The good news is that there are ways to overcome every obstacle, so just follow these 6 tips on how you can live well - and even save for your retirement - on a small income.
1. Live below your means
Remember the ratio: 80:20? Spend only 80% of your total income, and save the rest either for rainy days, retirement, possible medical expenses, or even future wedding costs. Consider living a car-free life to save even more. Opt for public transportation, cycle, or walk to work or nearby places.
Bonus: It keeps you fit and healthy minus gym membership fee.
2. Plan your shopping trips
Always have a list before you go grocery shopping, and keep your list short and minimal with only the essential needs under a strict budget. Of course, you can treat yourself to a chocolate bar or a tub of ice cream, but you don’t need to buy a whole selection of different flavours just to satisfy your taste buds.
Tip: Only bring enough cash for your listed items and leave your credit or debit cards at home to encourage yourself to stick to your budget.
3. Set a budget for everything
And we do mean everything. Separate your expenses into two main categories: the essentials (e.g. rent, utilities, insurance, mortgage, and/or car loan repayment) and the discretionary items (e.g. food, entertainment, petrol, and/or apparel).
Prioritize your budget on the essentials first, then add in the estimated cost for your discretionary items. If your total expenses are more than 80% of your total income, then cut down the budget on your discretionary items.
4. Avoid new debts
Having a credit card or getting a large sum of money from a personal loan sounds lovely, but don’t forget that you’ll need to repay what you owe the banks. The repayments will add up on your already tight budget and tip the scales, making it harder for you to save. Only consider applying for credit cards or loans when your finances are stable.
5. Switch to term life insurance
It’s important to have a life insurance to provide security to you and your loved ones. You can enjoy the benefits at a low cost with term life insurance. Most term life insurance plans allow you to customize your coverage and protection to suit your budget. Click here to find out more about term life insurance.
6. Enjoy free entertainment
You may not realize it, but there are plenty of free, fun things to do in the city to keep your entertainment budget to a minimum. You can visit interesting places that do not charge entrance fees; such as PETRONAS Gallery, KLCC Park, Central Market, KL Forest Eco Park, and Craft Complex.
It takes some getting used to, but after a while you’ll build up the habit of saving and living below your means that you won’t even notice it. After all, it’ll help you lead a better life in the future.