I’m Barely Making It Through the Month. Do I Still Need to Save?

Even if you’re finding it challenging to make ends meet each month, it’s still essential to make an effort to save money. Neglecting your savings when the going gets tough can make things even more difficult down the line. Here’s why you should continue saving through financially challenging times and practical steps for making it happen.

Top Reasons to Build Up Your Savings

If you’re living on a tight budget and hesitant about setting aside money, here are the top reasons to build up your savings:

• So you have an emergency fund: You never know what life will bring, so having a financial safety net can help you weather unforeseen events, such as a job loss or unexpected medical bills. You should have at least three to six months’ worth of expenses saved in an emergency fund to see yourself through difficult times.
• So you can build financial discipline: Even if you’re living on a tight budget, it’s still possible to be a bit more disciplined with your spending. Setting aside money for savings each month, even if it’s just a small amount, can help you improve financial discipline and develop a mindset of planning for the future.
• So you have practice reaching financial goals: When there’s barely enough money to get through the month, saving for a major purchase, such as a new home or a car, may seem beyond your reach. Setting and achieving small financial goals can be a powerful motivator for fiscal responsibility and ultimately aiming for larger goals. 

How to Make a Savings Plan

Just getting started with a savings plan is sometimes the hardest part. Use the following suggestions to develop an approach that will work best for you and your finances.

1. Get a handle on your expenses.

Before you can start saving, you need to understand where your money is going each month. Start tracking all of your monthly expenses by either writing them down, entering them into a spreadsheet, or using an app that tracks spending. Use your credit card and bank statements to get your list started.

Once you’re tracking your expenses, you can take it a step further and create a monthly budget. A budget will help you avoid spending more than you make.

2. Find ways to lower your expenses.

Even if you think you’ve already cut back as much as you can, take a closer look at your list of expenses. Some expenses are hard to lower or eliminate, but these suggestions will help you discover some of the opportunities that you may have overlooked:

• Avoid late fees and interest fees: When you’re living on a tight budget, it’s tempting to pay bills late and use the money for other purposes. However, late fees and interest can add up quickly.
• Use credit cards wisely: If you’re carrying a large credit card balance, you’re paying costly interest fees each month. Paying off the debt will eliminate this expense. Once you pay off your credit cards, use them only for convenience and pay the full balance each month. You can also transfer credit card balances to a card with lower interest rates or apply for a cash-back credit card that rewards you with money for each purchase. If you tend to run up credit card charges, just use cash, checks and a debit card. You can also seek credit counseling from members of the Financial Counseling Association of America (FCAA) or the National Foundation for Credit Counseling or credit counselors approved by the U.S. Department of Justice. Quorum members can also take advantage of FREE, one-on-one, confidential financial counseling sessions with certified representatives through our partner BALANCE (a member of FCAA).
• Refinance your home, car, and other loans to get a lower rate.
• Seek relief for your student loan: The federal government offers several debt relief.
• Reduce your utility, phone and internet bills: Research ways to reduce your energy costs. You may be able to save money by switching to a different phone or internet plan or moving to a different provider. If you’re facing a financial crisis, check out federal government energy assistance programs. Lifeline is a federal government program that lowers the monthly costs for phone or internet services for qualified households.
• Adjust your food budget: Buying meals at restaurants is more expensive than eating at home, so cooking your meals is a simple way to cut back on expenses. Eating leftovers for lunch, using coupons, and taking advantage of grocery store sales also help. If you’re facing a financial crisis, SNAP (food stamps) and WIC are the two major federal programs that provide food assistance for low-income families. Feeding America’s online tool will help you find food pantries, soup kitchens, and other food-assistance organizations in your community.
• Implement loud budgeting: Make sure your friends and family know that you’re on a budget and cutting back on your expenses.
• Find lower-cost entertainment alternatives: Take advantage of free community events. Cancel or pause subscription services and use your local library’s resources, such as free movie streaming services, instead.
• Ask for help: In times of financial hardship, it’s essential to take advantage of assistance and support programs. If you find yourself in a financial bind, don’t hesitate to seek help from government sources and community organizations. The federal government offers a wide range of assistance programs, and United Way’s 211 service provides referrals to local services and resources that can help you pay housing costs and other bills.

3. Increase your income.

If you’ve cut your expenses as much as you can and still can’t save money, consider finding ways to increase your income. Ask for a raise or a promotion at your current job. Update your resume and apply for higher-paying jobs at other employers. Increase your earning potential by investing in education or training so that you can advance your career or switch careers.

Even if you’re working a full-time job, you can supplement your income. Options include:

• Working a part-time job: You can earn money by taking on a second job during nights, weekends or other times that don’t conflict with your primary job.
• Starting a side hustle: If you have a hobby or skills—such as accounting, carpentry or baking—turn your talent into a small business. If you have expertise in a field that offers freelance or consulting opportunities, such as computers or graphic design, taking on assignments can bring in additional money.

If you’ve lost your job, be sure to apply for unemployment benefits. The federal government offers many employment and job search programs that can help you. For example:

• American Job Centers offer a range of free services to job seekers, including training, career planning, and connections to job openings and local hiring events.
• The Dislocated Worker Program helps individuals who have been laid off or terminated and need assistance to find or qualify for a new job.
• Job Corps provides skills training, counseling and other service to help people 24 years old and younger find employment

To find more information on other federal employment assistance programs, check out the Employment and Career Development section on the Benefits.gov website. Your local library also offers many free resources for job seekers. A staffing agency may be able to connect you with a temporary job to bridge the gap to your next full-time position.

How to Start Saving

Once you’ve identified ways to cut your expenses and boost your income, it’s time to start saving. Saving or investing 5% to 15% of your pre-tax income each year is the standard advice to ensure financial well-being. But even if you’re just saving a small amount of money each month, that’s fine. Starting small will get you in the habit of saving.

Follow these two basic steps to launch your savings plan:

• Set savings goals: Establishing achievable goals is an effective way to motivate yourself and follow your savings plan. Common short-term savings goals include building an emergency fund and saving for a vacation or a car down payment. Long-term goals include building up savings for a house down payment, your child’s education or investments to fund your retirement.
• Contribute to a savings account: If you don’t already have a savings account, open one. You can then set up an automatic money transfer that moves a set amount of money from your checking account to your savings account each month. If your employer offers direct deposit, into your checking account, you may be able to have a portion of the deposit routed to your savings account.

Sustaining a savings plan can be challenging, but even making small changes will help you save money, build financial stability, and achieve your financial goals.