If none of these suggestions sounds like much fun, that’s because it’s really hard to get by on very little income. You know that.

To make more money, you could work harder or you could work smarter. Choose the second option. Rather than spending your life working two or even three jobs to get by, get the right education and training for a career that will let you live comfortably. Look into jobs that require only a two-year degree.

Talk to your local community college to find out which careers are in demand in your area. Its financial aid office should also be able to help you learn about programs that can pay for your tuition and eliminate the need for student loans.

Do you have any great tips for saving while making minimum wage? Share them below or on Facebook.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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