One of the easiest ways to build wealth is to regularly save and invest over a long period. If you invest $100 a week at 5% from your 20th birthday onward by the time your 50 you would have $360,000. If you don’t start until your 40th birthday you will need to put away over $500 each week to get the same amount. By starting young you are letting compound interest do the heavy lifting. This is why is it important to save, even small amounts, when you first start working. Here are some tips to help you save when you making a low wage.
Live within your means
It seems so simple say but can be very difficult to do; living within your means is the most important step to saving more on any income. Don’t get caught maintaining an expensive lifestyle just because you started earning money. Use your income to make sensible purchases after you take out a portion for saving. This point of your life will be about low cost options; look for groceries on sale and choose second hand clothing and furniture as a way of keeping cost down.
Save first, spend second.
Every week take a set amount from your pay as savings before you spend anything; do not just save whatever is left over at the end of each week. Open a separate bank account that does not have debit card access and automatic deposit your savings into this account the same day your pay hits your main account. Try increasing your savings amounts in small increments, like 1% or $10 a month, after a year you will be saving a lot more each time. Even small amounts will make a big difference over a long period.
Invest in yourself
If you truly have very limited earning potential, then use your money to invest in yourself. Learn a new skill, take a course, or work low paid job with better earning potential, such as an apprenticeship. Talk to your current employer about what would make you a more valuable employee; they might even help fund part of your training. You might need to work your way up with multiple courses before you are earning better pay but it will be worth it in the long run.
Earning a starting wage can be tough and requires discipline to regularly save during this time. But these tips will help you save when your earning minimum wage and set yourself up for a wealthy life.
By starting young you are letting compound interest do the heavy lifting.