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If you are trying to save money on a low income, it can feel like a challenge. But don't let a low income stand between you and your savings goals! You should not feel like you absolutely have to put these on goals, such as retirement or a home down payment, on hold. Luckily, there are some creative ways to save money on a low income. Although you will need to think outside of the box, it is completely possible to save money when you aren't earning as much as you'd like.
Consider making it a challenge to increase your savings with a frugal approach to your budget that doesn't cut out the fun parts of life. Today we will share real tips that can help you save money.
Ways to save money on a low income: 13 Key tips
If you have a low income, it will likely take a focused effort to save money. Although it won’t be always easy, it can be worth it. Consider taking action on the tips that stand out below.
1. Build a budget that works for you
Budgeting might sound like more trouble than its worth, but it can help you to build your savings.
Unless you have a plan for your money, it can be extremely easy to spend it. With a budget, you can include your savings goals. Instead of aimlessly saving what’s leftover each month, you can meet your savings goals through careful budgeting.
A great tool to keep track of your spending, recurring bills, and subscriptions is a tool called Truebill. It can help to monitor your overall financial big picture, your spending, and even negotiate the cost of certain bills like your cell phone or internet service to a lower rate.
2. Lower your housing costs
According to a study conducted by the U.S. Bureau of Labor Statistics, housing expenses can be one of your biggest expenses. Imagine if you could cut down your housing expenses by a few hundred dollars each month. That money could make a huge difference in the size of your savings and overall quality of life.
There are a few ways to cut your housing costs including:
- Downsize. Consider a small apartment or home as a way to slash costs.
- New location. Location is a key detail in real estate prices. Could you save money by switching up your location? For example, moving from downtown to the suburbs could be cost-effective in some areas.
- Rent out rooms. If you have extra space in your home, you could rent them out to offset your housing costs. Consider long-term tenants or short-term rentals through a platform such as Airbnb.
Take a look at your situation and decide which option works best for you. An affordable place to live can completely transform your finances.
3. Eliminate your debt
Debt can hold you back from achieving new financial goals. The constant strain on your budget can leave no room for savings at the end of the month.
Make it a priority to tackle your debt. It will take commitment to erase your debts, but it can lead to an easier life. You’ll be able to put the money you were using for debt repayment towards your savings. If you want to take action today, then check out our debt repayment strategy course.
4. Be more mindful about food spending
Food spending can wreak havoc on any budget. With the constant temptation to eat prepared food at a restaurant, sticking to a food budget can feel like an impossible challenge.
According to the Bureau of Labor Statistics, the average household spent over $3,000 on food away from home. Although you might not be spending that much on eating out, there is likely room for improvement. Look for ways to cut your restaurant spending.
One of the best ways to combat last-minute food purchases is through meal planning. If you already know what you are supposed to eat for dinner, it is easier to drive home without stopping at your favorite take out place. Meal planning can take some time to get used. Try 30 day meal planning challenge to see how you like it.
Finally, make sure that you aren’t overspending on groceries. Take a look at your pantry to see if you can make some meals with what you already have on hand.
5. Automate your savings goals
Making the choice to save money can be difficult. Forcing yourself to make that same choice many times each month can be unrealistic. You are more likely to spend all of the money in your checking account. Unless you move your savings automatically, you risk spending your intended savings.
With each paycheck, set up an automatic transfer to your savings account. You’ll be able to breathe easy knowing that your savings are safely tucked away.
You won’t regret putting your savings on autopilot.
6. Find free or affordable entertainment
One area of your budget that is entirely variable is your entertainment budget. You have the power to overspend in a big way with entertainment. On the flip side, some frugal fun can allow you to pad your savings without feeling deprived.
Here are a few of my favorite entertainment options that don’t break the budget:
- Matinee movies.
- Host dinner parties instead of going out.
- Go for a hike.
- Practice cooking with your significant other.
- Look for free museums to explore.
Do some research in your area to find the best frugal entertainment options.
7. Go to the library
The library can be a great source of free entertainment. But it offers so much more that it deserves its own mention.
Of course, you can check out books, movies, and CDs. But most libraries often have many more. For example, there might be community events, free local attraction passes, seeds for your garden, and more. Talk to your local librarian to see what is available at your library.
The library is my favorite frugal resource! Check out yours today. If you aren’t sure where to find yours, then find it on Overdrive. Once you get your library card, you can borrow books online via the Libby or Overdrive apps that connect directly to your local library.
8. Try the cash envelope method
If you struggle to keep track of your spending, then the cash envelope method could be a great option. The cash envelopes could help you realize how much you are spending. It might open your eyes to your harmful spending habits.
Once you have a better understanding of what you like to spend money on, then you can work on adjusting those habits.
9. Find a fee-free bank
It is all too easy to get stuck paying unnecessary fees. According to the Consumer Financial Protection Bureau, the median overdraft fee at banks is $34. That coupled with other banking fees can lead to a leeching effect on your financial situation.
If you find that your bank is constantly charging fees, then it might be time to make a switch. There are many banks that advertise free accounts without any associated fees. Why not take advantage of that opportunity? It could help you avoid any unnecessary banking fees down the line.
10. Evaluate your car costs
A car can come with thousands of dollars of annual upkeep and maintenance each year. In addition to a car payment, you also have to contend with several other expenses. Car insurance and repairs are just the tip of the expensive iceberg.
You can lower these costs in a few ways.
- Comparison shop for car insurance. You might be able to save hundreds of dollars each year by switching to a different insurance company.
- Eliminate your car payment. Try to pay off your car early. In the future, avoid financing a car when possible due to the high costs.
- Use less fuel. You can cut down on fuel costs by using public transportation or biking to work.
- DIY car repairs. Although you might not want to do major repairs, think about taking care of basic repairs yourself. You can save money while learning a new skill!
Get creative when it comes to cutting your transportation costs.
11. Take care of your health
Healthcare is expensive. Unfortunately, there are not too many ways to cut down on your healthcare insurance costs. However, a preventative attitude about medical problems can help you save money and enjoy a higher quality of life.
A few ways to practice preventative healthcare include:
- Eating right.
- Quit smoking.
- Sleep enough.
If you have healthcare insurance, then take advantage of what that plan offers. For example, if it includes annual doctor visits, then make time for a check-up.
12. Try couponing
Couponing can be your way to buy exactly what you want for less money. It is not too difficult to get started with couponing. Here are a few of the best places to get started:
- Rakuten. You’ll be able to earn cashback from your everyday purchases. Many of their offers allow for between 1% and 12% cashback. That can add up quickly! Try Rakuten today.
- Ibotta. As you plan your grocery shopping, check out Ibotta for cashback deals in your area. Give Ibotta a try soon!
- BeFrugal. This app allows you to stay on budget while enjoying your shopping. You can earn cashback from over 5,000 stores. Plus, it will help you find coupons that apply to your purchase. Check it BeFrugal today.
These are just a few couponing sites to help you get started. Check out our full article for more ideas.
13. Increase your income
At some point, you might not be able to squeeze any more pennies out of your budget. Or you might want to create some more breathing room in your finances.
If you feel that there is no room to create savings in your current situation, then it might be time to increase your income.
Although it is not as simple as it sounds, increasing your income is completely doable. One way to increase your income is through a side hustle. It could be the perfect way for you to increase your income without taking a leap from your day job.
Whether you want to walk dogs or build a blog, there is a side hustle that will work for you. Check out our step-by-step side hustle guide to start building your side hustle today.
The bottom line
Saving money on a low income can be discouraging, but don't allow it to stop you from reaching your income goals. Take a minute to be honest with yourself about your current finances and your financial goals. Find the motivation to move forward with saving money for your future. Start by tackling one tip at a time. Consider taking the first step today. Once you do that, take action on the additional ways to save money on a low income as you make progress. Finally here are additional resources and programs for families with a low income.