How to Build Savings Even on a Low-income
A case study in the power of "treating new money like it does not exist"
Here’s something you don’t see every day; a personal finance article focusing on how low-income people can build emergency savings.
Apart from the obvious goal of trying to increase your income—the number one goal for most people living on a low income should be to build some emergency savings.
Low income + no cash = a financial time bomb rapidly ticking to zero
Studies have found that households without easily accessible money are more likely to experience financial hardship. Having emergency savings is linked to less financial stress and more hope for the future.
Not having emergency savings makes you vulnerable to financial shocks like losing a job or having your hours scaled back—which hourly workers must deal with on a regular basis. This can lead to all sorts of nasty financial outcomes like bank fees for overdrafts and bounced payments or racking up high-interest debt like credit cards or payday loans
These put further pressure on an already strained budget and create a vicious cycle of debt.
This type of debt spiral has many devastating real-world consequences.
Missing rent/mortgage payments.
Having your car repossessed.
Foregoing necessary medical or perceptions.
Being unable to afford healthy, nutrient-rich groceries.
Crippiling anxiety and mental health concerns.