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Well, to become financially stable you definitely need to have a really good amount of money but if that is not the case with you then this article might be useful to you.
There are two ways to be financially stable, either you earn a lot of money from your main job or you start hustling sideways to make extra money for future stability. In this article, we are going to discuss the ways to get stable life with a low income. So, let’s dive into the topic.
LOW INCOME is a subjective term, this may be different for everyone.
If you are making less money that doesn’t mean that you are not as good as others, it may be just you don’t know where to dig to have that extra money.
There might be so many reasons for having a low income, and one of them might be that you are only depending on one source of income, and to have stability financially you must have multiple sources of income.
But before knowing more ways to make money, let find out where you can save money because that will help a lot to get stability with low income.
Ways to Save Money To Get Stability On A Low Income
Stability comes when you have enough money to fulfill your needs and are able to save for the future. Well, the process of that will start from saving every penny possible and making an extra source of income.
For now, let’s learn the ways how you can save money.
1. Create A Budget:
This is the most important thing that you should do, no matter how much money you make. If you have no control over how much spend then it doesn’t matter how much you make. You can’t get stability for life long.
Making a budget will help you to eliminate all the unnecessary expenses that you make throughout the month. Tracking your expenses is the best way to minimize your expenses.
Pen out every penny you earn (mention all the sources of income in the house) and, every penny that goes out of the house. Write every transaction down, even the smallest. This way you will be able to identify what expenses you need to cut down to save more.
2. Lower Your Expenses:
Once you are done with making your budget, now it’s time to eliminate unnecessary things where you spend your money.
Everyone loves pizza, but do you know how much money it can save you every month? (Just calculate once). Start controlling your diet, eat healthy and home-cooked meals. This way you will save a good amount of money and will have a healthy diet which you should have had in the first place.
Not just food, search out every single piece of equipment in the house if you can replace that with the more power-efficient product then do it. It will save a lot more money than you think. (Replace every other light bulb with LEDs).
Use smart products that can control heating and cooling by identifying the number of people in the power to save power. This way you will definitely save a nice amount every month which will lead towards financial stability even with the low income.
3. Stop Spending on Entertainment:
We usually spend a lot of money on entertainment. If we start keeping track of that money and start saving that you’ll end up with a pretty good amount.
Find Alternatives:
If you spend most of your free time on Netflix with costs around $18 per month and other subscriptions take 100s of dollars away from you. You must find free sources for that and must save some money.
Ask your friends and take a subscription in groups so that you all can save a few dollars every month. Even a single penny will make a huge difference in the long run.
4. Save Money On Transportation:
This is the most underrated expense that we usually don’t even consider as an expense. As per the AAA (the American Automobile Association, Inc.), the yearly expense of owning a car is way more than $8,000. Buying a car is easy but keeping it running is a hard nut to crack. Use public transport, do uber. This way you’ll be saving thousands of dollars a year.
5. Reduce Your Living Expense:
Everyone loves to live in a dream home but it takes a lot of money to be in that and if you are still struggling to be financially stable due to low income then you should think about where you live.
You should consider a smaller house/apartment for a while, till you figure the way to be financially stable. Saving a few hundred dollars every month will turn into a significant amount after a long duration if you invest them properly.
6. Create Your Emergency Piggy Bank:
You must have funds for your emergency situations. If you are not making enough and struggling to manage your finances then a piggy bank would be a lifesaver for you.
Pen down all the negative habits of yours where you spend your money unnecessarily, now you need to put that money in your piggy bank instead of spending where you’ll regret later on. This way you’ll have savings as well as you are free from that unhealthy habit.
7. Kill Your Debts
Debts are killing you, it’s like a slow sweet poison. This is the biggest roadblock in your way of achieving financial stability.
Try to minimize your debts, track your debts, and try to pay them off as soon as possible.
Stop using credit cards to buy liabilities. Start buying assets using that, so that you’ll be able to have some additional cash into your pocket every month.
Get rid of bad debt – Understand what bad debt is for you and clear that off as soon as possible. Pay your highest interest debts first and then clear all of them in descending order.
Calculate your total debt and start making plans to pay off that as soon as possible.
Calculate your debt to income ratio, to know the debt-income ratio you need to divide your total debt by your total gross annual income. If the debt-income ratio exceeds 35% that means you seriously need to pay your debts as soon as possible.
9. Filter Your Insurances:
Choose your insurances wisely! You might be losing money if you have taken insurance without calculating your needs. For instance: If you are a very health-conscious person, and you do yoga and exercise daily then you need not have a high-deductible plan of health insurance.
Similarly, if you have insurances that you may not use very often then if it is better not to have those at a premium price till you are financially stable.
For instance: You have a debt of $20,000 and you earn $50,000 per annum, then your debt income ration will be 40% ($20,000/$50,000 = 40.0)
10. Save More With Cash Envelope Method:
The cash envelope method will help you make significant from insignificant. If you didn’t get what I mean then just wait for a while, till I explain the whole process.
See the below image for a better understanding. What I meant from insignificant was that you need to save money equals the number of weeks it is. In the first week of the year, on the last day of the week i-e Sunday, you have to put a dollar into an envelope. Similarly, every week you have to do this. On every Sunday, put equivalent money into the envelope and by the end of 52 weeks (one year) you will end up with the savings of $1,378.0 which is pretty significant.
This process of putting your money into envelopes every week is called the Cash Envelope Method.
All these methods will help you in any financial condition to achieve stability. But there is more thing you can do to be financially stable and that is, earn more money.
If your income is low, first you should try to get promotions if that doesn’t work that well because I have something more interesting for you that will make you financially satisfied.
Here I am discussing ways that will help you make extra money with your low-earning income job.
Ways to Make Extra Money to be Financially Stable
No matter how much you control your expenses, no matter how small your apartment is unless you are not making enough money to live a luxury life of being financially stable. To save, but along with that, you need to earn more and should make more sources of income for stability.
The first thing to be financially stable is to know where you are getting your income, then you must know where you are spending that money, and then you must learn to increase your sources of income.
The best practice is to have at least 5-6 sources of stable income to be really financially stable, and in today’s era that is pretty easy and simple. Here I will share a few ways, choosing whichever you like and start hustling and you will start seeing results by the end of the first year.
1. Start Tutoring:
If you are good at some skills, it would be great if you start teaching that skill to others and make some money out of that. This is the easiest way to make a few extra dollars without any hustle.
2. Start A YouTube Channel:
YouTube is the best way to share your knowledge with a vast audience. If you know something, and you know you can teach people in a better way than others then this is the right platform for you.
3. Start A Business:
If you have a passion and have the right direction towards your business then start it. Invest a small amount in your business and keep working a few hours every day and eventually, you will have some great returns from your business.
Final Thoughts
Being financially stable with low income is a hard nut to crack but with the right state of mind, motivation, and with the perfect planning you’ll achieve stability in your finances.
Track down your money, sort them in any particular order, and filter out the things that seem unnecessary. This way you will start saving money, invest that saved money into any business, if you have, else invest in stocks and funds for better interest.
All you need is the perfect motivation to do all this as you have to make some tough calls to save money for a few years, once you managed to build multiple sources of income everything will be back to there original place.
I hope this article might have helped you in some or another way, if so, do share it with your friends and families. Till then, keep hustling and keep growing.
