Lower wage workers frequently feel like saving for retirement just isn’t in the picture. To be sure, around a third of workers earning minimum wage or slightly higher salaries don’t even have access to employer-offered retirement accounts. Consequently, they can’t rely on corporate assistance. Plus, many people bringing home less than $25,000 or even $20,000 annually before taxes feel too cash-strapped to dream of retiring.
However, the good news is that putting away a nest egg for retirement isn’t impossible—even for someone making a relatively modest income. Plenty of people have gotten creative and found ways to maximize their money today for a more financially secure tomorrow.
Is it a challenge to focus on retirement when you’re making $7.25, $10.00, or $12.50 an hour? Absolutely. Still, it’s doable if you’re willing to take a few practical steps. Below are some methods you can use to skillfully, successfully, and systematically grow your retirement savings.
1. Switch jobs to find a more progressive employer
Depending upon your experience, education, and skill set, you may not be ready to scale up in terms of pay grade. That doesn’t mean you can’t start applying to jobs at different companies, though. Even if you make a lateral move salary-wise, you may end up with access to better perks like being able to contribute to a small business 401k with a generous match.
Though 401ks have classically been associated with higher earners and bigger organizations, new 401k models have made them feasible for all entities. Consequently, some lower wage workers get pre-tax opportunities to set up 401ks and maybe get matching employer contributions.
2. Flesh out your personal budget
Too many individuals and families live without any kind of budget. Though it can take time initially to construct a budget, it pays off in the end. You don’t need any specialized software, either. Using pen and paper, create two columns, one for monthly income, the other for monthly expenses. For the next 30 days, write down everything you bring in and everything you buy.
After a month, you should have a fleshed-out view of incoming and outgoing dollars. Now, look for places to scale back. For instance, are you overspending on non-essential items like specialty coffee drinks, fast food, or entertainment? You may find various places to pare down spending.
During the following month, scale back your buys and put any money you’ve saved into a special account. Even if you can only stash $25 or $50 a month, you’ll start to amass a little to invest later in interest-bearing CDs.
3. Consider living somewhere else
One of the biggest expenses most people have is their mortgage or rent. If you’re living alone now, mull the idea of sharing space with a roommate or two. You might not love it at first, but it’s a good way to pay much less in housing costs. Plus, you don’t have to live with other people forever. After a couple of years, you might be in a position to move back out on your own.
Not sure you like the notion of having other people in your living space? You could potentially relocate to a part of the country where your dollar stretches further. For example, living solo in the safest areas of a bigger city can be costly. On the other hand, moving to a smaller, yet still safe town could give you more financial freedom to save.
4. Go a little radical—at least in the short term
Are you focused on saving a bundle over the next five years or so? Consider temporarily reducing your spending by taking relatively revolutionary steps. What would they be? How about cutting the cable or your home Internet access? Or sharing ownership of a vehicle with several people? Sure, you’d have to rely on public transportation, walking, and cycling to get around. But you’d be healthier—and wealthier.
Other somewhat radical ways to squirrel away cash include always making your own meals and clipping coupons like a super-saver. In fact, 90% of all consumers have used coupons at some point, so you’d be in good company.
Plenty of folks won’t pay for anything that’s not on sale. We all know groceries take a bite out of most people’s savings. Shelling out less during each trip to the store will keep more in your pocket, which you can put aside for when you’re older.
5. Look for low-cost ways to bump up your salary
The good news is that you don’t have to remain a low-wage earner forever. Look for opportunities to move up, no matter what your chosen industry. A good way to start is by putting your all into learning more and being the best employee in your department. This may put you in a position for a promotion, such as being considered for a team leader appointment when roles open up.
Don’t forget about self-education, either. Some organizations offer free or inexpensive training that could give your resume a boost. Seek out classes to take, or ask your personnel manager for advice. The more you take charge of your learning, the more of an asset you’ll become on the job. If nothing else, you may be more qualified to snag higher paying positions with other brands, opening you to more money and benefits.
Just because you’re making a lower income right now doesn’t mean you’ll be making one until you’re retirement age. And it doesn’t negate your ability to save like an expert. Becoming a wiser steward of your financial resources can start right now. Future “you” will be happy that present “you” began paving a smarter money path.
Interesting related article: “What is a Pension?“