All of us that work, expect our salaries at the end of the week or end of the month. Generally, every good employer pays on time. In most cases, the employer will hand over a paycheck or transfer the salary to our bank account.

Unfortunately, most of us don’t find that our salary is enough to meet monthly expenses. We provide the basic needs of the household, such as food, clothing and shelter and a few comforts too, such as entertainment. Nowadays, education, communications, Internet access, and transportation, among others, are also part of our basic needs. Hence, we pay for these too.

Considering that our needs are rising, it’s obvious that a single salary or paycheck would not be enough to meet expenses. In fact, here are some shocking figures.

Living Paycheck-to-Paycheck

Nearly 50 percent of all Americans earning $100,000 per year or more, are living from paycheck to paycheck. Another 61 per cent of those surveyed find they’re “stretched too thin,” according to a report from NASDAQ’s website, MarketWatch.com. The report quotes a survey by the financial institution, Lending Tree.

Incidentally, $100,000 per year is much higher than the paychecks of persons living with minimum wages or below the poverty line in the USA. The minimum wage in the USA ranges between $5.25 per hour to $16.5 per hour, according to Statista.

Incidentally, the federally mandated minimum wage in the USA is $7.25 per hour, for the year 2023.

The poverty threshold in the US for an individual is an annual income of $12,880 or lower. A family of four with a yearly income of $26,500 or less, also falls below the poverty line or poverty threshold in America.

The poverty threshold varies by every state in the US. That’s because the cost of living differs in every state. While in some states of the US, the cost of living is higher, it’s much lower in others. The income of residents of these states also depends on the local cost of living.

Given these bitter facts, you might wonder whether it’s still possible for anyone in the US to save from their salary.

How to Save Money from Salary?

As a matter of fact, millions of Americans manage to save money from their salary, regardless of what they earn every month. Having said that, I will assure you, these are ordinary people with average salaries. However, they’ve found some superb ways and means to save money and build wealth with whatever little they earn.

So, what do these people do to save money from their salary? Continue reading. You would surely be amazed to learn how they save money every month.

1. Strict Budgeting

The first, foremost and perhaps the most important step to save money from salary is to make a strict budget. And stick to this strict budget, without flinching in any way. Living on a budget can prove difficult. However, do that for two to three months, and it will become part of your lifestyle.

Remember, anything done repeatedly over a period of 30 days becomes a habit. And the same thing done over and again for 90 days ultimately becomes part of your lifestyle.

You might make rough budgets for everything. Unfortunately, these aren’t really enough. Therefore, draw a serious budget. This is possible if you use any of the free budgeting apps that are available on Google Play or Apple Store. There are paid versions too, but you can begin with the free ones.

These budgeting apps allow you to allot a specific sum of money under various heads such as rent, mortgage, food, education, travel and transport, entertainment and so on. You will get an automatic notification, alert or even alarm when your spending under any specific head is about to cross the set limits.

Using these apps, you can also track if you’re overspending under any head, for any reason. For example, a lot of us spend more than necessary on groceries and entertainment. We stock up more food than we can consume each month and pay for cable TV channels and streaming services that we rarely watch.

You can safely provide access to your bank account, debit card and credit card to these apps to track spending. Most of these apps are fairly safe and don’t leak personal or banking information to outsiders.

2. Utilize the 50-30-20 Rule

In her book ‘All Your Worth,” Senator Elizabeth Warren speaks about the 50-30-20 rule for budgeting. As a matter of fact, it’s a simple rule. If you use the 50-30-20 rule properly, you can save a lot of money from your salary and actually get rich. Lots of Americans are using this technique to save money from their salary.

I will explain, in brief, the 50-30-20 rule.

The rule calls for dividing your salary by 50 per cent, 30 per cent and 20 per cent. For example, if you earn $1,000 per month, 50 per cent is $500, followed by 30 per cent or $300 and the remaining 20 per cent is $200.

The rule says that 50 per cent of the salary should be for needs. These include basic needs- food, clothing, shelter and other important needs such as education, taxes, loan repayment, transport and communications. We live in a modern era and hence, there’re more needs now than mere food, clothing and shelter.

The 30 per cent of your paycheck can be utilized to meet your wants. All of us have wants. These include anything from branded clothing to swanky cars, entertainment, gym memberships and much more. These come under the broad head of discretionary expenses. It means we can have discretion to decide whether or not to spend on such things. We can live without them easily since they’re not basic needs.

And the balance 20 per cent of your salary should be kept aside as savings.  The money we save adds up over a period of time and can be used for a lot of purposes such as investing and retirement planning, among others.

However, there’s always scope to save from the 50 per cent that we allot for spending or basic needs. This means we can also reduce or eliminate discretionary expenses or wants and boost savings. In some cases, people have successfully managed to save at least 30 per cent of their salary, using the 50-30-20 rule.

3. Use Small Investment Apps

The third step: use apps that allow you to invest small amounts of money. There are a few apps that allow you to launch your investment journey for as low as $5. The good news is that these apps are free, and sometimes, you can get a free bonus of $5 when you add money to the account. In some cases, you can get a stock of some company for free.

These apps are Acorns and Robinhood, among others. They’re available at Google Play and Apple Store.

Both Robinhood and Acorns are useful for investments in stocks, Exchange Traded Funds, bonds, foreign currencies, cryptocurrencies, and, in some cases, commodities. Additionally, these apps also provide some free investing advice, which proves quite useful for beginners.

If you’re wondering what stocks you can buy for $5, here’s the answer. These apps enable you to buy something known as fractional shares or fractional stocks. This means you can get a fraction of a high-value stock that’s worth $5 or the amount you wish to invest. As you go along, it’s possible to add money to your account and buy more fractions of the same stock.

Warren Buffet, the American billionaire, maintains his position as one of the wealthiest persons in the world because he actively invests in stocks. Understandably, the stock market does have upward and downward swings at times. However, the US stock market is very strong and always bounces back after any downturns. This means, your investments will gain value over a span of time.

4. Get Free Shopping Vouchers

Getting free shopping vouchers for Amazon, Walmart, Target, and other stores is one of the best ways to save on salary. It’s quite easy and simple to get these free shopping coupons and vouchers if you’re willing to spend some time online, daily. In fact, you can earn as much as $10 or higher worth of shopping vouchers free.

Earning free shopping vouchers is possible by completing a few tasks online. One of these is doing paid online surveys. There are several market research companies that offer free shopping vouchers in exchange for points you earn for completing a paid online survey. Swagbucks, InboxDollars, Toluna, and Nielsen Computer Panel are some of these websites.

Registering on these websites is simple. You can sign up simply with your email ID and by creating a password. The next step is to provide some basic details, such as your location. Once the website accepts you as a member of their online survey community, they’ll send emails about any new paid online surveys.

You get points for each paid survey that you complete successfully. These points are redeemable for free shopping vouchers on some of the largest American stores including Amazon and Walmart, among others.

These websites also have other ways for you to earn extra points. One is a referral program where you can invite relatives or friends to join the community. The others are by playing their online games, watching videos and ads, writing reviews and by helping community members who have questions. Most of these websites allow you to cash out your earnings when you collect $10 worth of points.

These free shopping coupons and vouchers can help you save at least $5 to $10 on monthly grocery bills. Some of these websites also pay real cash through PayPal and direct bank transfers.

5. Use Discount Coupons

The US has several fabulous websites, such as Groupon, where you can download or use online free discount coupons for shopping. These coupons are for large stores as well as local retailers. For example, Groupon features discount coupons for shopping on Amazon, Sam’s Club and Costco, among others.  They also have discount coupons for clothing and accessories, entertainment, dining out and take-away food, tours and travels, as well as accommodations at various destinations, among others.

Millions of Americans save a lot of money from salaries simply by using these coupons. They provide a discount that ranges from five per cent to as much as 70 per cent in some cases. However, there’s a flipside too. These coupons can’t be used on all stuff. Instead, they’re available only on select things. Check out all terms and conditions before using these coupons.

6. In-Store Coupons & Discounts

All megastores such as Walmart, Kohl’s, Target, Albertsons Group and others provide daily and weekly discount coupons. These are available for both, in-store shopping and, in some cases, online purchases too. Generally, these coupons and special offers can be found on the store’s official website, and validity can sometimes depend upon the location of the store.

Utilizing these store coupons could save you a lot of money. The discount can sometimes be amazing since you could get buy-one-get-one-free offers on certain products at times. Therefore, check out the websites of these stores for daily offers.

The only flipside here is that you have to check daily and buy when offers are made. In some cases, you might not get free delivery, if the order value doesn’t qualify. But that’s a small problem since you can always drive by the store and pick up the stuff.

7. Cancel Unwanted Subscriptions

Americans spend an average of $800 or more on various kinds of subscriptions. Sadly, over 70 per cent of these subscriptions are barely used and go to waste. These include subscriptions to bundles of channels on cable TV and streaming services, as well as newspapers and magazines.

We subscribe to such bundles, hoping to watch one or two specific TV channels. However, this seldom happens since the shows we want or movies we want to see, are rarely telecast. Hence, the entire package goes to waste.

The same holds true for newspaper and magazine subscriptions nowadays. Since most of us access news and other content online, we almost never read newspapers and magazines. Instead, they collect in the house and lie unused.

Cancelling unwanted subscriptions can save you a whopping lot of money every month. Though the amount of money on such subscriptions seems small at the moment, calculate them for a year and you will see how much you’re wasting from the salary.

8. Reduce Credit Card Interest

One of the greatest culprits for reducing your savings potential is your credit cards. If news reports are true, Americans hold an average of four credit cards per person. The figure can go as high as nine credit cards. In general, it is believed that Americans have at least two credit cards.

Holding one or more credit cards is fine. It helps us shop seamlessly and also enables us to develop a healthy credit score if we pay on time and regularly. However, when we don’t pay the bills fully and carry forward some of the amount, the credit card issuer slaps us a hefty interest rate. Though banks and credit card issuers don’t really admit it, this interest rate can go as high as 30 per cent per year. There are cases where some consumers end up paying thrice or ten times the price of what they bought using a credit card, because of high interest on unpaid dues.

I repeat, holding a credit card is normal and good. However, letting interest and Annual Purchase Rates accumulate over a long period is dangerous to your personal finances. It can throw your entire budget and life plan out of sync and out of gear.

9. Eliminate Student Debt

On average, an American graduates from college with about $3,000 or more as student debt. There are thousands of students that are unable to clear student debt when they leave college. Hence, they’re forced to pay it when they start working. In some cases, it can take very long to repay student debt.

While student debt itself is harmless, if paid on time, dragging on repayment can cause a lot of major financial and personal problems to a person. Studies prove that unpaid student debt can set back a person’s life by as much as seven to 10 years. It is blamed as the single largest cause of delays in buying a home and marriage. Unpaid student debt negatively affects your credit score, too.

If you’re working and have a salary, I suggest that you step up repayment of your student debt, if any. That way, you can build a healthy credit score and escape the evil effects that unpaid student debt has on a person’s life. It will also enable you to save from salary and step up your savings.

10. Ensure Good Health

That’s right. You could save a lot of money from your salary simply by ensuring good health for yourself and your family members. Why do I say this? Remember, out-of-the-pocket medical expenses in the USA are an average of $1,200 per person. This expense can occur even if you hold a medical insurance plan. Such out of the pocket expenses occur on things that, generally healthcare and medical plans don’t cover.

Ensuring good health can save you this money, which comes to about $100 or more per month, in terms of diagnostics and medicine costs. As anyone would tell, having superb health has its own benefits: you can enjoy life to the fullest.

Good health is easy to maintain, provided you take a few simple steps. The first is to eat healthy food and have a balanced diet. The second is to engage in physical activity to maintain fitness. And the third, yet very important- is to avoid additions of any sort. On average, an alcohol addict in the US spends about $1,200 per year on booze, while drug uses can end up blowing up as much as $25,000 per year.

Even if you’re not an addict, cutting down on alcohol and tobacco consumption can save you about $1,500 per year. Americans spend an average of $454 per year on alcohol for home use and more for drinking at bars and pubs. They also spend whopping $800 per year on tobacco, such as cigarettes.

Saving v/s Savings

These ten ways can definitely help you save a lot of money from your salary. However, the money you save doesn’t really help anything unless you convert it into savings. That’s where the saving v/s savings rule comes into play.

By definition. Saving occurs when you pay less for something or don’t buy the stuff. On the other hand, savings is the amount of money that you hold in your bank account or hoard at home or in your purse.

Remember, saving money isn’t the only thing you need to do. This saving has to translate as savings, in terms of money you hold in your bank account and gathers some interest.

Time Value of Money

One important factor to consider while saving from salary is the time value of money, also known as TVM. Basically, TVM means that the money you have in hand today loses its value over a period of time. The drop in value is estimated at 4.5 per cent. Meaning, that the $100 you hold today is useful to buy stuff only worth $95.50, a year later, and lesser and lesser as each year progresses.

Therefore, financial experts speak about the importance of beating the TVM. This can be done by investing your savings in a manner that fetches you returns that are higher than 4.5 per cent per year. This ensures that your money retains and grows in value over a period of years. The TVM is particularly useful for retirement planning since everyone wants to have more money for those golden years. Sadly, about 90 per cent of Americans don’t have enough money for retirement.

Closing Thoughts

If you imagine that saving money from salary is tough or impossible, think again. Millions of Americans and people elsewhere are successfully saving a large chunk of their salary and also investing the money for wealth generation.  You too, can join their ranks easily by exerting some extra effort. As the old adage goes, a penny saved is a penny earned.