How to budget on a low income

When it comes to building wealth, it’s not what you make that matters but what you save. People on high incomes often also have expensive lifestyles and save little, whereas people on lower incomes can save extraordinary amounts. Here’re some easy ways to get started smashing your budget goals, regardless of what you earn.

Create a realistic, sustainable budget

Budgeting is the magic key to saving money and getting ahead. First, find out where your money is going by tracking what you’re spending – a budget tracking app can help. Identify where you can save and set spending limits. Budgeting doesn’t have to be restrictive – in fact, it ultimately frees you up to have money for the things that are most important to you.

Make it automatic and easy

The harder it is to stick to your budget, the less likely you are to do it long term. Set up an automatic transfer to a designated savings account each payday. Create realistic goals that you can stick to and give yourself small rewards when you do. Saving even five per cent of what you earn is a great place to start that really adds up over time. As you gain confidence from the success you’ll find even more ways to save.

Shop around for financial products

The cost of bank accounts, personal loans and credit cards can vary greatly. Some banks offer basic bank accounts with low or no fees. You can find out more about affordable banking here.

Get creative with saving strategies

Once you start actively looking for ways to save it becomes a fun challenge. Think outside of the box with ideas such as swapping goods and skills with friends or making gifts instead of buying them.

Adopt a minimalist mindset

Less is more when you’re saving for bigger life goals and building wealth. Having more stuff won’t necessarily make you happy but having a secure financial future will. Do everything you can to keep your fixed living costs low and resist the need to accumulate things you don’t need. When you do need to purchase goods, scout online for bargains, search secondhand stores, use coupons, and join rewards programs that offer freebies or discounts.

Find a side gig

It’s the age of the gig economy and plenty of people are making good money with so-called ‘side hustles’. It might be making jewellery to sell on Etsy, becoming a part-time Uber driver, walking your neighbours’ dogs on the weekend, or offering your services on AirTasker. Check out Entrepreneur for inspiration.

Invest to grow wealth

The best way to grow your wealth is to invest a small amount of what you earn steadily and for a long time. It might not be exciting, but it’s effective and will set you up for a comfortable future.

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