You’ve heard it all before: Set aside at least three months income for emergencies, start saving early for retirement, set savings goals. But what if there is no money to save? When you are living mostly paycheck to paycheck, building your savings can feel impossible. But it can be done—even if you’re only saving a little bit at a time.
Here are a few steps to get you on your way.
Take a long, hard look at your budget.
Figure out how much you currently spend--and on what. Keep track of all your expenses for a month, no matter how big or small. Use your bank account and credit card statements to make sure you don’t miss anything.
Separate your expenses by needs and wants. For example, you need to pay rent, but do you need that streaming service subscription? You might have to make some tough choices to find money to save.
Check your budget each month to make sure you’re staying on track.
Get in the habit of saving.
Budget for savings, even if it’s $5 a month. It’s too easy to skip saving altogether if you think there’s not enough money to set aside. Make a habit of saving something--anything--just to make sure you do it.
Save your spare change.
It sounds simple, but it’s amazing where you will find spare change when you start looking for it. From random dollar bills in not-frequently worn jackets to change received after making a cash purchase, putting all of it in a jar can add up. Each year, add your jar to a savings account and start fresh the following year.
Separate your savings
By using a separate account for savings, there is less risk that money will be spent on something else. And many savings accounts earn interest, meaning you’ll make money just by saving it. Make sure you understand any minimum balance requirements of your savings account.
Set Up Automatic Transfers
If your employer offers direct deposit, allocate a small portion of each paycheck to automatically deposit into a savings account. If you don’t have direct deposit, you can set up automatic transfers from your checking to your savings account within Online Banking. Start with $5-10 a month and slowly increase the amount deposited as you adjust your budget.
Follow the 30-day rule.
When following the 30-day savings rule, you avoid all non-essential purchases for 30 days. Put the money you would have spent during those 30 days into savings. If you still want to make the purchase after 30 days, you can. But chances are, you’ll keep the money in savings.