Although saving money seems like a simple concept, it’s no secret that a lot of people struggle with it.

The problem is that compound interest is not understood, and most believe that a high income is necessary to save money. That’s just not how it works, though.

In short, failing to save money now is choosing to be broke forever because saving money is a habit.

Why your level of income doesn’t matter 

To tell you the truth, it doesn’t matter how much you increase your income—the cost of your lifestyle will increase with it. Your new job will require more expensive clothing, possibly more travel, and will probably lead to a group of friends with more expensive lifestyles. 

Therefore, the more money you earn, the more money you’re going to NEED to save. Someone earning 50k per year may actually be better off than someone who earns 100k per year, unless they are capable of avoiding lifestyle inflation. Simply put, the person that lives on 50k can afford to live under 50k, while the higher income earner can no longer imagine living on so little.

Of course, I’m not suggesting that earning more money is a bad thing. A higher income earner could obviously reach financial independence faster. 

But I am implying is that your level of income doesn’t matter. Each individual should be saving a proportionate amount of their income from the age of 25 to take advantage of compound interest.

Here are 5 rules to save money on any level of income:

1. Pay Yourself First.

In my opinion, paying yourself first is the most underestimated component of the pursuit of wealth. It’s an absolute must.

Many people claim they can’t afford to save money because they don’t make enough. After bill payments, groceries, and the cost for shelter is subtracted from their income, there isn’t enough money leftover to save. 

This will always be the case unless you make paying yourself first a priority.

To successfully pay yourself first on a regular basis, saving money should be the number one bill payment on your list, and it should go directly to an account you can’t access.

In a sense, you have to reflect back to a time when you earned less. If you were able to live on less at one point, it’s a lie to claim that it’s impossible to live on less now. What would happen if you lost your job and were forced to take on a new job that pays 10% less? Would you need to file for bankruptcy? Probably not, right? Because you’d adapt to your new income the same way you could adapt to a savings rate.

It may seem like you’re leaving yourself short at first. But before long, you won’t even notice the difference.

2. Motivate yourself with an asset of interest or seek professional advice.

Based on my career experience, a lot of people avoid saving money because they don’t know what to do with their savings.

Furthermore, saving a small amount and stashing it in an account that earns 1-to-2% interest is not that exciting. 

On the other hand, I’ve seen non-savers become incredible savers when they have something tangible to save towards, such as a house. They become extremely motivated. 

Similarly, getting closer to retirement causes people to become more interested in investment options. They are suddenly motivated to save after their financial advisor educates them on the various investment options and how it will impact their financial situation 10 years down the road.

As such, it’s important to understand why you are saving money, and it’s essential to know what the benefits of saving money are.

3. Avoid anything that decreases your cashflow.

This goes back to my point on why income is meaningless. 

Your level of income means absolutely nothing if you have payments coming out your ass. 

You might earn a high income, but you’re essentially reduced to a status-seeking, powerless title that earns minimum wage if you’re living pay to pay. That’s how I see it. 

I mean, has your lifestyle really improved if you’re down to $0 every two weeks before payday? I don’t see how that’s much different than being a student that is dependent on their student loan. 

Anyways, the point is to view additional payments as death. Don’t sign up for shit! Any extra payment, even if it’s just a $10 per month subscription, will take away from your ability to save money.

4. Buy assets that save money for you.

Another way to save money on any income is to buy assets that save money for you.

It could be a rental property, dividend stocks, or interest paying investments. There are many options out there. Of course, you must save the money first to acquire your asset of choice, but it really provides a boost once the asset is obtained.

In my case, I prefer dividend investing because of my interest in business and the stock market. 

Even if I fail to save another dime this year, I’ve already created a cash flow machine that will pay me $524.92 this year. Frankly, that’s more than some people can afford to save during an entire year, so don’t take that small amount lightly. 

5. Be consistent no matter what.

If there’s one take away from this post, it should be the importance of consistentcy over time.

Even if you’re starting off with a low income and can’t afford to save much, rest assured that small contributions add up.

Allow me to be more precise—start as low as you have to and be consistent. If you can only afford to save 1% of your income, start with that. It’s better than nothing. If you’d rather work with dollar amounts, start with $25 per pay ($25 bi-weekly is $650 per year). After you prove you are consistent with that amount, increase it slightly.

The key is to keep your savings separate from your spending account then forget about it. It no longer exists as if you were paid less. Over time you will be surprised with what you’re able to accomplish. 

Concluding Thoughts

I hope that you were able to learn about saving money by reading this post.

My goal was to create a post for those that believe they’re not in a position to save money. Too many people put saving money off in anticipation of eventually earning a higher salary. But most of the time, that never happens because saving money is a habit. Plus waiting to save doesn’t take advantage of compound interest.

Overall, I feel confident that these rules will help you save more money, because I have personally found success by practicing them over the past few years. You can check out my financial recap for 2018 to find out how much I saved.

Ultimately, I think that anyone can afford to save. It’s just a matter of prioritizing. I currently earn an average salary and live in one of the most expensive cities in the world, Toronto. I’ve never had any help with my expenses either. Not with my education. Not with a down payment. Nor with a car. Furthermore, I pay for my own shelter and groceries, unlike a lot of lucky millennials nowadays. And I’m not complaining… I’m just saying: if I can save money, you can save money too.

In conclusion, I truly believe that following these simple rules will lead to money saving success. At the very least, it should provide you with a foundation to begin keeping some of that hard earned money in your own pocket instead of someone else’s account.

No affiliate links are contained within this post. There are only internal links to posts on this blog. However, there are Google Adsense advertisements.