Saving with a small salary is possible!
Having a small salary does not mean that you can not save. On the contrary! By having a small income, we are much more likely to pay attention, weigh our purchasing decisions and reduce unnecessary purchases.
However, many people with modest incomes have the impression, and their reality proves it, that they are unable to save .
This is not the case since we can always save : it’s all about attitude and especially about managing your money. Many people have even become wealthy from very small incomes, not only because of their entrepreneurial genius, but also because of the ability to manage their small income at the outset.
Let’s look at an action plan to save money even with a small salary. We will give you the steps to follow in such a way that you will be able to set up this plan easily.
Action 1: Calculate your incompressible expenses
Yes, we all have expenses that must be done every month without being able to modify their amounts, such as rent . The amount of his mobile plan is also fixed if you do not have any fixed price.
If you have monthly payments for water, electricity, gas, the amount is fixed too. In Step 7, we will see together if such a monthly approach is really interesting in your case.
The amounts to pay for your insurance – car, home, mutual – are also fixed amounts, even if they are expenses that you can reduce by including them in your action plan as we will see in step 8 .
The same goes for the monthly payments of your credits if you have subscribed.
Action 2: Calculate your monthly income
This calculation should be done quickly because it is your salary. If you have no other income, we will have to think of generating some and we will give you some useful ideas later in your action plan.
Action 3: Calculate your monthly variable expenses
In this category you will mainly put expenses related to food , health expenses and other expenses that are necessary and variable.
Action 4: Calculate the impulsive expenses
Yes, this calculation is very useful and informative! Calculate the impulsive expenses you have made in the last 3 months and determine an average amount. Thus, you will be able to analyze to what extent these impulsive expenses affect your financial equilibrium and thus your capacity to save .
Be honest with yourself – for example if you bought a toy for your child because he insisted on it and you did not want to deprive him of it, know that it is a expense that is not absolutely necessary.
If you are in this situation, know that you are not the only one. Many parents buy a crazy amount of toys and other useless gadgets for their children. They think that it is their duty or that it is good for the child – which is not necessarily the case.
On the contrary, the child will understand that he is entitled to everything and therefore will only claim more and more. It will be difficult to appreciate what the money is worth and will not even realize the efforts you make to meet his superfluous wishes. You have to know how to say no.
Action 5: Analyze your monthly budget
You are now able to have your monthly budget in front of you with your expenses and your income. Whether you have written down on a sheet of paper or on your computer, you need to have an overall picture of your monthly budget.
By adding up the expenses and comparing them to your income, you must be able to see your ” financial health “.
Two cases are possible:
- The sum of your income is greater than that of your expenses . This means that you are already able to save money and your management is healthy. Obviously it can always be improved and allow you to increase your savings and even your income.
- The sum of your income is less than your expenses . In this case, you must have difficult end of the month and trouble managing your money. So this is the sign that you have to take action and we will start immediately.
Action 6: Switch to true budget management
This step is very important when you are often in financial difficulty. It’s also useful if you’re struggling to save money and want to better manage your money so you can do more projects that are important to you .
To manage your money and get to have a healthy management, the simple fact of looking at your accounts from time to time or to have an overall picture following the 5 previous actions is not enough to clean up your financial situation. These steps simply allow you to take stock of your financial health.
To improve your financial situation, you must start managing your money by following your monthly budget , that is, all the operations you do.
You can do it with free software like GNUcash or you can do it on Excel. Know that a specialized software will allow you more easily analyze your management because it offers:
- reports by category of expenditure
- categories of operations
- to see graphics if you are visual
Action 7: Reduce your electricity, water and gas costs
save with a small salaryIf you have monthly expenses, know that it is not in your interest. This operation, even if it allows you to have fixed monthly payments, does not really allow you to perform and analyze your consumption, let alone compare the different months.
You do not pay what you consume now. You pay on the basis of what you have consumed before. Admit that it does not help much.
While if you pay the bills on the actual consumption, you can immediately compare and so be able to take action .
Here are some action ideas to reduce his expenses :
- use your washing machine and/or dishwasher in off-peak hours only
- systematically turn off the lights and make your family aware of doing the same
- unplug appliances that are consuming and weighing on our bill
- no longer let the water run while you wash your hands or do the dishes because it pushes up the bills to reconcile with your bank statements.
Action 8: Reduce the amount of your insurance bills
You probably have insurance to pay. Some are even mandatory:
- auto insurance if you have a car
- home insurance
if you are a tenant
You may think that you can not lower their
In any case, you should know that you can not only do it, but that you also have a good chance of lowering the cost of these compulsory insurance by putting different insurers in competition.
As for the mutual, know that it is not really mandatory unless your company requires you to take one since it finances a part. No law requires you to take a mutual .
To decide to take a mutual, here are the main questions to ask yourself :
- Does your state of health require or may it require special care only reimbursed by a mutual?
- Do you have a lifestyle or work that requires you to take a mutual when needed?
- If you currently have a mutual benefit, do you receive a refund greater than your monthly contribution or vice versa?
Action 9: Save every month
Set yourself the goal of saving every month, even if it’s a small amount . You have an idea of your budget and now know how much you can afford: whether 20 or 50 euros, the important thing is that you can set aside a sum every month and you keep it in time.
20 euros saved each month equals 240 € at the end of the year, it is not negligible!
Action 10: Place your savings to generate interest
Do not let your money sleep, but put it in a savings account. We have written for you a detailed page on the various savings accounts that exist in France and their rate of remuneration. Do not hesitate to consult it and choose the savings account that suits you and that earns you the most.