How can you possibly start to save money for retirement on a small income? If you think you can’t, then
you’re wrong. The reality is that even on a small income you can save money for retirement. Now, low
income earners may be in disbelief, as they may have tried before to save money, but to no good.
When you are living paycheque to paycheque in Canada, saving money looks more like an impossible
dream. What if we tell you that you, a low-income earner, can make your dream of saving money for
retirement a reality. If you want to save money for retirement, here’s what we want you to do:
- Make a Retirement Plan Now, Not Later
We all retire at some point in our life. Why not start planning for retirement now instead of later? After
all, you want to save a good chunk of money for retirement. This means saving money right away even if
that means that you can only save $20 each week.
For instance, you want to save at least $100 each month for retirement. Make a retirement fund when
you are 25. By saving for retirement at a young age, you are looking at saving around $190,000 for
retirement. When you start earning more money, you can increase the amount you put towards your
- Follow a Realistic Budget
Most people who live paycheque to paycheque do not think of creating and following a budget.
Regardless of how much money you earn each month, you need to create a budget and stick to it. In
doing so, it gives you more control over your expenses. You can control the amount of money you spend
each month. It gives you an idea on where you can save your money.
The money you save, you can put it towards retirement. To create a realistic budget, add up all your
sources of income, calculate monthly fixed payments (money you pay each month), and variable
expenses (groceries, clothes, and entertainment). In your budget, add retirement savings. If you spend
more than you earn, that’s bad. If you spend less than you earn, that’s good. Aim for the latter.
- Automated Retirement Savings Account
You do not want to forget about putting money into your retirement savings account. To ensure that
you do not forget, set up an automated retirement savings account. Each month, a small amount of your
salary will automatically get deposited into it.
- Reduce Your Spending
Try to reduce your spending on areas where possible. Take one month to jot down every expense. From
that list, eliminate the things you find as an unnecessary expense. For instance, if you eat outside for six
days, you need to start cooking at home. If you pay cable, but do not watch TV, cut the cable. If you
drink coffee from outside every day, start making your own coffee.
If you are a low-income earner who wants to save money on retirement, follow these tips to start saving