Written for Daily Hive by Christopher Liew, a CFA Charterholder, former financial advisor, and the creator of Wealth Awesome.
Despite minimum wage increases throughout the country — including BC’s on June 1 — 54% of Canadians say they are living paycheque to paycheque, according to a recent BDO Canada survey.
The good news is that almost everybody can find a way to budget and save, even if they’re just working for minimum wage. It just requires a bit of math, creativity, and goal-setting.
If you’re tired of living on the edge and want to create more financial stability for yourself, keep on reading to see some of the best tips to save (and earn) more, no matter what your current wage is.
Can you save money while working for minimum wage?
If you’re supporting yourself while working a minimum-wage job, saving money can be hard. The Consumer Price Index (CPI), which measures changes in the cost of living and daily consumer goods, increased by 4.3% year-over-year for March, according to the latest Statistics Canada report.
Even though wages are increasing, many Canadians are still struggling to keep up with the rising costs of fuel, groceries, and housing, let alone set money aside for a rainy day.
Budgeting on a minimum-wage or low salary isn’t impossible, though
While you may not be able to save an extra $1,000 per month, something as simple as saving an extra $100 to $200 per month really adds up over the course of a year.
An extra $1,500 saved up at the end of the year could allow you to invest in job training, move to a city with better job opportunities, or earn more interest with a high-interest savings account.
Budgeting tips while working for minimum wage
Some people like to wait until the beginning of the next month to start their budget, but I always tell people that the best time to start is today. Even though it may seem difficult or overwhelming, budgeting is actually fairly simple.
Here are my top five tips to help you budget on a lower income.
1. Detail your monthly expenses and income
First things first, you need to do some personal accounting. The best way to start is by taking a look at your debit/credit card statements from the previous month. Categorize all of your expenses into categories, such as:
- Groceries/daily supplies
- Car payment and insurance
- Fuel and auto maintenance
- Eating out
- Debt, credit card, or loan payments
- Fun, vacation, and personal activities
You may have some other categories to add to your personal list, but this is a good place to start.
Under each category, detail each expense listed on your card statements.
Once you’re finished, take out your calculator and add up the totals. This will allow you to see exactly how much you spend in each category.
Next, add up all of the income that you earn in a month. This should include your hourly pay/salary and income earned from any side jobs or projects.
If you have high-interest rate debt such as credit card balances, prioritize paying those down first, as those interest payments can add up quickly.
2. Identify where you can cut and save
Now that you have the numbers, it’s time to identify areas where you can save. In my experience, here are some of the best things you can do to cut down costs and save:
- Shop for a new auto insurance policy with a better rate (if you live in a province that allows this)
- Buy your everyday groceries in bulk and freeze leftovers if needed
- Meal prep at home, pack lunch and don’t eat out as often
- Replace expensive entertainment like clubs and concerts with cheap fun like going to a park or hiking
- Find a roommate to reduce your rent and bills
- Cancel subscriptions or streaming programs that you don’t use every day
- Challenge yourself to drive less by taking public transportation, riding a bike, or walking
3. Create a savings goal
A savings goal will help you keep the bigger picture in mind and motivate you to keep up with your good habits, even when you feel less confident.
Your goal doesn’t have to be astronomical or unbelievable. Some simple savings goals could be:
- Saving $1,000 in an emergency fund
- Saving $500 to invest in a stock market account
- Saving $2,000 to purchase a class or training program that will help you earn more
- Saving $100 per month to help you pay off your credit card debt faster
Pick a goal that works for you, write it down where you can see it every day, and remember it every time that you’re tempted to break your budget rules.
4. Save smart with a TFSA or HISA
Saving cash is a good place to start, but it’s not the most efficient way to save. If you want to grow your savings even quicker, I suggest saving your money in a tax-free savings account (TFSA) or a high-interest savings account (HISA), where it can compound over time.
Most banks and financial institutions offer these accounts, so it’s worth researching.
For example, you could invest your savings into a stock market ETF in a TFSA, where your investment will grow with the market, or put your savings in a HISA, where it can earn a high monthly interest rate.
Putting your savings in a separate account will also discourage you from spending it.
5. Keep track with a free budgeting app
Writing your budget down on paper is a good exercise to help you remember it. However, I suggest using a free or low-cost budgeting app to maintain your budget and keep track of your daily spending.
You can find many of these on the Google Play Store or Apple App Store. My favourite is Mint, which is completely free, and allows users to link their cards/bank accounts to track purchases, income, savings, and more.
Small wins compound
If you’re earning minimum wage, don’t expect major results within a month. Instead, focus on consistency and compound your savings. Enjoy the process, and keep your end goals in mind.
If you want to start earning and saving more, consider picking up a side hustle like food delivery or babysitting. Investing in yourself and learning a new skill through a job or skills training course is another way to set yourself up for success.
Stay consistent, keep working hard, spend smart, and your future self will thank you!