Almost any financial advisor or economist will advise you to have a rainy day fund, with most suggesting 2-3 months of income. If you are a very low income earner, this may seem like an impossible goal. Although getting to that amount may take years, you should start a savings regimen. These rainy day funds can make a huge impact if you have a true emergency.
The only way to save, when on a very low income is to be smart about your budgeting and use every available tool at your disposable. Effective and consistent budgeting is the first major pillar of being able to save on a very low income. Develop a budget that lays out your exact costs per month and your income. Next look at ways to lower some of your largest expenses, as this will be the only way to shave off $5, 10 or $25 a month off your budget. The largest expenses of a family are going to be your lodging, food, utility bills and clothing.
Budget these items and never go over the budget. In order to meet this, you will have to reach out and use public and local resources that are meant to help low income earners. Sticking to a budget can be one of the hardest aspects when on a very low income. There will be times when impulse purchases or minor emergencies prevent you from saving, as long as the goal stays firmly in front of you to save.
When emergencies that require cash do pop up, utilise non-profit and government benefit loans that will have minimal to no fees and low to no interest rates. These loans are specific to low income earners and essential household needs.
Use the Resources
For low income earners there are a number of resources that actually put money back in your pocket. Not using these resources is like throwing money away.
The easiest resource to use is the multiple food savings programs. There are national and state level programs that help many families with direct benefits for purchasing groceries or with food bank options. In addition, there are programs through in schools to make sure kids are getting healthy meals while at school. This type of subsidy really helps with the monthly budget.
Getting housing or rent assistance can also help immensely for very low income earners. Again there are state assistance programs as well as programs from the federal government. Ensuring you have affordable housing is one of the long term goals of any family. This means planning and being persistent in your applications to get into some of these state and federal programs.
Other resources provided for very low income earners include health care for pregnant woman and children, electric and heating bill assistance and thousands of charity and grant programs for specific purposes. Each of these areas take effort from you to apply and discover if you are eligible. However do not get discouraged by being denied from one program, simply move on to the next. Fully combined across all these resources you can considerably increase your standard of living and free up enough budget a month to be able to put away a little savings.
Lastly, remember that this savings should never be used for indulgences, but only for emergency. Once you have at least one month in savings, you can then use the same principles and savings plan to start saving for other items.