Pay Yourself First -- three simple tips for saving on a low income

Even if you are working, you know how challenging it can be to save money. 

You have heard experts say you should save 10% of your gross income. You have tried and it does not seem to work. Furthermore, you might have a low-income and with all your expenses, there seems to be no way you can save. You are thinking: what you can tell me about paying myself first that I have not heard?

pay yourself first

Let me share what I did for myself so very long ago, and which I still do today. Perhaps it could be something you might consider trying.

I have three rules for Paying Yourself First:

1.  Save the smallest amount you can -

Try this: figure out your hourly income (if you only know your annual income, an online calculator can help figure out your hourly rate). Save the value of the first hour you work every day. If this is too much, keep dividing until you come up with an amount you can handle. The most important thing is to save something, no matter how small.

2.  Have it deducted automatically –

Your bank is happy to take your money and will do it for free. (Remember that your money is added to give someone else a loan; that person will pay 9% interest to the bank. So, if the bank gives you 1% interest on your savings, the remaining 8% is their profits. So, the bank needs your money to make money!)

3.  Save your annual raise –

When I started working, my philosophy was (and still is): I did not have it last week, so I will do without it this week. Raises are not hefty, so if left in a Chequing Account, it’s like feathers in the wind and will be gone before you blink. In a Savings Account it will grow as you keep adding to it, year after year.

Try it. It works.

If you have any tips to share – comment, or email jvsonline(at)jvstoronto(dot)org – we might add them to our blog!

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