How to Budget Money on Low Income—14 Useful Tips on Saving Money Fast
Updated · May 06, 2022
Most people think that if they had more money, they would be able to save more. But this is not always the case.
Budgeting is not about having a lot of extra cash each month. It’s about planning and determination.
In fact, by making small changes to your spending habits and being creative with your finances, you can live quite comfortably on a low income.
To help you achieve that, we’ll show you how to budget money on a low income.
Here’s a list of our top five suggestions:
- Save on clothes, rent, and groceries
- Do the no-spend challenge
- Find a bank with low or no fees
- Apply for low-income benefits
- Invest in yourself
Read on for more.
Helpful Tips About Living on a Low Income
Budgeting can give you a sense of security and the confidence to plan your future finances. But what if you want to achieve your goals now?
How to save money fast on a low income?
1. Create a Budget
The best way to save money fast is to create a budget. That way, you can monitor where every penny goes.
Start by calculating your monthly income and expenses.
First, make a list of all of your regular expenses, such as rent, car payments, debt, groceries, and utilities. These are the spendings you can’t avoid.
Then, note down your non-essential purchases (beauty products, clothes, entertainment). If there’s anything left, put it in savings.
Lastly, look for ways to reduce your expenses. See what you can cut back on from the non-essential purchases. Reducing your essential expenses is more difficult but not impossible.
Below, we list some tips on how to save money each month from rent, groceries, and even car payments.
2. Track Your Spendings Every Day
When you're on a tight budget, it's important to track your expenses every day. This means writing down every single penny you spend.
That way, you can see where your money is going and what areas you could cut back on.
There are numerous budgeting tools that can help you do this, including online tracking apps, templates, and spreadsheets.
3. Pay Off Your Debt
Debt can be a major burden, especially if you have a low income. So before you start saving money, you should focus on repaying it.
Start with the high-interest debt. That's the one that is drowning your monthly budget, so try to pay it off as quickly as possible.
It might seem like it’s slowing you down, but it’ll help your budgeting immensely. Once you tackle it, you can put away the money that went for debt repayment in savings.
4. Find a Bank With Low or No Fees
Bank fees can strain your budget more than you realize. Maintenance, withdrawal, overdraft charges—these are all expenses you can avoid.
Luckily, there are several low or no-fee options. Research the banks in your area and choose the one that offers the best conditions.
Your bank might charge you for closing your account, so make sure it’s worth switching.
5. Don’t Give Up Your Health Insurance
Even if you’re on a low-income budget, it's important to have health insurance. Otherwise, you'll likely have to pay for medical care out of your own pocket. And we know how expensive that can be.
Some people with a low income can get cheap or even free health insurance. So, check if you're eligible for Medicaid or the Children's Health Insurance Program (CHIP).
If you don't qualify for those, you might be able to get a subsidy for Marketplace health insurance.
6. Check Your Eligibility for Different Low-Income Benefits
There are a number of government programs that provide assistance to low-income families.
The Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, is an excellent example. It helps low-income families buy food by providing them with monthly benefits for groceries. It’s one of the easiest ways to save money on food.
Another great government program for low-income households is the Temporary Assistance for Needy Families (TANF). TANF provides cash to low-income families with children. It also helps with job training, child care, and so on.
The Earned Income Tax Credit (EITC) is a tax credit program for working people with low income. It can reduce the amount of taxes you pay or get you a refund.
7. Revise Your Recurring Payments
How to budget money on a low income? One of the best things you can do is reduce the number of recurring monthly payments.
This includes things like cable TV and subscriptions to services like Spotify or Netflix.
Here are a few ways you can reduce those:
- Replace cable TV with streaming services like Netflix or Hulu. This will save you a lot of money fast, and you can still watch your favorite shows.
- Cancel some of your subscriptions. If you don’t want to give up all of them, we’d suggest keeping one or two. Some services, like Spotify, have decent free versions. In addition, you can find people for a group subscription. These are cheaper when you split the bill.
- Switch to a prepaid phone plan. You probably aren’t using all the minutes in your plan anyway. Prepaid phone plans are much cheaper, and you can still use your phone.
- Cancel your gym membership. This can be a tough one, but unless you’re making money from your training, you can exercise at home instead. Give it a shot! You’ll save a lot of money each month.
- Carpool to save on gas. If you have a friend or colleague who lives close by, carpool to work or school to save on gas money.
8. Save Money on Clothing
Sure, clothes aren’t in the essential purchases category, but we don’t expect you to stop buying them altogether.
Instead, we suggest a few realistic ways to save money on clothing.
For starters, you can sell the clothes you don't use online. Go through your wardrobe. You’d be surprised how many things you don’t remember you’ll find there.
There are many websites where you can do this, such as eBay, Poshmark, and Depop. You can also buy cheaper clothes there.
In addition, you can shop in thrift stores. This is no longer taboo. In fact, many second-hand shops offer high-quality clothes and are even considered vintage.
Budgeting for clothing doesn't have to be difficult. With a little creativity, you can find affordable clothes you love.
9. Save Money on Rent
There are a few ways to save money at home. Literally, at home. The most effective ones are house hacking and moving to a cheaper area.
House hacking is when you rent out a room in your home to someone else. This can be a great way to reduce your monthly rent. It might even be better than moving to a smaller place.
If you live in an expensive area, moving to a cheaper one can save you a lot of money each month. Granted, moving is expensive and a pain in the neck, but it is worth it in the long run.
10. Save Money on Shopping
When it comes to budgeting money, one of the biggest expenses is grocery shopping.
Luckily, there are ways to reduce it.
You can start by buying only the things you need urgently. This means resisting the temptation to buy fancy new products you haven’t tried. The same goes for things that are on sale but you don’t really need.
That said, shopping on sale the things you do need can be a life-saver. Make a habit of using coupons and looking out for discounts. You can search for special offers in brochures or online.
Finally, be mindful of what you’re buying. This means avoiding impulse buys and emotional shopping. Try waiting 24 hours before purchasing an item. If you still think it’s important then, you can buy it.
11. Do the No-Spend Challenge
How to save money fast on a low income? Well, the fastest way is to not spend at all.
The no-spend challenge is an extreme but very effective budgeting method where you don't spend any money for some time.
You’re only allowed to spend money on necessities, like rent and bills. Of course, you can also buy food but stick to the basics.
This can be a great way to save up a larger amount of money. But more importantly, it’ll help you rethink your spending habits and get used to saving and budgeting.
How to live on a budget when unexpected expenses emerge all the time?
Well, instead of calling the handyman every time something breaks, you can learn how to DIY some things around the house.
Doing your own repairs is a great way to save money if your finances are low. Besides, there are YouTube videos about everything—from fixing a leaky faucet or repairing a hole in the wall.
You can also save money by, say, doing your own nails. Or get together with friends and do each other’s hair. You can even make a day out of it.
You could also learn how to knit, sew, make furniture, etc. If you're good at it, you could sell your crafts online or at local fairs.
There are tons of hobbies you can make money from. You just have to find out what you’re good at.
13. Invest in Yourself
If you want to save money fast, budget planning will only get you so far. You also need to think of ways to increase your income.
And if that isn’t possible now, invest in your future self. Take free online courses to make you more marketable.
You could improve your skills in your current area of expertise to increase your chances of getting a promotion. Or, you can choose another venture—learn a new language, take a business course, start coding.
The more marketable you are, the greater your chances of earning more money.
14. Stay Positive and Focus On the Big Picture
Figuring out how to save money when you are broke can be tough. But with our help and a little discipline, you’ll learn to budget in no time.
Remember, you're working hard to save for a brighter future. Focusing on your goals and achievements instead of the limitations will keep you motivated.
Learning how to budget money on a low income is not an easy task. So start small and build your way up.
With our useful budgeting tips, you’ll reach your saving goals in no time and have some fun in the meantime.
With an eye for research, Aleksandra is determined to always get to the bottom of things. If there’s a glitch in the system, she’ll find it and make sure you know about it.