Saving money can be difficult when you are on a tight budget. In a bid to cover both your fixed and variable monthly expenses, your savings goals may seem farfetched. However, if you look hard enough, you’d realize there are feasible ways to save money on a tight budget.
During my early days in college, saving money wasn’t easy. I was working a part-time job that enabled me to pay my tuition fees, afford feeding, and other essential bills. Yet, I couldn’t save more than 20 bucks a month. But because I was bent on protecting my finances, over time, I consciously adopted several methods to manage my paycheck and hit my savings goals consistently.
You will learn some of these same tips for saving money on a tight budget. If they worked for me, you shouldn’t be an exception.
What Are The Secrets To Saving Money On A Tight Budget?
The secrets to saving money on a tight budget can be summed up in one simple rule – cut down on your expenses. By finding creative ways to reduce your monthly living costs, it will be easier to meet your savings goal without breaking your budget.
How Much Of Your Income Should You Save?
Saving 10-20% of your income is ideal. This portion of your income should be dedicated to meeting your long-term savings goal and paying off debt if you have one.
Also, if you are familiar with the 50-30-20 rule of money, bear in mind that 50% of your income should be budgeted for needs, 30% for wants, and 20% for savings.
18 Practical Ways To Save Money On A Tight Budget
Learning clever ways to save money on a budget will improve your finances and help you achieve your money goals faster. Here are some money-saving strategies for you to consider:
1. Reduce Your Grocery Shopping Cost
We spend a lot of money on food, and that’s perfectly fine. Food will always remain one of the necessities of man. But the moment you realize that the amount of cash spent on groceries is affecting your overall income, you should adjust.
The next time you go grocery shopping, leave your home with a full stomach and a shopping list. By purchasing only the items written on your list, you can prevent overspending and stick to your budget.
On the other hand, don’t buy to stock up. Just buy what you need for a week. This will help you reduce waste and avoid trying to preserve food that you don’t eat.
Need more ideas on ways to save money on groceries? Check out these 10 proven shopping tips to save money on groceries.
2. Sell Things You Don’t Use
This is one of the most overlooked ways to save money on a tight budget. Selling stuff to get quick cash is actually a brilliant idea, especially when you aren’t earning enough money at the end of the month.
Of course, it’s possible you think that there aren’t items in your home you could sell. I used to think that as well. But each time I declutter my home, I find items I don’t need anymore, and I end up selling these things at a giveaway price. The extra money you make from selling stuff can be put toward your savings goals.
3. Avoid Monthly Bank Fees
Although many people won’t agree, paying monthly checking or savings account fees is one way you lose money without realizing it. Since you are looking for ways to save money on a tight budget, avoiding monthly bank fees is a good idea. Switch banks if you have to.
When it comes to finding free accounts and more personalized customer service, Credit unions are a great place to keep your money.
4. Spend Only On Your Essentials
If you want to learn how to live on a tight budget and still save money, I’d recommend that you focus on your essentials. Usually, your budget may have a category for recreation or entertainment. As much as this isn’t bad, it’s not a necessity.
You should focus more on paying your rent, affording transportation, getting food, and any other essential bills that you can’t avoid. This way, you can stick to your budget and still save money every month. If your income increases significantly in the future, you can decide to spend money on your wants.
Best Ways To Save Money On A Tight Budget
5. Don’t Eat Out
Eating out is expensive. That’s a no-brainer. If you want to save money on feeding, the best thing you can do is create a meal plan and eat at home. Apparently, you have to avoid restaurants and buying takeout.
If you consider yourself to be a lousy cook, there is no shame in learning from the pros. Get a cookbook or watch comprehensive step-by-step tutorials on YouTube. If you are attentive to your spending habit, you’d realize how much money you save every month by preparing your own food.
Want to stop eating out? Here are 10 tips to stop eating out to save money.
6. Avoid Credit Cards
Credit cards can never be the best way to pay for your expenses. If you are trying to figure out how to save money on a tight budget, you need to focus on using your debit card only.
On the other hand, you can decide to spend only cash. Having to pay a credit card balance every month will take a toll on your finances over time. It means you will constantly be in debt and unable to achieve some of your savings goals. If you currently use multiple credit cards, begin by reducing them. Maybe stick to just one. Eventually, you can cut out credit completely.
7. Stop Paying For Unused Subscriptions
One of the top tips on how to save money on a tight budget is canceling subscriptions you don’t use. On average, Americans are spending $273 a month on subscriptions. The funny thing is that they probably don’t use all the services they subscribe to.
I would advise you to go through your statements and select the subscriptions you can cut off. For instance, if you barely watch cable, cut it out and look for an alternative. If you have a gym membership, you might also want to take it out of your budget. There are so many fitness programs online you can find. Some of them are free while some cost only a few dollars.
8. Use The Pay-Yourself-First Strategy
Paying yourself first is one of the best ways to save money on a tight budget. Even if you aren’t earning a ton of money every month, the pay-yourself-first strategy can help you hit your small goals.
As soon as you receive your paycheck, take at least 10% of the income and put it toward your savings. That’s how it works. This is something you must do at the beginning of the month so you won’t be tempted to spend the money on something else later on.
Having paid yourself first, you can spend the remaining cash on your fixed and variable expenses.
Tips For Saving Money On A Tight Budget
9. Compare Prices Before Purchase
Some people say comparing prices is for broke people. Well, I think otherwise. Comparing prices is for people who are intentional about spending their hard-earned money wisely. It remains one of the practical ways to save money on a tight budget. The next time you are about to make a big purchase, shop around before buying. This is how you find out if there is a better deal somewhere else.
Let’s assume you want to get a computer or a set of chairs for your living room. All retailers can’t sell these items at the same price. There must be a difference in the price tag. If you are bent on saving money, you need to find where to get your stuff at a cheaper price.
10. Review Your Budget
If you have a budget set up, one of the things you must do occasionally is review the financial plan. Don’t just create a budget and set it aside without checking how beneficial or unhelpful it is to your finances.
Review your budget at least once a month. This is the only way you can figure out if you are on track, meeting your savings and spending goals. Check if you are spending too much in a category. Find ways to eliminate any extra spending that could break your budget.
11. Monitor Your Spending
How well do you track your spending? This is one of the ways you can master how to save money fast on a tight budget. To track or monitor your spending, get a journal where you write out everything you spend your money on throughout the month. This will help you figure out where your money goes. But more importantly, you can easily determine the areas where you have to cut down on your expenses.
12. Embark On A Savings Challenge
One of the best ways to get used to saving money on a tight budget is by taking on a savings challenge. You can choose to do this at any time. Simply create a money goal that you need to achieve within a definite time frame. Start saving money until the goal is accomplished. This exercise is quite practical and it teaches you how to save even when you don’t have a lot of money coming into your checking account.
You can make this more interesting by having one of your friends join you. Even if they aren’t chasing any specific savings goals, they can be your accountability partner.
Top Ways To Save Money On A Tight Budget
13. Take A No-Spend Challenge
A no-spend challenge is a financial exercise that requires you to not spend money for a particular period of time. It is one of the top ways to save money on a budget.
You can decide to embark on a no-spend challenge for 30 days or two weeks. Just make sure that you choose a realistic time frame. Moreover, taking on a no-spend challenge can have a significant impact on your finances when it’s done in January. It would be a great way to kick-start the year by saving money and being mindful of your spending habits.
Need tips for a successful no-spend January? Here is a comprehensive guide on how to do a no-spend January challenge.
14. Use A Budgeting App
Saving money on a tight budget is easier when you make use of a budget app. Most of the budgeting apps online make it easier to stick to a budget by helping create different budget categories, automate payments, set reminders for certain expenses, and a lot more. Apps like You Need A Budget (YNAB) or Mint have been helping people achieve this for years.
By the way, If you need a huge list of the best budgeting apps that are tailored for you, check out these 10 best budget apps to help you manage your money.
15. Refinance Your Mortgage
Refinancing is one of the effective ways to save money on a tight budget. You can be lucky enough to reduce your mortgage interest by 0.5 percent or more. That could be thousands of dollars over the life of the loan.
However, before you refinance your mortgage, you need to consider the closing cost which can amount to 3% of the refinanced amount. It’s important to ensure that refinancing would actually help you save rather than incur more expenses.
16. Try To Save On Rent
If you are still a renter, one of the common ways to save money on a tight budget is by moving to a smaller apartment.
Moving to a place with less space actually means you would spend less money on rent every month. However, this is not usually the case. You can still move into another spacious flat and pay a cheaper amount. This is often determined by the area you live in. Some towns are way more expensive than others. If it doesn’t affect your job or children’s education, you can move to a lower-cost area to save money.
Easy Ways To Save Money On A Tight Budget
17. Automate Your Savings
One of the easy ways to save money on a tight budget is by automating your savings. Sometimes we forget to save. Our minds are occupied by so many activities that we pay little attention to our savings goals. Hence, automating the process is a very effective way to save money even when you don’t remember.
As of today, financial institutions are now developing mobile banking apps with automatic savings features. But if your bank doesn’t have such an app, you can use a third-party savings app such as Chime.
On the other hand, you can have your employer deposit some money into a high-yield savings account. This way, you can separate your savings from the money meant for bills.
18. Find Cheaper Ways To Travel
One of my hobbies is traveling. I love the thrill of leaving my local area to a different destination I’ve never visited. But traveling costs money, which is why I always make proper plans for every trip.
Whether you want to visit a relative or want to go on vacation, you have to cut down on your travel costs. It’s one of the ways to save money on a tight budget. You can set a budget for the trip ahead of time. I normally do this to avoid splurging.
You can also save money on flights by booking a red-eye flight and staying at a pocket-friendly hotel or Airbnb.
Quick Summary: Ways To Save Money On A Tight Budget
It is challenging to save money when there’s little or nothing left afterward. This can easily discourage you from chasing your savings goals. But if you create room for savings by reducing your expenses and perhaps even increasing your monthly income, you would be able to save some extra cash.
Besides, this post has discussed some of the most practical ways to save money on a tight budget. You can apply these strategies as you look forward to building a good savings habit.
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