5 Strategies To Get Ahead Financially Even On A Small Salary

If you live on a modest salary as your only source of income, you're not alone. What's more, many people live paycheck to paycheck and have a difficult time saving any money, making it hard to get ahead financially. But this doesn't need to be you.

The good news is even if you only have a single income stream there are ways to save money and stop living paycheck to paycheck. Here are five strategies you can adopt.

1. The 52-week challenge

This strategy is best for newbies who like to build the discipline of saving money. It is the easiest strategy you can adopt with no complicated rules to remember. The 52-week challenge requires you to save every day and increase it on increments per week. For instance, you start saving $1 every day on week one. On week two, you start saving $2 per day. This continues for a whole year (thus the name 52-week challenge), adding one more dollar to each week. If you can complete this challenge, you will be able to save $1,378. If you start at $2 on week 1, you get to double your savings! You can save the amount daily or compute what you have to save for the whole week and come up with that amount at the end of each week. So if you are starting week one with $1 per day, then you can already separate $7 so you can tick off week one from your calendar. If you still have $14 to spare, then you can tick of week 2 in advance, and so on. This way, you don't get delayed in putting away money for your weekly challenge.

The great thing about the 52-week challenge is it makes saving a regular habit. This strategy can be daunting when you think ahead on the latter part of it. When you have to save $30, $40, or $52 per day. But come to think of it, when you finally develop the habit of saving, you will become more creative in ensuring that you get to save even on a tight budget. This could mean commuting, biking, or walking to work instead of driving.

2. Pay yourself first

This is one of the best saving strategies when you only have your salary as an income stream. This involves setting aside a part of your salary as payment to yourself. You pay that money before you pay anything else--bills, loan, mortgage, etc. This can be any amount — $100, $50, or 10 percent of your paycheck. The important rule for this strategy to work is you pay yourself first rather than last.

For most people, saving comes after the bills are paid. This kind of method doesn't work because most of the time, there is nothing left over to save. By paying yourself first, you are your first priority. Then you make do with whatever is left. So even if the budget is tight, it makes you more innovative in stretching your budget and forces you to make ends meet.

You can do this strategy in two ways: (1) manually separate a part of your paycheck and put it in a savings account. Or (2) you can get your employer to deduct a certain amount from your salary and automatically puts it in your 401(k) Plan or your preferred high-yielding depository account. When you have your "pay" automatically deducted from your salary, the less likely it will feel like you are saving because your saved money is already removed from what you are going to receive. This way, it doesn't feel much like you're saving.

3. Have a Budget

The most trusted and tested method to saving money from your salary is to create a spending plan. A spending plan or budget lets you allocate your income and itemize your expenses. Once you know your net take-home pay and your list of expenses, you can look for ways to reduce it. This method takes a bit more work than the other strategies at the beginning. And it needs reassessment every year or when you have changes in your income (a raise, promotion, lay-off, etc.) or long-term expenses (loan, a new subscription, change of address, tc.). But it works.

For this strategy to be effective, you have to identify what you are spending your money on. Map out your expenses by listing down your cyclical bills and arbitrary expenses. You can write it down in your financial journal, input your data on excel, or use budget planning apps to make your life easier. Once you know where your money is going, the better you will be able to plan your spending.

4. Have a goal

Choosing something to save for can keep you motivated when saving feels so difficult. This financial strategy gives you a goal or purpose for saving. It can be a short-term goal like travel, build up an emergency fund, or preparing for your wedding. It can also be a medium to long-term goal like buying a house, college funds for your kids, or saving for retirement. Think of what you want to save for, how much money you need, and your time frame.

The key to making the most of your savings is to have the right financial instruments for each goal. For short-term goals, you could put it in a separate savings account or time deposit to get a higher interest rate. For long-term goals, you may want to opt for FDIC-insured individual retirement accounts (IRAs) and securities such as stocks, trust funds, or mutual funds. IRAs are tax-efficient backed by FDIC. Securities, on the other hand, are not insured by FDIC and pose some risks so it is best to talk with a financial planner if you want to diversify your savings to securities.

5. Frugal Living

Removing unnecessary expenses in your life or those that you can live without, without sacrificing your sanity can further stretch your salary. With a few adjustments in your lifestyle and spending habits, you can squeeze in more savings. Here are some tips to lessen your expenses.

• Cut your cable subscription. A bundled cable subscription is more expensive as opposed to streaming services like Netflix, Hulu, and Amazon Prime. Consider cutting your cable and opt for a streaming service instead.
  
  
• Let go of your gym membership. If you are not visiting your gym as often as you should, you might consider letting it go. You can save an average of $40 per month if you let go of your gym membership. Besides, if you are going to the gym to stay healthy or lose weight, there are other means to do so without you having to go to the gym. Integrate your exercise in your daily routine. Biking to and from work, walking around your office block during lunch break, HIIT at home (or even in the office!) can all help to keep you fit.
  
  
• Always bring your own water bottle. Bringing your own water bottle that you can refill lessens your expense on having to buy something that you could otherwise get for free.
  
  
• Plan your grocery shopping. Do your grocery shopping during weekends when you are not stressed out, hungry, or tired from work. This will help you stick to your list better.
  
  
• Pay in Cash. Leave your cards at home and pay for your purchases in cash. This will force you to spend only what you have.
  
  
• Avoid dining out. Try to eat in as much as possible. Plan your meal and prep it beforehand so you have snacks and lunch ready to take with you to work and dinner waiting to be heated when you get back home.
  
  
• Make your own gifts. If you like crafting, cooking, or baking, why not make your own gift instead of buying from the store. It is more thoughtful, personalized, and cheaper on the wallet.
  

Where to get additional money from your salary

Besides your monthly paycheck, there are other ways to boost your savings from your salary. When you are used to living below your means and sticking to your budget, here are other areas where you could save from your salary.

1. Raise from work

When you get a raise, set aside that extra money in your savings. You have lived on less before, you can still live with the same budget. Those extra dollars can go to your short-term goals.

2. Promotion from work

Performing and doing good work in your job could earn you that much-coveted promotion. If you do, don't make drastic changes in your lifestyle. You can add a little to your monthly budget but try to keep most of your additional salary invested or use it in paying outstanding loans.

3. Overtime pay from work

If your job allows you to volunteer for extra overtime, consider working a little bit more each week. If you are following the 52-week challenge, this could help you achieve your savings requirement when you reach the latter end of the challenge.

4. Bonuses from work

Bonuses from work are extra money from your normal wages and do not form part of your living expenses. You can easily tuck this away to your savings account.

5. Large commission

If your job allows you to get commissions, think about putting a certain percentage of it to your savings. You can use it to reward yourself something that will last. A comfortable home or maybe a nice retirement are long-term goals but are worth the effort.

Final word

Saving money from your salary is very doable. You can pick any of the financial strategies that will work best for you. Or you can mix and match the strategies as you see fit. Better yet, find other income streams that will add to your salary and help you get ahead financially.