Save More With a Small Income

We usually think that having a high salary or a high income is the only way that we can save more. But, this is a common misconception.  There are individuals who may have high salaries but may go broke because of poor spending habits.

On the other hand, building wealth can be possible even if we are receiving a small salary or have a low income.

As I explore more articles and videos on how to increase one's net asset, I came across this statement by no other than the popular businessman and author, Robert Kiyosaki. We may have encountered this adage but does it have any impact on us?

Practices to Avoid if You Want to Gain Wealth

Who wouldn’t want to gain wealth? Some say that working as an employee will never make us rich. I don’t agree with this statement. Apparently, some people may never get ahead because of the following practices:

Upgrading Vehicles and Lifestyle

This is one of the common mistakes of people that we can observe within the community. When employees were promoted and got their salary increase, the first thing they would do is to buy a new car regardless if they still have a service vehicle that they can use. I mean, there’s nothing wrong with having a new car but it seems that they were not aware that when the salary increases, so does the taxes and other mandatory contributions.

Suggested Reading: Would You Go for a Brand New or a Second Hand Car?

Availing Loans Without a Specific Project

Credit companies are everywhere and if we are not careful, we could be easily tempted to avail loans even if we don’t have a specific purpose or project. Availing loans just because we like it or our friends and colleagues availed the same is not a good practice and may lead to more serious problems in the future.

We should avoid availing of loans without a good purpose.  

Frequent Dining Out

Unless we live alone or dining out would be cheaper, we should avoid this practice. If we have the time to cook our own meals, that is much better and we are assured that we are serving healthier food to our family.

Uncontrollable Shopping Online

One way to drain your money fast is through online shopping. With a lot of items to choose from, you won’t certainly not leave the app with an empty cart. And because you don’t have to pay it outright, you tend to buy more.

Buying on impulse will surely bring negative effect especially if you are doing this as a coping mechanism to regulate our emotions.

I also buy things from online shops but I see to it that I only buy things that I need and whenever I ordered an item, I would automatically give the corresponding amount to the guard so that the money would be ready just in case the item arrives.

Things You Should Consider in Order to Build Wealth

I always believe in the saying that great things comes from small beginnings. We may be earning a small amount but we can always make a way in order to save. Here are some of the proven strategies that can help you in one way or another in order to build wealth despite having a low income.

Build an Emergency Fund

You might encountered this statement many times and you might just get annoyed because this will always come as the top suggestion when it comes to building wealth. Many says that we should have an emergency fund that is equivalent to at least 10 month of salary.

Set Aside at Least 10% of Your Income

No matter how small your income is, you need to make your best in order to save at least 10 percent of it. This amount should be kept in a secured bank and better if we have it deducted directly from our salary.

Create a Budget and Stick to It

First, we need to know how much is left after keeping the 10%. From there, we can allocate the needed amount for bills, food, gasoline, and other things needed depending on your situation. If you have children who are studying, then you need to include tuition fee and allowance.

We should monitor the monthly allocation. For example, electricity and water bills. Are they increasing? We need to know the reason why so we can take the needed action. I remember I was paying water bill almost 800 pesos per month for 3 months before I noticed the difference from the bill I was paying in our previous house. When I checked the lines, I found out that there was a leak in the connection. So, I immediately reported the issue to the Prime Water and they checked and repaired the lines. As of now, we are only paying from 300 to 360 per month.

Live Below Your Means

Living below our means does not necessarily mean that we compromise our health or buy low quality things. It only means that we need to assess our income. It also means,  that we need to cut unnecessary spending.

You want to go on a vacation? Why not if you can afford it without taking any loan? Meaning, you need to plan it in advance and save the necessary amount to cover the expenses needed for a vacation.

It’s simple. If we can’t afford something now, set it aside momentarily and save until such that that we have enough fund to acquire it or spend on it.

Invest

No matter how small, we need to start investing. We will be amazed on how far we have been over time.

Additional Strategies

These are my own strategies and allow me to share it with you.

Trick yourself to Saving More

What does it means? I think there is this urge to spend whenever we have money on hand. What I am doing? Yes, I am buying something just to satisfy myself.

I buy cryptocurrency

When I buy something and lost sight of the money, the desire to spend would be gone. So, instead of buying unnecessary items, I would rather buy Bitcoin Cash and other cryptocurrencies.

I save using an online banking app

Since I have my small business and I earn a little amount every day, I would put at least 2 Dollars on my online bank, CIMB via GCash. After a few weeks, I have good amount which I will transfer to my Pagibig MP2 account.

Issues We May Encounter

We can encounter various issues on our way to reaching our goals. We cannot totally avoid these issues since these are beyond our control.

First, while we are trying our best to be frugal so that we may be able to save, here comes our relatives who are regularly visiting us to ask for money.

Second, people will make friends with you and eventually will borrow money and you have no idea when they will return the money they borrowed.

What will you if you have these people around you? Please let me know in the comment section.

On the final thought…

Just like a dripping water from the faucet, a small amount on a regular interval can fill the pail after some time. It may not be easy but it doesn’t mean it is not possible. Focus on the goal and consider everything else as distractions trying to take away our attention from our main objective.

Disclaimer:

The content of this post are based purely from my own experience and should not be considered a professional advice. Similarly, the opinions I have shared are of my own and does not in any way represent the organization I am currently connected with.

Special Thanks:

I would like to extend my thanks to my sponsors. I wish you more success with read.cash and with other projects you currently have.

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