Updated: July 31, 2020
When competing with the rising costs of living and a low income which doesn’t appear to get any bigger, life can be stressful.
With generation rent & debt (i.e. the millennials) becoming a prominent news headline, it’s difficult to know where you stand when it comes to saving for your future or living in the here and now.
While there are a number of options, such as unsecured loans, to help you when facing a financial emergency, having an emergency fund to help you with day-to-day life is important.
Here, we’re taking a look at how you can build up an emergency fund even if you’re taking home a low income.
Keep Your Emergency Cash Separate
Whether your emergency fund is going to be drawn out into a pile of cash or you’re opening a separate savings account, it is important to remember that your emergency fund should always be isolated from your existing account.
This will help to ensure that you do not impulsively purchase products that you can’t really afford, and so you can keep an eye on how much you’re building up. You can do this even on a low income and this should always be the first step.
However, make sure that your funds are still accessible, to ensure that if you do face an emergency you are able to use the fund that you have built up.
Look At Expenses You Can Ditch
There are a number of different expenses that you might be able to get rid of, but the most common are your subscriptions.
Are you still paying for the gym despite the fact you haven’t visited and worked out for a few months? Are you paying for Netflix when you could instead be sharing with a family member? What about app services or magazines that you don’t really notice coming out of your account?
Every penny can make a difference, and when you eventually start to cut out all of your expenses that you don’t need, you’ll find your emergency fund starting to build up.
However, make sure that you are actually putting this excess money to one side instead of using it to purchase something else or splash out on something a little bit extra for one month. If you’re ditching some of your expenses, the money you’re saving should always directly enter your emergency fund.
To make it simpler, write down how much exactly is going where, cancel your direct debits, and set up a number of new direct debits from your account and into your saving fund so you won’t even notice the difference!
Lower Your Phone Bill
If you’re on a low income, but you’re still paying an expensive phone bill every month, then you may want to reconsider your options.
For many, a phone contract is the simplest way to find the latest models at an affordable price, which you can pay off with your plan over the course of 1-2 years.
However, those on a low income should consider instead opting for an A+ rated second-hand phone and choosing a pay as you go SIM. While this is deemed to be relatively old school, this can help you to save a significant amount of cash in the long run.
If you decide to stay with your contract phone, then don’t forget that WiFi is readily available now meaning you may want to consider cutting down the amount of data usage you can have each month.
Also, if you don’t call very often and you only text or message via an IM platform, then get rid of the unlimited minutes and downgrade your plan to really save on some cash.
Saving is simple even if you’re on a low income. There’s plenty of different tips and tricks that you can implement in order to ensure that you are building up the emergency fund that you need to help you when facing a financial emergency.
This article is contributed by Connor Christopher.