Saving money is challenging for most people, and it is only amplified by having a low income. Whether you are dealing with student debt, saving for a downpayment on a house, or just want an emergency fund, saving money is extremely important for unexpected emergencies and major life events. The good news is there are lots of ways to save money even when you are dealing with a low income. In this article, we will explore 13 practical ways to save money and achieve your financial goals, even with a low income.
1. Create a Realistic Budget
Creating a budget is the first step you need to take in order to save more money. Putting your goals in writing and looking at the hard math of your income and expenses, helps you gain control over your finances. Start by examining your bank and credit card statements to understand your spending habits and identify areas where you can cut back.
When creating your budget, prioritize your needs over wants. Allocate a certain percentage of your income for essential expenses such as food, utilities, rent/mortgage, and transportation. Set realistic limits for discretionary spending and entertainment. Remember, the key to budgeting on a low income is to be mindful of your spending and make conscious choices.
2. Reduce Expenses
Reducing expenses is ultimately what you will need to do if you want to save more money while on a low income. Here are some practical tips to help you cut costs without sacrificing on things you need:
a. Minimize Food Expenses
One of the significant expenses for most households is food purchases. To save money on groceries, consider planning your meals in advance and cooking at home. Avoid eating out frequently, as restaurant bills can quickly add up. Instead, opt for homemade meals and pack your lunch for work. Look for budget-friendly recipes and consider buying in bulk to take advantage of discounts.
b. Cut Subscriptions
Review your monthly subscriptions and eliminate those that you don't use or need. Streaming services, gym memberships, meal delivery and other subscriptions can eat into your budget without you realizing it. Keep only the ones that bring you value and cancel the rest.
c. Lower Energy Usage
Lowering your energy consumption can significantly reduce your utility bills. Switch to energy-efficient light bulbs, unplug electronics when not in use, and adjust your thermostat to save on heating and cooling costs. These small changes can add up to significant savings over time.
d. Consider Buying Used
When purchasing items, consider buying used instead of new. Thrift stores and online marketplaces like Ebay offer great discounts on various items, such as clothing, furniture, and electronics. Buying used can save you a significant amount of money while still meeting your needs.
e. Shop Smartly
Take advantage of sales, discounts, and coupons when shopping for essentials especially when making expensive purchases like furniture. Compare prices and look for deals before making a purchase. By being a savvy shopper, you can save a considerable amount of money on everyday items.
3. Pay Off Debt
Debt can be a significant obstacle to saving money on a low income. Prioritize paying off high-interest debt to free up more money for savings. Consider using the snowball method, where you focus on paying off the smallest debt first and then move on to the next one. Alternatively, you can use the avalanche method, which prioritizes paying off debts with the highest interest rates first. Consolidating your debts into a single payment can also make it easier to manage and pay them off.
4. Lower Housing Expenses
Housing costs can consume a significant portion of your income. To save money, consider downsizing to a smaller and more affordable home or apartment. If possible, explore options such as shared housing or renting out a spare room to generate additional income. Look for ways to lower your utility bills, such as using energy-efficient appliances and adjusting your thermostat.
5. Minimize Transportation Costs
Transportation expenses, including car payments, insurance, maintenance, and fuel, can take out a significant chunk of your monthly budget. If you can, consider alternatives such as walking, cycling, or using public transportation. Carpooling with coworkers or neighbors can also help reduce commuting costs. If owning a car is necessary, choose a reliable and fuel-efficient vehicle to minimize expenses.
6. Save on Food Expenses
Food expenses can quickly add up, but there are several ways to save money on groceries:
- Plan your meals in advance and create a shopping list to avoid impulse purchases.
- Look for sales, discounts, and coupons at grocers like Walmart going to the nearest grocery store just because it is close.
- Consider buying generic or store-brand products instead of name brands.
- Take advantage of loyalty programs and rewards offered by grocery stores.
- Consider growing some of your own produce if you have space for a small garden.
By being mindful of your food expenses and implementing these strategies, you can significantly reduce your grocery bills.
7. Prioritize Health and Preventative Care
Taking care of your health is essential, even when you have a limited income. Preventative care can help you avoid costly health issues in the long run. Make sure you have health insurance that covers basic costs and take advantage of free or low-cost screenings and vaccinations. A healthy lifestyle, including regular exercise and a balanced diet, can also contribute to long-term savings on healthcare expenses.
8. Eliminate Bad Habits
Bad habits such as smoking, excessive alcohol consumption, or impulse buying not only harm your health but also drain your finances. Quitting smoking or reducing alcohol consumption can result in significant savings over time. Similarly, being mindful of your spending habits and avoiding impulsive purchases can help you save money and achieve your financial goals.
9. Cut Entertainment Expenses
Entertainment expenses can quickly eat into your budget. Instead of spending money on expensive outings, find low-cost or free alternatives. Explore local parks, libraries, and community events for free entertainment options. Host game nights or movie nights at home instead of going to the theater. By being creative and resourceful, you can have fun without breaking the bank. If you decide to purchase tickets for live events make sure you look for coupons and discounts on platforms like Ticket Master.
10. Try a No-Spend Month
Try following a no-spend month at least once a year. During this time, challenge yourself to only spend money on necessities and avoid all discretionary “fun” purchases. This exercise can help you identify unnecessary expenses and develop better spending habits. It's also a great way to jumpstart your savings and see how much you can save when you're intentional with your spending. As usual you should document all of this and pay attention to how much you were able to save vs a normal month. Although you can do this any month you like we recommend avoiding this experiment during Novemeber and December due to the Black Friday and Christmas deals
11. DIY Repairs and Maintenance
Learning basic DIY skills can save you money on repairs and maintenance. Instead of hiring professionals for every small issue for small home and appliance repairs, try fixing it yourself. There are thousands of free DIY resources available online including Youtube, Reddit, and Home Improvement Forum. By being proactive and spending a bit of time, you can save yourself thousands of dollars of the course of a year.
12. Utilize Banking Promotions
Many banks offer cash bonuses for opening an account with bonuses of up to $500 depending on how much you deposit. If you are looking for a new bank or are looking for an “emergency fund” this can be a help provide some much needed relief. Additionally, make sure your current banking provider is not charing you unnecessary maintenance fees, ATM fee reimbursements, high-interest savings accounts, or cashback rewards. By switching to a bank that aligns with your financial goals and offers additional benefits, you can maximize your savings potential.
13. Seek Freebies, Coupons, and Deals
Take advantage of freebies, coupons, and deals to save money on various products and services wherever they are available. CouponFollow aggregates these types of savings daily if you are looking for somewhever to start.
The strategies above are designed to provide suggestions on how anyone can save money at any income level. It is unlikely that you should do all of these suggestions, however most people should be able to pick out 2-3 and save an extra few hundred dollars each month. The one thing everyone should absolutely do is track your budget in a notebook or excel spreadsheet. Actually tracking your expenses will do more to save money than any other suggestions on this list.