How to save money fast on a low income is a simple query in mind among hundreds of thousands of low income earners across the world. Saving money is not a herculean task. But, it is not so easy task to save money. Because, we want to increase our expenses when we have a chance to save an amount. However, saving money is prerequisite to invest.
If you have money, you can even invest in stock market. But, many people don’t like to invest in stock market because they fear of losing hard earned saving. Nevertheless, you should save money for stock investment because you have high chance of getting high return on stock investment.
Why people save money ?
We have many reasons to save money. You may want to buy a new mobile phone. Or you want to buy a desktop. Some one wants to save money for emergency uses. Jobholders save money to back up their family in case of unexpected fire from job. More importantly, some people want to save money for investing purpose. Investment brings return. So, you should save money for investing.
Why do you need money to save for investing?
Investing money has more or less return. If you deposit money in fixed deposit scheme, you will get a limited return. But, if you can properly invest in stock market or some other sources, you will get unlimited return. Remember that, any type of business has equal chance of loss or profit. But, stock investment has high risk of losing your holding.
Briefly how to save money fast on a low income?
First of all, you should calculate your total earning. Secondly, you should figure out your sources of expenses. Thirdly, Calculate probable investment amount. Fourthly, saving that amount by any chance. Finally, stick to your saving plan.
As a low-earners, you should try to save at least 20% of your current amount. If you can manage to save more in each month, you can achieve financial freedom fast.
10 Effective Tips How to Save Money Fast on a Low Income
1. Cut short your daily expenses
Every day, we spend some money on unnecessary work. Moreover, some unnecessary expenses are harmful to our body. Such as alcohol or smoking. Easily you can cut short these expenses.
Let’s cite an illustration
Suppose, you have a bad habit of smoking. Every day you spend minimum 2 to 3 dollars on smoking. That means your monthly unnecessary smoking expense is 60 to 90 dollars. Similarly, you may spend 100 to 200 dollars on drinking alcohol and night party.
If you can control these expenses, you can save at least 300 dollars each month. Thus, this saving amount for the year will 3600 dollars. Merely, 3600 dollars is sufficient to start investing.
2. Reduce your transport expenses
Transport expenses may vary from one country to another. In many developing countries, anyone can save 75% transport expenses if he uses public transport. Thus, you can save from transport expenses minimum 50 dollars to 100 dollars in a month.
3. Reduce your unnecessary shopping
Many people, especially women, want to buy extra dresses. You can easily save some money by controlling shopping habit. As I don’t know your life style, even your per month earning, I can’t exactly tell you how much money you can save by reducing unnecessary shopping. If you belong to middle class family, you can save some money by reducing extra shopping. Even you can get out of debt fast if you control your shopping expenses.
4. Daily food budget
You can save money by maintaining your food habit. Junk foods are not suitable for good health. You should avoid junk food. On the other hand, junk foods are costly foods. If you follow diet chart, you can reduce both food expenses and medical expenses.
5. Dating expenses
I have nothing to say how much money do you spend on dating each month. You can easily save some money by lessening dating expenses. As you want to save some money for investing, you should cut short of your dating expenses. You may reduce the number of dates in each month. Even, you can lessen your dating expenses by spending little in each dating time.
6. Preserve a part of your income as saving
Many personal finance writers say that first pay for yourself than pay to others. That doesn’t mean you will not pay your debt. Pay first for yourself means you should save a part of your income each month. Remaining amount will spend on your daily expenses.
7. Find out extra source of income
You can do part time freelancing or some other work to earn some extra money. Extra earning will boost up your saving. Suppose, you are a full-time jobholder. You want to increase your earning in order to save money. After office hour, you can start freelancing or some other part time work.
8. Fixed your saving target
“Cut your coat according to your cloths” is an ancient proverb. First determine your saving target, then spend rest of the amount. Try to achieve your goal. Don’t spend more than you earn.
9. Don’t take loan or borrow from others
The first rule of saving is paying all of your borrowing money. If you have interest generating loan, you should pay all amount. You can borrow money from relatives to pay loan. Later, you should pay your borrow money. The final step is start to save as little as you can.
10. Try to maintain a discipline life
In the real world, no limit for earning and spending. You can expense as much as you want. But, you can’t earn as much you desire. Spending is easier than earning. Hence, you have to lead discipline life until you have created more than one source of income. Think before spending a single penny. But, you should not be a miser to save more. You must maintain your normal life.
How much saving do you need for stock investing?
You can invest as much money as you want in stock market. So, your investing capital is no fixed amount. But you should start with small amount. Minimum amount requirement for stock investing is very from country to country. You can know this information from stock exchange regulation body in your country.
Moreover, minimum amount varies from one trading style to another. First of all, you should choose your investing style-short term investment or long-term investment. If you want to invest for long term, you should follow how to buy stock for long term investment. Secondly, you need to fix your return target. Thirdly, you should save a mentionable amount to invest.
Let’s show an example:
I think your monthly expenses are 6000 dollars. You want to earn 30% of monthly expenses from stock investing. Your target return is (6000*30%)=1800 dollars.
Note: Stock investment is highly risky and unpredictable business. No one can guarantee any fix loss or fix return. Here, I have just shown an imagination. Moreover, you can’t expect monthly same return. As market fluctuates, you should calculate yearly performance.
How can you save 15000 dollars by low income in a year to invest?
I think, you want to save 15000 dollars for investment. I have explained earlier section how can you save money. If your monthly income is 8000 dollars, you should save at least 10% to 20% of your income. Suppose you save 10%. Your monthly saving is (8000*10%)=800 dollars. Yearly saving is (800*12)= 9600. In this rate, you need nearly 2 years to save 15000 dollars. If you save 1250 dollars per month, you can save 15000 dollars in a year.
How to invest your 15000 dollars saving?
In order to get the answer, you need to think average return of your investment. I imagine you want at least 12% return on investment (ROI). Your investment amount is (1800*100)/12=15000 dollars. If you want to invest in stock market, you should follow the below steps. Why did I start the article with how to save money fast on a low income? Because you can invest your saving in stock market or anywhere to get a return.
Firstly, you should achieve about stock market basics knowledge. Secondly, you should learn how to start stock investing. Thirdly, you should learn about best fundamental indicator–EPS, Dividend Yield and P/E ratio and top technical indicators–RSI indicator for buying and selling signal and candlestick chart for price movement. Fourthly, you should develop skill on buy or sell decision. Finally, you should expertise on stock selling styles to avoid stock trading mistakes by following golden rule of stock trading: stop loss order.
Moreover, you need to learn how to manipulates stock market and how to trade trend reversal. On the contrary, you should obverse the downtrend market in every situation. Be careful about record date effect. Otherwise, you may lose your money. In some cases, stock trading is better than investing. So, find out your opportunity.
Final Thought
Before starting saving, you should fix your saving target. You can save money by reducing your daily expenses. Later, you should invest your saving. You can invest your hard-earned money in stock market. Try to gather experience and skill. Then, gradually increase your saving money to invest in stock market. Don’t you learn how to save money fast on a low income? If yes, try to find out suitable sources for investment.
Founder of The Financial Ask
