I get a lot of questions from readers wanting to know how they can save money on a low income, so I thought I would write a post about some of the suggestions I’ve been giving out that can help you put money in the bank, even when you’re living on a limited income. I’ve also included some great resources along with the suggestions that will help you get started putting money in the bank right now!
You Can Still Save Money On A Low Income
When you’re living on a small income, it can be especially hard to save money for things like an emergency fund, college, retirement, cars, or anything else. We all have our lean times financially, but even in those lean times you can still find ways to save money for the future needs of you and your family, such as college and retirement. I truly believe that even if you have a low income, you can still save money if you’re diligent about the process.
13 Ways To Save Money On a Limited Income
So let’s get on with it! Here are 13 ways you can save money on a low income:
Evaluate Housing Costs
Many times it’s difficult to save money because housing costs take a huge chunk of the family budget. In general, it’s best to keep housing costs to 25% of your take home pay or less.
If your housing is costing you more than 24% of your income, you may decide you need to sell your house and move to something more affordable. You can even use discount real estate agents in your area that can help find a home that's right for your budget.
I realize that in some areas of the country this might be impossible on a small income, but there are always a few very good deals available on rent. Just be diligent and keep looking.
If you own a home, you may be able to refinance your mortgage at a lower rate and free up some money that you can put into investments, savings, or toward getting out of debt.
If you’re single, you can even take in a roommate or two and charge them rent to save money on housing costs. That’s money you can put straight into investments, IRA’s, 401k’s, or an emergency fund!
Keep track of all your financial accounts in one handy dashboard with Personal Capital- It's FREE!
Get Money Back When You Shop with Rakuten
One way you can make your regular shopping work to your advantage is to get paid to shop! I always use Rakuten when I shop, and I typically get anywhere from $25-$100 cash back every month. They send me a Big Fat Check every single month just for doing my normal shopping online and in-store at thousands of popular retailers, including Walmart, Target, Kohls, Ulta, Sephora, Best Buy, and most other household names. Here's a detailed post on how Rakuten works.
Sign up for Ebates here (it's FREE!)
Plan Your Shopping
Never spend money on a whim or just because you “feel like it”. That’s where a lot of money leaks tend to happen. The best way to spend a limited income is to plan your shopping ahead of time using a written budget every single month. That way, you spend your money on paper before you spend it in real life.
When it comes time to buy what you need, you will already have a plan in place and you won’t overspend because you only have so much allotted for each category. When you approach your spending in that way, you’ll feel like you got a raise because it frees up money that you were wasting when you didn’t have a plan.
Check out my book on how to make a budget that works. It's simple and easy to implement!
Check out my Budgeting Page for more articles on budgeting.
Buy Used Stuff
Buy everything you can used, such as used cars, used electronics, used furniture, clothing, etc. You’d be surprised at the great deals you can find on stuff that’s hardly been used. Sometimes you will find “open box” items that haven’t been used, but can’t be sold as new because the packaging has been damaged or opened. I get some killer deals on EBay on this kind of merchandise all the time. I always buy used cars, and I’ve even been known to shop at Goodwill and at yard sales. I’ve gotten $100 shirts for $4 at Goodwill and $250 shoes for $45 (worn only once!) on Ebay.
Believe it or not, my wife even picked up a beautiful set of wrought iron and glass shelves that someone had set out for the garbage collector that had absolutely nothing wrong with it. They just didn’t want it anymore and were too lazy to give it away or sell it (price = FREE!). There are incredible deals out there for most anything you want or need, you just have to know where to look. Never pay full price if you don’t have to!
Get A Programmable Thermostat
A programmable thermostat can save money on heating and cooling bills that can free up money for savings. You can buy a basic model for around $40, or get a more sophisticated thermostat that saves a lot more energy. Angie and I have two Nest programmable thermostats in our house that have cut our energy bills by about 10-15%. That means we save around $30-$45 every month on our energy bills. SWEET!
Of course, you can always change your home’s temp manually too, but a programmable smart thermostat can sense when you’re away from home, and does a much more efficient job of controlling usage while keeping you comfortable at the same time. The cool thing is that even though these thermostats can be a little pricey, they will more than pay for themselves over time, making them a great investment!
Learn about the Nest Learning Thermostat here
Learn more about programmable thermostats here
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Don’t Use Credit Cards
Credit cards keep you poor. When you use a credit card, studies have shown that you spend 12% more on average because using plastic is such a smooth and frictionless way to spend money. That doesn’t include the money you also spend on interest and fees that come with using credit cards. Your best bet is to go cash only and use cash in an envelope system along with your monthly budget.
Find more articles on Credit Cards here
Sweat The Small Stuff
Take your lunch to work, plan to do your errands all at once to save gas instead of making multiple trips. Save your change and cash it into an investment account periodically. Heck, you can even roast your own coffee (you can also make extra money doing that, here’s how). There are always ways to cut costs that will free up money you can put straight into savings.
You will be surprised how much you can save when you get creative.
Walk Or Ride Your Bike
If you can ditch the car to go to the store or to work, then do it. You will save money on gas and have the added benefit of getting more exercise. It’s a win-win!
Find out how Mr. Money Mustache retired at 30 by saving money riding a bike!
Find a Side Gig
There has never been a better time in history to find ways to make extra money. I wrote a whole series of articles to help you get started, and I’ll add more “Money Making Ideas” over time.
You can see all my Money Making Ideas articles here
Stay Out of Restaurants
Of course, it’s ok to eat out occasionally, but making eating out a regular habit can add up very quickly. Restaurant food costs at least 4x more than a homemade meal would cost. That multiple goes even higher at more expensive restaurants. If you want to save money and still have a nice meal with friends, host a potluck at your house and have everyone bring a dish. You’ll have just as much fun for a fraction of the cost.
Plan Your Meals
You can save money using meal planning apps or even a paid service like Emeals.com. Planning your meals ahead of time allows you to better plan your grocery list. Therefore you spend less on food and save much more than the service costs.
You can check out Emeals.com here.
Also, my friend Lauren Greutman at IamThatLady.com is an expert on saving money with meal planning. She can show you everything you need to do your meal planning right!
Check out Lauren's Meal Plans Here!
Get Rid of Cable TV
This is one of the more common suggestions you’ll find, but it’s also one of the most effective. Get rid of your cable bill and save money for the future instead. You can still get the free broadcast channels and enjoy plenty of good programming and all the news you need. It could also have the side benefit of freeing up some extra time to work on a side gig or increase your skills for your present job so you can get a raise or promotion.
Use Coupons
Using coupons to buy groceries and necessities can save you a large amount of money, especially if you know where to find the best coupons. You can save even more by going to stores that double your coupons, as well as using that store’s discount card along with the coupons.
You can do a Google search to find coupons on your favorite products.
Watch a “How to Coupon” Video here
Ditch Your Landline
Having a landline phone is pretty much useless nowadays. Getting rid of your landline can help you save as much as $30-$100 every single month!
Republic Wireless helps you save a ton on cell service- Find out how
Diligence Is The Key
Of course there are plenty of ways to save money if you put your mind to it and get creative. But when it comes down to it, diligence is the key to save money on a low income. When you use any of these techniques mentioned above, you have to be sure to stick with them for the long term, and when you determine how much you’re saving from each one, put that money in the bank as an emergency fund, or into investment accounts to provide for your future needs.
I realize saving money on a low income can be a daunting task, but you CAN do it. These are just a few of the things you can do to get started. So now I want to hear from you!
Question: What are your best suggestions for saving money? Leave a comment and tell me about your favorites.
Resources:
4 Smart Moves to Achieve Financial Peace of Mind
How to Save for the Future When You’re Living Paycheck to Paycheck
Good article. I’ve decided to just make smart decisions with my money so I don’t end up with an empty bank account:
1) Paying off my debts as they come to me. Never holding a credit card balance longer than a month. If this means living in a small studio apartment and eating ramen, rice, and beans, so be it.
2) I will always buy small, fuel efficient and durable cars. I drive a 2006 Honda Civic now. It costs me nothing to fill up and next to nothing to insure ($24/month from Insurance Panda… woohoo!). I will not drive when I don’t need to, and use public transportation whenever possible.
3) Developing multiple revenue streams. Doing side jobs. Building up small businesses. Doing contract work. Basically doing whatever I can to generate income from multiple sources.
4) Grow my revenue and assets no matter what. Make sure I am always expanding and develop them to the point that they consistently generate reliable cash flow.
5) The most important one – make as much as I can. Save as much as I can.
iPhones… ecigarettes… Starbucks… Chipotle Burritos…new clothes.. organic lipgloss… expensive yoga classes. Why not try living in your means for once? No wonder we have a debt crisis
I like the recommendations but when it comes to cable I have basic but it’s cheaper to get a triple play than just one single package. How do I manage with that ? I turn off everything even with the wall plug and things are still tight for me .
I always recommend doing a written budget every month to keep close track of how you spend your money. If you do that and find you’re only making enough just to get by, then you may need to find ways to make extra money to supplement your income. I’ve written a ton of posts on those subjects, which you can find using the search feature in the upper right sidebar.
I already do most of these things but I’m still finding it hard to save up to raise a family one day. I just don’t have a consistent income so it get hard to plan budgeting when you’re not sure how much you’ll have to spend. Do you have any advice to resolve this?
If you click on the “Resources” tab in the Navigation menu at the top of the page, I have budgeting forms available for those with a variable income.
As for your inconsistent income, one thing you should do is make a set of goals for your career that you can work toward achieving. When you have written goals in place, you’re more likely to get where you want to go. I recommend an awesome book that can help. It’s titled “48 Days to the Work You Love” by Dan Miller. You can find it on Amazon at this link: http://www.amazon.com/gp/product/1433669331/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1433669331&linkCode=as2&tag=celebfinanfre-20&linkId=F2R24L72W43XX4EP
aff link
I checked out your variable income form and it tracks three things: Item, Amount, and Amount Left. This may tell me how much I have left to spend, but it doesn’t tell me how to gain more…., or how to cut my spending further when I’m already on a lean budget. I don’t buy coffee, I pack leftovers for lunch, I don’t own a car, instead of going to the gym, I do home exercises, and to satisfy my needs, I buy things on sale as much as possible. I’ve grown up with frugal parents, so I don’t find this difficult. If I cut anymore, I feel like I’ll be starving myself!
As for careers goals, I’m already on track and working towards achieving them. But again, the amount I’m reeling in is barely enough to sustain my own existence…let alone think about trying to save…it’s just so hard when you start off life with so much educational debt.
To raise one child from birth to post secondary education, it’s going to cost about a million dollars in today’s financial rates. I looked further into the cost of children, and I found that it will be about $10, 000 to a year from age 0 – 5, growing to $15,000 as activities get more expensive and $22,000 by the time their in university. Even with the consideration of government child support and other forms of community charity, I don’t know if I can confidently increase my salary at the rate the needs of my child increases. I hope to get the career of my dreams and give every opportunity as best as I possibility can give to my child…. But with so much uncertainty in this world, it feels more and more unattainable.
Of course the variable income forms won’t show you how to make more money, that’s not their purpose. Their sole purpose is to allocate your money so you never spend more than you make.
You talk about these numbers for child rearing as if they are set in stone, In fact, these numbers are total BS! If it really took a million dollars to raise a child, almost no one could do it! Don’t believe that crap! There are a ton of single parents out there making $35K a year and raising 2-3 kids. I won’t say it’s easy to do that, but I can tell you they’re not spending a million to raise each kid!
One thing I’m hearing from your comments is that you’re talking out of both sides of your mouth. On one hand you say you’re working hard toward achieving your goals, and you have a strong faith that your dreams will come true.
On the other hand, you’re complaining about the cost of raising children, not having a network, not making enough money, etc.
If you really want to succeed, you have to get rid of the negativity. Even if your reality stinks right now, you have to speak positivity and success. You have to eliminate complaining and stop dwelling on problems and potential problems.
Learn to speak positively about your challenges and you will see a lot more changes in your life a lot more quickly. I hope you don’t take this as me being too harsh on you. I’m speaking these words from experience because I’ve been there and I’ve learned to change and grow over the years, which has had a huge effect on my success.
As for Dan Miller’s “48 Days to the Work You Love”, I agree with him entirely, and I am already a part of this “electronic immigrant”, although I prefer the term, “digital nomad”. I feel as if it really is the only way to move forward in today’s world… and I suppose if you had a wide network of individuals where you could grow your name, you could become successful in your chosen profession. But my parents immigrated to a new country when I was young and I just haven’t had the fortune of growing up with such networks. Normally, I’m not all that out-going, but I feel I’ve had to force myself to learn to be one so that I can gain a whisper of opportunity in a highly competitive job market.
I have strong fate that things will get better and one day, all my dreams will come true. It just feels like it will take much longer then I hope for it to be….. and I’m just a ticking time bomb, by the time I have enough funds to raise a family, my body will tell me otherwise…
Things WILL get better one day, and you’re the one who has to make it happen. Whether you grew up with a strong network or not, it doesn’t matter. You have to go out and build a network of people willing to do business with you.
Even if you’re an introvert like you say, you can still do it. Speaking as an introvert myself, I had to force myself to get out and talk to people, be vulnerable, and make connections in order to succeed. The result is that I have a successful dental practice, a successful blog in the personal finance niche.
It never happens overnight, you just have to keep plugging away, educate yourself as much as possible, and take action to make things happen.
Great ideas that save money here, thank you! It would be so helpful if you could clarify with specific suggestions and links where to keep looking to lower housing costs as I, like many in this country pay over 50% of income on housing?
“I realize that in some areas of the country this might be impossible on a small income, but there are always a few very good deals available on rent. Just be diligent and keep looking.”
Usually the best way to find a cheaper place to rent is to pay daily attention to the classified ads, Craigslist, and other sources for cheap places to live. There are deals out there but they don’t always last long, so you have to pay attention and be one of the first to contact the landlord.
You forgot a way: Ask God for a financial plan and then stick to it, even if your brain tries to dismiss the thing as unsafe, crazy or just plain old stupid.
I got into a $140000 debt by ignoring what God said about how to make money because that information did not seem safe enough to me. Namely, I wanted a nice low risk high paying job but God was talking about commodity trading (which requires learning to accept and manage risk). Then when that $140000 emergency hit, I did not have a source of money strong enough to handle it correctly and I ended up mortgaging an apartment to pay for that.
Now another emergency hit and God asked me to put my job along with the ability to work in one on His altar. And then He simply took all of that away. OUCH! So, humanly speaking my future looks like I should jump under a train to make the death quick and painless but I received an amazing promise of God in exchange for that job with the ability to work in one plus I still have the ability to work on that commodity trading thing so the suicide will have to wait.
The moral of my story is that if you received specific instructions from God about your finances, DON’T IGNORE THEM !!! Even when you think you know better. You definitely don’t know what God is trying to prepare you for.
this is really productive information, i am so glad to have read this and now i know how to manage my savings and how to plan for things i am actually surprised that i can save alot more when i plan and divide my expensenses.
thank you for your information….God bless
Thanks Nelson!
it is like having a financial advisor for free..very good stuff
i got a raise and I want to save money. I do not waste money I have only the basic bills, no cable or internet. I only go to dollar movies sporadically but I do like to eat out sometimes and I am not a good cook. I am not a shopper so what am I doing wrong. I save 75 dollars a month but I want to save more
There are a few great things you can do. First, make sure you do a written budget for your money every month. That way, you use your money more efficiently and will have more left over to put into savings. Also, find ways to make extra money on the side and put all that money into savings. Doing that allows your money to grow extremely quickly when you invest it instead of spending it.
Easiest(and smartest) way to save money is to replace your Toilet Paper with the Hand Bidet Sprayer. Washing with water is far cleaner, healthier, saves money and you never run out!
This seems like a great map, but what if you’re only living paycheck to paycheck without knowing what you’ll make one week to the next (construction type work) most people would say to get another job, for people like me, that option is easier said than done. My problem doesn’t pertain to eating out either. I’m living off Ramon at the moment and only working to pay bills. The water is high enough to drown
Terry, I know a variable income can make things even more complicated. Doing a budget to keep total track of your money is the first thing I recommend. I wrote a post a while back about how to do a budget on a variable income that might help you out. You can find it here: http://www.cfinancialfreedom.com/how-do-you-budget-on-a-variable-income/
Also, finding extra work doesn’t necessarily mean you should find more construction work. I know construction is a very up and down industry, so it can definitely be a problem getting a steady income. However, you can create work for yourself outside that industry that you can do on your own schedule to make some extra money. I suspect it wouldn’t take a lot of income to change your situation in a big way, but to do it you might have to think outside the box a little.
I’ve written a lot of posts on ways to make extra money that can help you come up with some ideas. You can find a complete list of those here: http://www.cfinancialfreedom.com/resources/money-making-ideas/
I think Money Making Idea #16 would be an especially good fit for you because there is almost no startup cost and you can easily do it in your spare time!
I hope this helps!
Thank you
I have decided to save a certain amt in my account as I get it.but the main thing is that I shld b committed to it.
Absolutely! When you commit to consistently saving, you will reap huge rewards from it!
When you say “low income”, do you mean those on 100% or less of the yearly Federal poverty level or so, eg
1 person — $11,770
2 people
Poverty Level threshold
100% FPL1$11,770215,930320,090424,250528,410632,570736,730840,890This is for the 48 continental states. Alaska & Hawaii have higher rates…
I really wasn’t trying to get into a discussion about Federal poverty statistics. By the way, the people at the income levels are certainly not paying 30-35% in taxes. Most all of them are paying little to nothing at the end of the day because of their limited income and the tax breaks they get because of that.
In fact, even most people with higher incomes aren’t paying that much if they are taking the trouble to itemize deductions on their taxes.
To save money i give my mom a certain amount of money and I keep some because I know that I’ll blow it all on either food or clothes. My mom is amazing at budgeting and I’m horrible at it. She’s teaching me how to save so I can be like her with my money management.
That’s awesome Sidney! Learn all you can about budgeting from your mother (and others like me). It’s one of the most important things you can do to make sure you never have money problems!
I like all your advice and I do mostly all of them except for the credit card I got screwed up once with the late payment fee and interests when I was outside of the country, and I try very hard to pay it all.
I found a low rent in a storage facility where they have 2 apartments in their office building, the advantage of this is that I don’t pay any utilities, no electricity, no watter bills, all included with the rent which is still low compares to apartments complex.
I rarely eat outside, I cook and I make bread at home but I spend a lot of money in food (groceries) because I try to eat healthy and give my family healthy things (we are three my husband, my 22 months old boy and I) and this is expensive I buy organic milk and eggs, I don’t usually buy organic fruit and vegetables but sometimes I do buy some for my little one.
I wish I can save with all these techniques I only go even in the end of month and I don’t have to borrow money.
I don’t know how to cut off my expenses on food even if I try to not eat meat every day but still vegetables are expensive.
I am a young ambitious man on a low salary. I spend a lot on unnecessary things and I need a guidance . I really want to be succesful. I love your posts. Thank you so much as I look forward to hearing from you.
Cheekay, the best way to get started learning what this site is all about is to go to the “Get Started” button in the navigation bar at the top of this page. It will get you pointed in the right direction.
Basically all sound advice. The only thing we do differently is use our no fee UPromise credit card to purchase already budgeted items, (like gas for the car), and pay the bill in full every month. That way we can painlessly put a small bit aside for our son’s education. Every bit adds up. My husband has a different no fee card for reimbursed work expenses with book store credits as the reward.
In addition, we tweak our expenses by finding alternatives to meet our needs. You mentioned your wife’s success at “curb gleaning”. A lady we know and her lifting buddy go around in a pick up before trash days and she posts her treasures on “freecycle”. We have been helped more than once by her finds. Several friends gave us wooden furniture they found on the road side. A rub down with Old English furniture polish yields great results.
We reuse clean aluminum foil, bread bags, plastic grocery bags, small plastic containers, glass jars, as a matter of course.
A local wild raspberry patch yielded enough to make a batch of jam a couple years running before it was torn out. I’ve been given apples and pears on occasion from friend’s trees and made them into sauces and butters.
There are great tutorials online showing how to do simple repairs around the home or how to make things. Patch quilting is an example of making beauty from cast offs.
Search out alternative sources. We get our eggs from a lady out of town every other week and pick up some for others for $1 a flat. When we lived elsewhere we got milk directly from a farmer.
Probably the best free thing out there is a library card. Our little local library offers children’s programs, computers with Internet access, job hunting resources, inter-library loan, book sales, and government literature, like free state maps, resources for senior citizen, college financial aid literature.
Wow, sounds like you’ve really made saving and being frugal into a complete lifestyle… good for you!
We follow all of these excellent tips, except that we do use credit cards for the rewards. We make sure that we don’t pay a fee to have the card, that the balance is paid each month, and we treat it as though it is a debit card. We budget and if we tap it out for the month, we put it away just as if we ran out of cash. For us, the rewards pay off, but it does take a great amount of discipline. While I wish we had more income, it is true that what you do with the income you have is just as important. Thanks so much for the encouragement!
Wow, most people just don’t exercise that level of discipline with credit cards. It’s so easy to get lax after awhile that the average person ends up feeding an ever growing credit card balance every month.
That is true. In fact, I was afraid to publish a post on my blog about this very thing because it does take a lot of discipline. My husband and I learned this lesson the hard way, though. We went to a debt counseling service many years ago and they taught us to use credit responsibly. It does take a tremendous amount of discipline, though. We see our finances as being stewards of what ultimately belongs to God. That goes a long way in keeping us accountable. The key is knowing yourself.
I do the same exact thing. I do all these things on $30k. People are surprised by what I can accomplish on 1/5 of their salary
When you do the right things with your money, it really can go a long way, even if you don’t make a lot!
hello , i have just read through your massage and it has changed the way I think and how I should do things. Please I kindly need to have more of your guidance . my name is Isa Muhongya from Uganda. my email address (isamuhindo@gmail.com )
Will do, I’ll send you an email in a few minutes!
Awesome tips. Just goes to show you its not how much money you make, its how much you keep that’s important!
That’s right, there are plenty of people out there with a small income that end up in good shape financially later in life because they knew what to do. Mostly it just takes some knowledge and discipline. It’s not rocket science, but I’m always surprised at how many people just don’t do this stuff.
Dr Jason , thats true.