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Complete Savings Plan for Low Income Earners

Learn how you can start saving even on low salary. 5 tips to reduce your expenses, increase the cash in hand and investment options.

  • Jun 13, 2022

The earning class in India fall into a wide range of salary brackets, with many salaried individuals earning a considerably low income. However, it is important to do proper financial planning for low-income earners to ensure that you create a reliable amount of wealth. But how to plan savings with low income in India, given the high inflation rate in the country?

The straightforward answer to this concern is changing your spending habits, budgeting for a low income, and strictly following saving strategies for a low income.

Many experts believe that you should not underestimate the power of starting early. Start early, start small and slowly develop a habit of saving.

This article will discuss how to budget and save money on a low income, how to plan savings with low income in India, budgeting on a low income, and the top tips on budgeting for low-income, among other money-saving tips for low-income earners.

However, before we move forward to discuss saving strategies for low income, let’s look at how to divide your monthly income/salary for a better savings insight.

Monthly Salary Budgeting for a Low-Income Earner

Many experts suggest that around 40% to 50% of your monthly salary must be invested in household/living expenses, around 20% to 30% in food and necessary lifestyle. And a minimum of 20% to 30% must be summed up towards savings.

However, since you are earning a low income, you must target to save most of it and push the savings limit to above 35% of your monthly salary. Through this, you will quickly achieve your short-term and long-term savings goals and help you in accelerated wealth creation.

Top 10 Tips on Budgeting for Low-Income Earners

1. Analyze your expenses and create a budget accordingly

No expert can help you budget until you don’t research and analyze your expenditure. Budgeting may sound very technical to many, but it is simple math that involves the basic allocation of your monetary priorities. The rule is to create a budget that suits your financial goals.

A budget is important because unplanned expenditures can easily exhaust your money and impact your financial planning for low-income. Therefore, your focus on budgeting should be on allocating money for maximum savings instead of how much you earn.

2. Separate cash for expenses every week

A budget will certainly help you in gaining clarity over your expenses. However, a more effective tool when controlling unnecessary expenditure is a “cash-envelope” system for yourself. As per this system, you must keep pre-allocated cash for every week’s expenses and manage them accordingly. This will help you in limiting your weekly expenses.

Remember, the goal is to save, so try to cut expenses wherever possible and save your funds accordingly for the unpredictable future.

3. Live with a better economic sense

It is highly recommended to do shopping on paper before spending money on stuff in real life. This is the best way to save money with a low income. In addition, this helps you in fixing unnecessary leaks.

Making a list of the items you need and putting an estimated price for all of them helps you decide your priorities and keeps you in check while shopping from temptations.

4. Look for the best investment tools for savings on a low-income

Financial tools help you be bound to invest money. This encourages building good habits when trying to save money. You can look for a short or long-term savings plan and invest money into it. This will support you in a financial emergency and enable you to save money and ultimately build wealth.

Here are some of the most loved investment plans:

1. Unit Linked Insurance Plans (ULIPs)

2. Guaranteed Savings Plans

3. Mutual Funds (MF)

4.Systematic Investment Plans (SIPs)

5.Public Provident Fund (PPF) / Employees Provident Fund (EPF)

5. Start now! Even with minimal savings

The toughest part about savings and wealth creation is crossing the starting point. But, once you taste wealth-creation, you will never look back. You will gradually understand all about how to save money with low income in India and the best way to save money with low income.

6. Cut Off Unnecessary Expenses to Build Savings

Reduce unnecessary spending if you’re having trouble saving money. Look for expenses in your budget that you can cut back on.

1.Manage utility consumption

2.Track your spending

3.Avoid Unhealthy Practices

4.Avoid Unnecessary Expenses

Increasing your savings by eliminating unnecessary expenses may at first seem painful, but it will get easier with time.

7. Have a Food Budget, Too!

Making an effective food budget requires planning. This saves time every day because you are never left wondering what to prepare for dinner, in addition to assisting with knowing what to buy while at the grocery store. The materials are prepared, and the strategy is in place. Take a look at your schedule before creating your weekly menu. You’ll be less likely to order takeout or go out to eat if you prepare quick dinners for hectic nights. Prepare balanced, wholesome meals.

8. Cut Back on Housing Expenses

Controlling your consumption is one strategy. For instance, adjust the temperature of your air conditioner to lower your monthly electricity costs. Any voltage adapters utilise electricity even when they are not charged or hooked into the device, therefore turn off your computer or laptop when not in use. Connect all of the stereo components to a power strip that can be quickly turned off when not in use. Consider whether you actually need every single premium channel available (aside from Prime and Netflix) and a thousand different channels.

9. Leverage Insurance to Secure Your Family’s Future

You can have a safety net and a useful tool for saving by investing money in things like life insurance and savings plans. When used wisely, building wealth can help you achieve your financial objectives and cover future costs like a new home, marriage, children’s education, or retirement.

10. Prioritize your Health

You can stop bad habits like drinking and smoking that are unnecessary. These are bad habits that, regardless of your money, should be avoided and removed from your life if you want to live healthily. The best and most sensible way to save is to do it this way.

Did you know

Around 2,500 years ago, the first coins were “minted” (created). Over a thousand years ago, China was where paper money was first utilised. Metal coins have the advantages of being both transportable and robust. A pound (in weight) of silver was what a British pound originally cost.


So if you are among those earning a low income, then your best bet is having disciplined financial expenditures, researched and analyzed budgeting, predefined financial planning for low-income earners that suits your requirements, and the correct choice of investment plans to serve your financial goals? So, what are you waiting for? Start saving today and secure your tomorrow.

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- A Consumer Education Initiative series by Kotak Life

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