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Finder's money experts have put together 4 no-nonsense ways to help you stretch your dollar further and take the next leg-up financially .
The federal minimum wage is still just $7.25 an hour, or about $15,078 gross per year if you work 40 hours per week. In some states, the minimum wage is higher, but even in those states, it may barely be enough to survive alone.
There are a lot of so-called“money tips” for minimum wage earners, but many I've seen are completely out of touch. As someone who earned minimum wage for over 10 years, here are some realistic saving tips for minimum wage earners that don't involve getting three more roommates.
1. Savings round-ups
Using a savings round-up feature is easily one of my favorite money-saving tips. It's especially useful for people who struggle to save manually. A savings round-up feature is sometimes included with modern bank accounts, more often through online banks .
It works like this: When you spend with your debit card, the feature rounds up that purchase to the nearest dollar. The rounded-up amount is deposited into your savings, allowing you to save anywhere from $0.01 to $0.99 per transaction.
It isn't a ton of money, but that's exactly why it's one of my favorite tips. It shouldn't impact your overall budget too much because it's under a dollar with each transaction - but over time, it will add up, similar to saving your change in a jar. And if you notice that the savings round-ups are impacting your budget too much, you can simply disable the feature.
2. Save what you can actually afford
The old rule of thumb recommends saving at least 20% of your income . If you earn the federal minimum wage, saving 20% of your income would require saving around $251 per month - which is likely an unrealistic savings goal if you have bills to pay.
Instead of focusing on what you're“supposed” to save, focus on saving what you can realistically afford. If you think saving $20 per paycheck is a waste because it's not hundreds of dollars, change your mindset. If you save $20 twice a month for 12 months, that totals $480 in savings in just one year. If you make $7.25 an hour, $480 is nearly two weeks' worth of pay - and that's something to celebrate.
3. Put savings in a high-yield account
Opening a high-yield savings account can boost your savings balance without any extra work.
Say you commit to saving $40 per month and deposit that money in a high-yield savings account with a 5% annual percentage yield (APY). After two months, your balance is $80.16 instead of just $80. One year later, your savings balance is $490.90.
By just placing your savings into a high-yield account, you save an extra $10.90 in one year compared to keeping your savings as cash or in a non-interest-bearing account. The earnings aren't off the charts, but they will add up over time and are completely passive.
Look for high-yield savings accounts without monthly maintenance fees, too. An account that charges $5 each month just to keep it open will seriously eat away at your savings over time.
4. Make a budget
I highly recommend the zero-dollar budget method for minimum wage earners. Simply put, this budget method means that every dollar you earn has a job.
You assign portions of your income for living expenses, groceries, utilities, fun money and so on. If you have $5 left after paying everything, assign the $5 a job. The zero-dollar budget method is about making use of every single dollar you bring in. If you don't have money to throw around willy-nilly, this method can help ensure every dollar is doing something.
There are also budgeting apps like You Need a Budget (YNAB), which comes highly recommended by its users. But it costs $14.99 per month, which is counterproductive when we're trying to save with minimum wage. Instead of paying for a budgeting app, consider those with free versions, like Goodbudget or Empower Personal Cash.
Bottom line
Many stereotypical money-saving tips hinge on the idea that minimum wage earners struggle because they splurge on pricey coffees or have dozens of subscription services. But with less than $16,000 in gross income, there isn't much flexibility to splurge or save.
When you lack flexibility with your wage, make use of savings tools, craft a budget and look for high-yield accounts that can passively grow your savings.
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