Whether you are trying to pay off debt, grow your emergency savings, or saving to buy a home, saving money on a low income isn’t impossible. Here are some tips on how to save money on a low income.
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Save Money or Pay Off Debt?
Debt will always be your enemy. If you want your savings to actually mean something and work for you, you HAVE to pay off that debt! Not to mention how much easier it gets to save once you don’t owe any money to anyone!
If you have debt, such as student loan debt, medical bills, a car loan, credit car debt etc., you will want to pay that off BEFORE starting your savings. The only exception to this is if you have no emergency savings OR if the interest on a loan is so low that it doesn’t make much of a difference if you pay it off early or not.
Start by paying off your debt. Try paying as much as you possibly can each month so that this number goes down faster. You will also save money on interest in the long run, and it feels SO GOOD not to owe anyone any money! After this debt is gone, you are now free to start saving for your own personal goals, which is so exciting!
Of course, I know that many people have larger amounts of debt that they need to pay off, so it might take a little while. You got this. It will be OKAY. You can use the rest of the tips I will give here to pay off debt just as you would to save money.
Live Below Your Means & Create a Budget
I once heard that you should always only spend 75% of what you make. In other words, you should pretend like you only make 75% of what you are actually making. I think this is a good place to start, but I suggest that if you want to get really serious, try living even more frugally than that.
Become aware of your spending habits. Track everything you spend and make a list of all your monthly expenses. From here you can take a hard look of what is really essential or not and make cuts where it is necessary.
Examples of such cuts are cutting out your daily or weekly coffee at a coffee shop, less eating out, and cutting out certain subscriptions that you could live without for a while. You need to create a budget for yourself and decide how much you want to be saving each month or putting towards debt (if you have debt to pay off first).
Think Like a Minimalist
One of the reasons I decided to become a minimalist is to save money. If you haven’t already, check out my post on How Minimalism Saves You Money.
There are several ways a minimalist lifestyle can save you money. Of course, there is the obvious way of simply buying less stuff! There are also other way however of which I talk more about in the other post.
Downsize to Save
I realize that this isn’t the easiest ways to go about saving money, but it is one of the biggest and more effective ways to save. The truth is, our rent is usually our highest bill we pay every month and reducing this number is going to make a significant difference.
Consider moving into a smaller space in the mean time if you are renting. If you own your home, consider renting out a bedroom or a part of your home to get extra income. Remember, this is a temporary sacrifice you are making to help you reach your end goal!
Find a Side Hustle
If you have extra time on your hands you may want to start a side hustle! Even if it’s just for a couple of extra hours after work or on your days off from your regular job, a side hustle is a great way to diversify and bring in extra income.
Some examples of side hustles are gig work such as Doordash, Instacart, Lyft, Uber, and Postmates. These are all good ways to make extra money if you have a car. The best one for you might depend on what area you are in, but it’s defiantly worth looking into. My personal favorite is Instacart and I still do it every now and then. I find that it’s less wear and tear on my car because most of my time is spent inside the store grocery shopping.
If you aren’t into gig work, you could try starting a small reselling business and sell some things in Ebay, Poshmark, or Mercari. These are just a few of many reselling platforms, but I mention them because they are all sites I’ve used myself. Start by reselling some of your own stuff, then perhaps you could source more things to flip for profit. It’s actually really fun!
Other ways to make extra income include starting a blog, creating digital products, or providing services such as baby sitting and pet sitting. Honestly, the possibilities here are endless, it just depends on what works best for you.
Ask For a Raise
Another way to save more money is to simply increase your income by asking for a raise. I know this may seem scary for many people, but really evaluate what you have to offer and find reasons as to why you deserve a raise.
The worst thing that can happen is that your employer says no, but at least you tried. If they say yes, then you now will make more money and will be able to save a little bit more!
Put Your Money In a Separate High Yield Savings Account
Another smart thing you can do is to open up a separate account for your savings. Specifically, a high yield savings account. If you have your money in a bank such as Chase, Wells Fargo, or Bank of America (trying to think of mainstream banks here) then you are getting basically pennies back on interest for your savings. Basically, you are getting nothing.
Also, if your savings account is easily accessible to you in the same bank account you have your checking in, the easier it will be to be tempted to withdraw money from it when you don’t really need it. Like they say, out of sight, out of mind.
I recommend finding an online bank, such as Ally, that has a high yield savings that will give you at least a 2% interest rate. This is by no means a get rich quick thing, but if you are going to have money saved and sitting in your account, you might as well make some money on it, right? Also, this might make you think twice if you are thinking to withdraw money from your savings.
Use Cash Back/Coupon Apps
While it can take a little extra time, using cash back apps and coupon apps to save yourself some money can really add up and be worth it!
Personally I love using the Rakuten app to earn cash back on purchases that I would have already made anyway. To earn cash back using Rakuten, all you have to do is sign up and shop through their site or app on sites that you already shop on. These sites could be Home Depot, Target, Amazon, Walmart, etc. The list really does go on!
Another great app to save you some money is the Ibotta app. The Ibotta app is actually a coupon app where you can search items you already plan on buying to see if there is a coupon for them! I love using the Ibotta app for saving money on my groceries or anytime I need something from Target.
Talk To Your Partner
If you are in a serious relationship, and especially if you are married, you will want to talk and be open about your plans and goals with your significant other. This is just to ensure that the both of you are on the same page and have the same goal in mind so that you can work together and not against each other.
It’s also important that the both of you understand what sacrifices you are and aren’t willing to make in order to save money. For example, I can be a little more extreme than my husband when it comes to being frugal and saving money. My husband is open with me and tells me if he thinks I am taking something to far and I respect it. We always try to meet in the middle and we always know that we share the same goals. This can also make the process more fun since you have someone to share it with!
Write Down You Savings Goals
I personally think that writing down your goals is a great way to envision and remind yourself of why you are doing everything. Write down why you are saving as well as the amount you need/want to save.
This will help you stay motivated and it will feel great once you can check off that goal once you get there!
