How to Save Money from a Small Paycheck

Even if you don't make very much money, it's still possible to put some of it into savings.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Paper / Pencil or Computer

1. Add up your paychecks (AFTER TAXES) from an average month to calculate your monthly income.
2. Deposit all your paychecks into the bank instead of cashing them out. When you need money, get it out of a no-charge atm in small quantities - just enough cash for the immediate need of the moment.
3. Add up all your required monthly expenses (rent, insurance, loan payments, etc). Subtract this total from your monthly income total. This is the maximum amount of money you can spend per month on food, clothes, transportation, and any other daily needs which arise - call it your monthly allowance.
4. Divide the total for your monthly allowance by 31, to find out your average daily allowance. Dividing by 31 will give you a little bit of extra at the end of the month on shorter months, which can be saved up to earn interest in the bank or help you with an unforeseen expense.
5. !!!Plan to never spend more than your calculated daily allowance each day!!!
   Keep your wallet empty, other than the minimum amount you need for your planned daily expenses and a credit card for emergencies. If you predict an expense coming up which exceeds your daily allowance, live extra cheaply in the days before and use the unspent daily money for that expense. You will be much better off if you scrimp before having to pay a large cost rather than using the daily allowance of future days and planning to live more cheaply later.
6. Be honest with yourself about what you really need and what you just spend money on out of habit or laziness. Think about reducing how much you spend on frivolous things like electronics, phone services, long showers, coffee, cigarettes, alcohol, excessive home heating or cooling, and restaurant, ready-to-eat, single serving, or highly packaged food. Consider the value difference between new and used products before paying retail price.

Tips & Warnings

• If you spend less than your daily allowance on any given day, consider putting the money back in the bank, or at least keeping it in a hard-to-reach spot in your house. Don't keep it with you or you might be tempted to spend it on something you don't really need.
• If your total for required monthly expenses is close to your total average monthly income, research moving to a less expensive home, switching to a better bank or insurance plan with better rates, and look into adding another source of income to your current employment.
• Never use a payday loan company or cash a check through any service which charges a fee or takes a percentage from the total.