How can I save money on a low-income?

Steps To Change Your Financial Situation


There are two answers to this question. Either earning more money or spending less money. Of course, making both is the most optimistic way if you can do.

That sounds reminded me business administration lectures I took. All businesses have one goal, increasing revenue and decreasing cost. Just in this situation, we will consider that your business is your life.

You should set your priorities. If you have debts or student loan to pay, it places first. In order to set the priorities, take out a paper and a pen and start writing down your income and expense statement. The statement must include any purchase you make.

Clarify your spendings. Is there any junk you can renounce? Just cross out it. You cannot pay down your debts if you do not cut down some of the expenses which aren’t essential like $5 Starbucks coffee you drink and $10 Netflix subscription you take out. And, to crown it all, you would be miserable if you have a car. Because on a low-income, a car which decreases your proceeds wouldn’t be a reasonable investing strategy rather it increases your expenses.

So, let’s get started to make a budget planning.

Necessities — 55%

Put fifty-five percent whatever you make to necessities. Necessities are your rent, your home, your utility bill, your food, your transportation al that sort of stuff. A lot of people put a hundred percent of their money. It is a huge mistake. This means you will live month to month in the rat race.

Emergency Fund — 10%

People might live bad days. Nobody knows what will happen in the future. You might lose your job, get a disease or get robbed. So, you have got to be prepared for those days. If you would live on a balance of income and expense, you wouldn’t have enough money to pay expenses in emergency cases. Therefore, you should allocate ten percent of your income. And, you should put aside it until you reach 3 or 6 times of your average monthly expense as an emergency budget in the near future. This money must stay as cash and you mustn’t invest it to earn some coins for short-term.

Financial freedom — 10%

Next ten percent you need to put aside for what is called “financial freedom”. This is for opportunities to invest, to create financial abundance in your life. This could be investing in stocks, currencies or an online business. Some sort of vehicle that can then make you more money in the future and help ideally make you passive residual income which continuously makes you more money.

Invest Yourself — 10%

Another ten percent you have got to put towards education. You have got it to invest yourself. Because how are you going to change your life if you don’t have the financial means to invest yourself to learn from others, to invest in seminars, training, courses or mentors. That is what is really what is going to get you to financial prosperity. If you just cute living in the rat race, you are not going to get ahead. You have got to educate yourself. No matter how much money you have, if you don’t have intelligence, you won’t be able to spend wisely.

Fun — 10%

A ten percent more. But this time for fun. Oftentimes you are going to get more fun out of your life by putting money aside and then being strategic about how you want to use that money. Personally, I sacrificed this ten percent significantly. Because I realized that I could get myself out of the situation of being in debt a lot faster by instead putting some of this money more to paying down my student loan or to more financial freedom. But fun is also good because it rewards yourself. So, that is up to you how you want to modify it.

Give — 5%

The last five percent is to give to contribute beyond yourself even if you don’t have money. I found it extremely important because it trains yourself to live in a state of abundance and trains your brain that there is more than enough. It might be less than five percent for you. It is not about the amount, it is another way of feeling good. Happiness multiplies as you share, not as you buy. So, try to donate to homeless people, to podcast producers who don’t place an advertisement for his podcasts or to buy food for stray animals.


This is a good formula to follow. You can modify it if you would like. But most important ones are savings, financial freedom and education that you have to prioritize if you didn’t yet in your situation you are in right now.

You have got to shift your mindset, you have got to be more future and long-term thinking than in short-term. And you are going to have to make those sacrifices to make sure you are living well below your means.

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by +415,678 people.

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