I’m Barely Making it Through the Month. Do I Still Need to Save?

Q: I’m in a bad financial place now, and I sometimes run out of money before the end of the month. Can I neglect my savings until my finances improve?

A: For many individuals who are grappling with financial challenges, the idea of saving money can seem like an unattainable luxury. How can you possibly squirrel away money for the future when today’s needs are so pressing?

However, neglecting your savings when the going gets tough can make things even more difficult down the line. Here’s why you should continue saving through financially challenging times and practical steps for making it happen.

Why you should continue saving when the going gets tough 

1. Be prepared for emergencies

Life is a roller coaster ride, and you never know what’s waiting for you just around the bend. You may unexpectedly find yourself facing a medical crisis, trying to cover an expensive car repair or shopping for a large home appliance to replace a broken machine. Or, you may be struggling to cover the cost of your wedding a decade before you’d planned to get married, or to pay for the adoption of a baby you’ve just decided you’d like to bring into the household.

Having a financial safety net will help you weather nearly any financial eventuality and avoid letting an emergency send you spiraling into debt.                         

2. Build financial discipline

If money is tight right now, there’s a fair chance that you can stand to be a bit more disciplined with how you spend it. Setting aside money each month for savings, even if it’s just a tiny bit, can help foster financial discipline and cultivate a mindset of planning for the future. This proactive approach will empower you to take control of your finances instead of reacting to immediate needs without a long-term strategy. Over time, this discipline can lead to a more secure financial future. 

3. Practice reaching financial goals

When there’s barely enough money to get through the month, saving up for something big can seem ridiculously out of reach. However, setting and reaching small financial goals can be a powerful motivator for fiscal responsibility. Choose a small indulgence you can’t generally afford right now, such as a night out on the town or adding a new pair of shoes to an already sizable collection. Save up for your chosen treat by saving small change, skipping some unnecessary expenses or opting for a cheaper choice whenever possible. Reaching your goal will make you want to try saving up again, perhaps for an even larger goal.

How to save during times of financial difficulty

It’s important to note that savings should never take the place of non-discretionary expenses that cannot be neglected without consequence, such as rent or mortgage payments, car payments and health insurance premiums.  

Here are some practical tips for saving during times of financial difficulties:

• Start small

Experts recommend putting upward of 20% of one’s monthly income into savings, but if you’re struggling just to make it through the month, you will want to tweak this advice. Instead, start small, with what you can manage to save in a given month. Then, work your way up from there. Start building those saving muscles and you’ll get better at it each month. 

• Look for ways to trim discretionary and non-discretionary expenses

When money is tight, you have two options: decrease your expenses or increase your income. (Of course, you can do both!) If you feel like you’ve already exhausted all opportunities to trim the fat, think again.  Look for unnecessary subscriptions, expensive products that can be swapped for cheaper generics and DIY options instead of paying for services and products. 

Next, review your non-discretionary expenses. Yes, you can find ways to cut back here, too. Reach out to your insurance companies to negotiate for a lower premium or shop for a new, cheaper plan, and do the same with your phone and internet service providers. Look for ways to conserve energy, such as insulating your home and switching to LED lights to bring down your utility bills. Also, make an effort to carpool or drive less to decrease fuel costs. For a bigger impact on your budget, consider a major life change, such as downsizing to a smaller home or selling your car for a less-expensive model. 

• Boost your income

Another obvious way to improve your financial circumstances is to make a sincere effort to bring more money home. You may be working a full-time job, but devoting even a few hours a week to a side hustle can make a big difference in your monthly budget. Consider freelancing for hire, working for a ride-sharing company over the weekend or hiring yourself out as a consultant in your chosen field.

• Explore government assistance

In times of financial hardship, it’s essential to be aware of government assistance and support programs, such as food stamps. These programs may provide temporary relief, enabling you to allocate a portion of your income to savings. Research the available resources in your area and leverage them to alleviate immediate financial burdens.

• Seek financial guidance

If you find yourself struggling to make ends meet, consider seeking professional financial guidance. Financial counselors or advisors can help you create a realistic budget, explore options for debt management and provide personalized strategies for saving based on your unique circumstances.

While the idea of saving money during challenging financial times may seem overwhelming, it’s important to recognize that saving, even in small amounts, is an investment in your future financial health. Use the tips here to learn why and how to save during times of financial stress.