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It might feel like an uphill battle when you’re trying to save money on a low income. I mean, you just don’t make enough to save money, right?
Or do you?
It might feel like a challenge to have any leftover money to save at the end of the month, but don’t let your income stand in the way of your savings goals. It’s time to find creative ways to save money.
It is possible to save money on a low income even if it doesn’t feel like it. I’m going to walk you through how you can find ways to save money even when you don’t make a lot. Get your hopes up!
Ways to Save Money Each Month
If you’re looking for ways to save money on a tight budget you’ll likely need to find creative ways to save money. And that’s okay! You’ll be surprised at how many savings ideas for everyday that you can use to put more money into your pockets.
If you think about it, there are really two distinct types of ways to save money:
- Saving money outright from what you bring in every month
- Saving money every month from cutting expenses
That’s simple enough, right? So how do you actually implement these two approaches to savings when it feels like you have no extra cushion every month?
Broken into these two stated sections, here are some of the money habits you can and should add to your day to day to start seeing savings.
Living on Low Income Tips
1. Make use of tax benefits
Make sure that you’re not missing out on any tax credits that could apply to you. This would be a huge financial mistake to give up tax savings (and money) every single year.
Apply for tax credits like the Earned Income Tax Credit which is an extremely valuable credit that the government provides to lower income working individuals to help make ends meet. And, don’t stop there, check out this list from TurboTax to make sure that you’re taking advantage of any tax credits that you might qualify for and benefit from.
Another tax benefit that you should use to your advantage is your tax refund. Make sure to use these funds well, whether that means saving, investing or paying off debt. It’s important to treat ourselves once and awhile, but it’s also important to use our money for a cause that will have lasting benefits.
2. Change your money mindset
I know, I know, it sounds cliche. You can’t really change how much you save by simply changing how you think. On the contrary, yes, the way that you think has a direct impact on what you do.
I’m not going to sit here and tell you that you can think yourself up $1 million dollars. Obviously that’s ridiculous. What I will say is that your mindset will make or break whether or not you succeed on the path to saving and building wealth.
Until you see the potential in your future and believe that you alone hold the power to change your life and that it doesn’t always have to be this way, you will be stuck in this past cycle of living.
Add the following books to your cart right now as you read this: The Millionaire Next Door and Rich Dad Poor Dad where you will find a drastically new way to think about your money and your life. It’s extremely eye opening!
3. Take Advantage of Free Money
Small changes add up over time. It’s important to realize this concept as you look for ways to find and save money in all areas of your life. This includes finding free money that you might be missing out on with your everyday living.
If you’re not already, you should be taking advantage of cash back apps or percentages back for all of the purchases that you make on a regular basis. Apps like Ebates (Rakuten), Ibotta, Checkout51 amongst others make this very simple. Sign up, use their link before making a purchase online, and then that money is added to your account.
Sign up for these welcome offers through my link and take advantage of free money you’ll receive from signing up:
- Ibotta (a $10 welcome bonus)
- Checkout 51 ($2 welcome bonus)
- Ebates ($10 welcome bonus)
Another great tip: use high yield savings accounts for your savings. This is simple but an effective way to make money (for free) through interest rates.
I highly recommend Capital One Performance Saver accounts which provide a 1.5% APY. If your balance is $10,000 you can make up to $150 extra a year! And that yield will continue to increase as you continue to save more money. Compound interest for the win.
4. Choose the best bill payment method
You might not have thought about the way that you pay your bills in terms of saving money on a low income. However, the way that you pay your bills can have an impact on your savings.
When choosing between a check payment, a manual payment or a direct debt (automatic payment), I would personally choose the automatic approach. This might freak you out at first, to have money taken automatically every month, but it will save you from paying late fees or interest in the long run.
Not only will you benefit from saving as your bills will be guaranteed on-time, there are companies who actually offer discounts for customers who pay via direct debt or ACH.
5. Automate your savings goals
The less you need to manually move over money for savings every month, the better chance you’ll consistently save money.
The best way to save automatically is to have money taken out of your paycheck directly by splitting your income between your checkings and savings account.
Another great method is to use a personal finance app, such as Digit, that will allow saving to be both automatic and maybe even exciting (is that a thing?). With Digit, you set up trigger rules for saving certain amounts automatically when something else happens. An example could be: you save $5 automatically every time it rains.
Digit is free to sign up with and makes saving super simple and helps you save without even realizing you’re saving! Sign up with this link to grab a free $5 bonus.
6. Find Fee Free Banking
A popular bank fee study done by Bank Rate showed that the average overage charge sits around $33. The average monthly maintenance fee for banks is around $10-12, that’s up to $144 per year! Whether you’re paying fees for accidental overages, ATM fees, or a monthly balance upkeep fee, every bit adds up!
Check out some of the well-known banks that offer fee free banking, including Chime which offers an automated savings feature along with fee free banking for several services. They even offer fee free banking for overage charges up to $100! You can also use a well known Bank like Capital One who offers online banking that is far cheaper than banking in person.
7. Try Couponing
You might not want to be one of those people who clips coupons and brings them to the grocery store (and there’s nothing wrong if you were!). But that doesn’t mean you shouldn’t take advantage of the free money or discounted amount for everyday purchases.
Nowadays it’s as simple as downloading an app like Ibotta or Checkout 51 where you can digitally “clip coupons” and earn money back on the purchases you make. Cool, right? You don’t even need to break open a newspaper or print out coupons online.
You can also take advantage of cash back on Rakuten (Ebates) as well as discounts found through Paribus or Honey online while making purchases.
8. Speak up at work
It might feel a little nerve-wracking, but it might be time for you to ask for a raise from your boss. While this might be an awkward conversation, if you deserve more money than what you’re making, it’s better to ask. The answer is always no if you don’t ask.
Many are employers are willing to hear you out and give increases in pay depending on your situation. But it’s impossible for them to know that you want a raise without you asking them directly.
9. Start a Budget on Low Income
You’ve heard it before. You know that it’s the only way you can understand the way you are spending your money. Those with budgets are far more likely to properly save money on low income no matter what the circumstances. Your familiarity with your expenses gives you the flexibility to cut back on the right areas and to save what’s leftover rather than spending it.
Remember to be realistic though. Can you save your entire paycheck overnight? Well, no. That’s not the solution and it doesn’t benefit you to set unrealistic goals early on.
Make sure you know where every single dollar of your income goes in order to give each dollar it’s most effective job.
How to reduce expenses and Save money
1. Cut down your biggest expenses
Most of your income is drained by your core expenses: housing, transportation, and food. In order to find ways for how to save money on a low income, you’ll need to take a close look at your biggest expenses and find a way to cut down costs.
Housing is typically the largest cost category. While it might not be possible to just up and move tomorrow, you might want to consider relocating if you live in an expensive area. When you’re working to budget and save money, it’s going to be hard to cut costs and take ground if you’re consistently trying to stay afloat with expensive living costs. You can also consider finding and living with a roommate to split costs for rent and utilities.
If your transportation costs are high every month, you should consider either selling your car and using public transportation. This could work in a situation where you live in a city or near one and are able to rely on public transit.
2. Tackle high-interest debt first
Interest can add up. I remember my first introduction to interest when I built up a sizable amount of credit card debt. I was like shocked as I knew I had debt but didn’t believe that I’d spent that much in that month!
Take care of your highest interest debts first so that your overall monthly interest expense is reduced gradually. You can use a debt tracker to see which of your debts has the highest rate and which to tackle first.
Read more: Debt tracker spreadsheet
3. Personal finance robot to trim your expenses
I feel like there’s an app for everything. Including one to help you cut costs where possible.
Check out a personal finance robot like Trim that can help you uncover all of the recurring expenses that you’re making every month. It will also help you determine whether you want to keep those expenses or cancel them.
It makes it as easy as a text message or email asking if you want to cancel that Spotify subscription or the magazine subscription you signed up for maybe like 10 years ago (No I don’t care about Brad & Jen’s breakup anymore, thank you). This cutting of recurring expenses will save you money you didn’t even know you were spending!
4. Find free or affordable entertainment
One of the biggest mistakes people make when starting out on a budget is to go crazy and just cut out all varieties of fun in an attempt to save money. Let me tell you now: this approach just won’t work.
You shouldn’t cut out entertainment from your life to save money as you still need this type of ease and relaxation in your life. You need to have fun and take time to spend it with friends and family that you care about.
You can learn how to save money on a low income by taking part in no spend challenges where you’ll find fun things to do that are cheap or free. Activities like going for walks in the park or exploring nature on a local hike won’t set you back a ton of money, if any.
Find free or cheap activities to do in your city or state such as free museums, matinee shows at the movies, or having friends over for dinner or a get together rather than going out.
5. Cutting out bad habits
Another money drainer that we often don’t realize or care to admit is our bad habits. This will be different for everyone but the outcome is the same: more money out the door.
Some of the bad habits might include smoking, eating out too often, building up excessive credit card debt from shopping, or convenience purchases such as coffees on the way to work or Uber Eats’ing after a long day in the office.
It’s important to recognize any bad habits that you might have in your own life and figure out how you can stop them from ruining your financial successes. Cutting out bad habits can help you to save extra money every month even on a tight income.
6. Negotiate your bills
One of the most important sayings that I’ve grown up hearing and using in my own life is “If you don’t ask, the answer is always no.” This can be applied in so many ways in life.
In this instance, it’s time to start digging up a list of all of the expenses you pay monthly, annually or whatever the frequency might be. You’re going to try your hand at negotiating these bills to see if there are discounts available or fee reductions if asked.
Make a list of all of your expenses and call their billing or retention departments and ask for ways to reduce your bill. This can include utility bills, cell phone bills and even medical bills. Note that the average savings for medical bills can be 20-35% if you are able to pay the full amount upfront!
There are apps that you can use to negotiate your bills and how much you pay for each. Examples include Billshark, Trim, and Paribus. These are all very popular at negotiating bills on your behalf and can save you hundreds or more a year!
7. Buy Secondhand
One of the most financially sound actions you can take is to stop buying things at full retail price if you can prevent it. Purchases to stop buying at full price include: furniture, electronics or even clothing. A great way to accomplish this is to shop secondhand.
It might not be everyone’s favorite to thrift, but if you dig through the right apps or thrift stores, you can actually find a gold-mine of treasures.
I’ve used Poshmark and Thredup for buying secondhand clothes with a lot of success. You just have to know the right places to look! You’ll save money and find quality purchases in the process.
8. Lower your monthly food bill
Your monthly food bill can be a massive budget breaker. According to the Bureau of Labor Statistics the average household spent over $7,729 in food costs for the year. $4,363 of that related to food costs at home while about $3,365 of that relates to food away from home.
That’s a heck of a lot of money spent on food. Whether that’s groceries you’re buying, the cost of eating out, ordering in or even the price choices of where you shop. It all counts and It all adds up.
The most logical cost reducer is to cook your own meals as much as possible. Use ingredients that you buy and prevent food from going to waste. Don’t buy more groceries without using up all of your existing groceries. Learn to freeze food before it goes bad. All of these tips can lead to lower food costs every month.
Other noteworthy tips for saving money on food include:
- Use a simple meal plan like the $5 meal plan to better organize the meals you’ll make and make sure you’re only grabbing necessities at the store.
- Lower your eating out costs!
- Order your groceries online from places like Walmart or Whole Foods with Amazon Prime. I find that I’m more aware of the cost of my groceries when I see the total as I shop. It makes me question everything I put in my cart- do you really need those chips Marissa?
- Grocery shop at cheaper stores like Trader Joe’s, Walmart or Aldi
- Implement a meatless dinner day or several throughout the week (poultry adds up!)
- Buy the generic brand, why not?
- Use apps or websites like SuperCook to figure out how you can use the groceries or items you already have at home; use up before loading up on more groceries.
- Find ways to cut your grocery bill in half or earn back money on the groceries you spend with apps like Ibotta or Ebates.
Food can be extremely costly, and it adds up quickly if you don’t watch and prevent it. You can take charge of your food budget by using these tips every month to save money where you can.
9. Earn free gift cards to use on expenses
Use online survey sites like Swagbucks or Survey Junkie to earn free gift cards that you can use to apply to expenses that you typically incur each month. Cash out on gift cards for Amazon, Walmart or even Starbucks.
Another great survey site that I’ve had success with is Microsoft Bing search rewards. You can earn and cash in on gift cards with this site as well. You won’t make an overnight fortune but it does add up when you offset your daily expenses where possible.
Struggling to Save Money?
Decide on your priorities
Find your reason. The reason that you want to start saving. Once you have this, write it down. Be sure to write down your financial goals and have them somewhere where you’ll see them often.
Not only will this help you build financial goals and start taking action to achieve them, but it will also remind you of what you are trying to accomplish when the going gets tough. It won’t always be easy to find ways to save money on a tight budget. It’s important that you find the motivation that speaks to you the most and to use that to persevere.
Always, ALWAYS have a reason why. Have a goal. Something to achieve. These reasons will allow you to keep pushing on and reaching your goals.
Create a visible savings goal
Just as writing down your reason or financial goals will help you stay motivated, it will also help you to visualize a savings goal. Sometimes you need to create a vision board of what will happen when you successfully save money to visualize the future you’re building. Or maybe you need to see that the small steps really do add up.
A visible savings goal reminds you of the progress being made and how far you have till you reach your goal. It can help you keep going but it can also help you to work harder to save money and reach that goal sooner.
Improve your circle of influence
They say that you are the sum of the 5 people closest to you, and I believe that.
If you’re looking to find financial success, especially with how to save money on a low income, you’ll want to make sure that you surround yourself with people who influence your finance decisions in positive, healthy ways. Ways that benefit you the most. These people will understand your life and choices the most and will help you along the way when things get hard.
If you aren’t able to find friends that can positively influence your finances, search for financial planning or investing courses to meet and connect with like-minded people who share your financial desires. You can also listen to money or financial podcasts that dive into the issues and strategies that you need.
The more you surround yourself with wise financial strategies, financial success topics and others who encourage you to make positive changes and habits, the more success you’ll find.
Some of my favorite money or finance podcasts include:
- So Money
- The Dave Ramsey Show
- Smart Passive Income
- Money for the Rest of Us
- The Fairer Cents (for Women)
How to make extra money when you have a low income
Start a side hustle
You might have tried several creative ways to save money but it just isn’t cutting it. Or maybe you’re looking for ways for how to save money fast on a low income because you want to speed up the process.
Look into side hustles that will make you extra money. Many people nowadays are using side hustles to generate side income to pay off debt, save more money or find a way to quit their full-time jobs.
Here are some great ideas for how to make extra money fast that you should look into:
- Teach English online VIPKid
- Survey sites
- Drive for Uber or Ubereats
- Flip furniture or thrift items
- Rent out room airbnb
- Blog
- Make money on Pinterest
- Deliver groceries
- Freelance work
Sometimes to meet your savings goals you might need to make more money. This extra income can give you the cushion that you’re looking for and side hustles will speed up the saving process.
To sum up…
Surviving on one income or a low income can be somewhat de-motivating when it comes to achieving your financial goals, but don’t let it discourage you from making progress and moving forward!
It’s important to find creative ways to save money wherever you can and to keep implementing small wins into your daily habits. Once you build consistency the little wins will add up.
Keep in mind that it’s never too late to start saving and that you can always change your financial situation if you set your mind to it.
What are the most strategic or helpful ways that you’ve found to save money on a tight budget?
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