How to save money on a low income
6 min read
July 07, 2022 • Spruce
Putting aside money for savings is sound advice. But if you’re not making a lot of income, trying to save can feel like a huge hurdle. And that’s without factoring in inflation or unexpected expenses — like having to buy new tires for your car or purchasing cleats last minute for your child’s summer soccer league! So, what is the answer when you’re trying to figure out how to save money on a low income?
Essentially, it comes down to finding small ways to save that stack up. If you follow good money management habits over time, you can be on your way to financial stability day by day. It may seem like a chore at first but knowing that you can build a cushion for the unexpected or for a big purchase can take a load off of your mind. Plus, the more you save, the more you can avoid putting purchases on a credit card unnecessarily.
Learn more as we guide you through savings tips for low-income earners, including tips if you’re on a fixed income.
How to save money fast on a low income
If you question how to save money fast on a low income, it comes down to one word: budgeting. Without a budget, people tend to spend without really thinking, which can add up to hundreds if not thousands of dollars over time. It’s especially important to stretch your dollar as far as it can go when you’re working with a limited income.
A personal budget can help you gain control of your spending and saving. It ensures you don’t overspend, run out of funds, or fail to pay off debts (such as credit card debt or student loans).
To create a budget, you should first calculate your total income. You can do this by referencing income from paycheck information or bank statements. Then outline your expenses. Draw this information from bank or checking account statements as well. After you’ve calculated money coming in and out, categorize the type of expense into necessities, savings, debt reduction, and frivolous spending categories.
Use your list of incoming and outgoing money and plug it into a budget method that keep your spending in check. Popular methods for those with a smaller budget include the 70/20/10 budget, which helps you turn your disposable income into savings. Another option is the pay yourself first method. Both methods are outlined in our post on how to create a budget.
Speaking of savings, we have an easy and free savings tool for you. Using Spruce’s saving goals, you can set personalized goals, add funds, and track your progress along the way. Plus, you can check out our savings calculator to figure out how long it may take to reach a personal financial goal.
Now that we’ve covered a bit on budgeting, you’re probably wondering about how to save money fast on a low-income budget – with actual strategies.
Here are a few savings tips for low-income earners:
- Do things yourself. Whether it’s cutting your own hair or washing and detailing your own car, there are many tasks people usually hire others to do – but realistically you can do them yourself! You’ll surprise yourself!
- Cook for yourself: Speaking of doing things yourself, cook for yourself more often. Whether it’s dining out or fast food, it’s generally going to be more expensive than making meals at home – especially during times of inflation. Think about what it costs to have lasagna at a restaurant instead of at home. If you need incentive to save this extra money, just take a look at your last few restaurant receipts. It’s easy to see how fast dining out adds up.
- Start cost-splitting. Are there products or services you currently use that you could split with friends or family? Think small appliances or tools. If so, share a product or service with them! Why not get a 50% reduction?
- Try bargain brands. Swap out name brands for generic brands. You can save hundreds of dollars at the end of the year by doing this. Plus, you probably won’t even notice the difference in taste or performance.
- Consider hidden fees: If you look at each billing statement separately, you can review if you’re paying hidden fees for a specific service. If you spot them, consider negotiating the cost down or finding an alternative source for the service. Check with your service providers for discounts to help lower your bills. Another example is if you’re encountering fees to pay bills (like online bill pay fees), investigate how you can pay the bills for free. Your first saving goal may be to save enough to pay one bill all at once, instead of two to three times per month.
- Ditch the frequent coffee runs (and other needless spending): Cutting these out entirely can feel like draining the fun out of life. But, if you’re able to cut back on these perks by 50% or more, you can consider the ones you keep as a happy reward for minding your finances. A little goes a long way in terms of spending. Here are some areas you could consider trimming coffee runs, online shopping, subscription services, and. meal delivery services.
- Reduce reoccurring bills: As you review your expenses, think about ways to reduce how much you spend. Every dollar you don’t spend can be a dollar that you save. Common costs where you might be overspending on:
- Cable television
- Subscription services
- Cell phone services
- Gym memberships. (And for that gym membership, you could consider working out consistently with a friend to keep you accountable like a gym trainer would.)
Luckily, there are many tips on how to save money on a low income. Learn more money saving tips with Spruce.
How to save money on a fixed income
It’s one thing to budget on a low income, but what if you have a fixed income? For those receiving a set amount of income each month, thoughtful budgeting can be even more critical. In the end, how to save money on a fixed income doesn’t change much from the tips described above.
In some ways, it may be easier to keep track of money coming in since it’s always consistent. But that means you’ll want to focus more on the money going out. Really look at your reoccurring bills for ways to cut corners. If you’re a student or retiree, you may be able to save money on a fixed income by looking for student or senior citizens discounts.
How Spruce can help you get better with money
Whether you’re looking to save more, get cash back on certain purchases, find fee-free ATMs, monitor your credit score, or improve your money management skills, get help from Spruce.
Find out about all the money management features Spruce has to offer now.
This information provided for general educational purposes only. It is not intended as specific financial planning advice as everyone’s financial situation is different.
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