To Budget and Save Money on Low Income, tailor your habits and goals to save 15-20% of your monthly income. Cultivate saving habits by setting motivating goals, budgeting effectively, cutting unnecessary expenses, automating savings, paying off debt, and getting additional income sources.
Having a low income doesn’t mean you can’t effectively budget your finances and save for the future.
Getting all your expenses in writing, carefully attributing money to food and utilities, and calculating your monthly spending are some elements of successful budget planning.
If you are smart enough to cancel your unused subscriptions, automate your savings, and cut out luxuries like takeouts and deliveries, you might also be able to save some bucks at the end of each month.
- How to Budget and Save Money (Before You Need It)
- 10 Weird and Creative Ways To Save Money
- Budgeting on Low Income – All you need to know!
- How to Save Money on Low-Income?
- How Much Should I Save Each Month?
How to Budget and Save Money (Before You Need It)
- Create a Budget
- Automate Savings
- Cut Unnecessary Subscriptions
- Limit Eating Out
- Buy Generic Brands
- Comparison Shop
- Use Coupons and Discounts
- Negotiate Bills
- Reduce Energy Consumption
- DIY Home Repairs
- Sell Unused Items
- Set Financial Goals
- Emergency Fund
- Limit Impulse Purchases
- Use Public Transportation
- DIY Beauty and Grooming
- Buy Secondhand
- Negotiate Prices
- Practice Mindful Spending
- Invest Wisely
- Cook at Home
- Educate Yourself on Finances
- Cancel Unused Memberships
- Limit Convenience Store Purchases
- Utilize Free or Low-Cost Entertainment
- Explore Side Hustles
- Delay Gratification
- Bulk Buying for Staples
- Plan No-Spend Days
- DIY Gifts and Celebrations
10 Weird and Creative Ways To Save Money
- Mystery Meal Night:
- Once a week, have a “Mystery Meal” using only ingredients you already have at home.
- Backward Budgeting:
- Start with your savings goal and work backward, determining what expenses you can eliminate to reach it.
- Library Lending for Everything:
- Borrow not just books but also tools, gadgets, and even kitchen appliances from the library.
- Wacky Wardrobe Week:
- Challenge yourself to wear the most eccentric, mismatched outfits for a week, avoiding clothing purchases.
- Odd-Day Shopping:
- Shop only on odd-numbered days of the month for groceries and essentials to capitalize on potential discounts.
- Silent Sunday Spa:
- Dedicate Sundays to a “Silent Spa Day” at home using only what you have, avoiding spa expenses.
- Secret Shopper Sell-Off:
- Become a secret shopper, but instead of spending, sell the items you buy after reviewing them.
- Thrifty Transportation Tuesdays:
- Use unconventional modes of transportation, like a skateboard or rollerblades, on Tuesdays to save on commuting costs.
- Fortune Cookie Investing:
- Use the numbers from fortune cookie messages to determine how much money to save or invest that day.
- DIY Dumpster Diving:
- Find usable items in your neighborhood’s bulk trash collection and repurpose them, saving money on new purchases.
Budgeting on Low Income – All you need to know!
Money management or budgeting is something you should do every month if you want to take control of your spending habits. In my opinion, the whole point of budgeting is to avoid overspending and put a limit on your monthly expenses.
To create a perfect budget, you need to first sit down with a paper, pen, and calculator. Working on a budgeting app is also a good option as it will do the math for you!
Step 1: List your income
Start by listing all your income sources! To analyze where your money should go each month, you need to first list down the sources it’s coming from.
The common income sources may include your salary, part-time job, side hustles, stipends, child support, etc.
Step 2: Figure out your expenses
Are you done sorting your income sources?
Then it’s time to keep aside some money for savings. It could be 5-10 percent of your income or more–depending on your current financial situation.
Once the saving part is handled, move on to list down all your necessary expenses. Make five categories in your budget: food, utilities, transportation, shelter, and miscellaneous. You need to carefully attribute money to each category.
If you pay a mortgage or rent, write it down under the shelter category.
- How much do you spend on groceries each month?
- How do you normally travel?
- Is fuel a concern for you?
Answer all these questions in numbers!
Additionally, write approximate electricity bills, maintenance fees, internet charges, and gas bills to complete the utility section.
Once your necessities are handled, you can figure out all the other expenses such as entertainment, personal spending, and miscellaneous.
If you are confused about how much money should be attributed to each category, look at the percentage breakdown below:
- Shelter–25-35 percent
- Transportation–10–15 percent
- Food–10-15 percent
- Utilities–5-10 percent
- Savings–10-20 percent
- Insurance–10-25 percent
- Personal spending–5-10 percent
- Medical and healthcare–5-10 percent
- Entertainment–5–10 percent
- Miscellaneous–5-10 percent
Step 3: Subtract your expenses from your income
Do you know the zero-based budgeting rule? Well, let me explain!
When you subtract all your expenses from your income, the answer should be zero!
This will mean that you have created a perfect budget where every penny you earn is going somewhere useful. But if your expenses are negative, don’t bother! It can happen the first time you do budgeting.
Go over your expenses again if they do not equal your income. Maybe it’s time to cut out some luxuries from your monthly budget such as dining out or ordering takeouts. You can also postpone buying new items such as clothes or accessories until your budget settles down.
And if cutting out expenses isn’t working for you, find out ways to grow your income. Side hustles, freelancing, or investment are some good options to consider!
How to Save Money on Low-Income?
Saving money when you have a low income requires a lot of discipline and effort on your part. You need to make some lifestyle changes while also actively searching for ways to grow your income.
If you wish to make an emergency fund or save for a financial goal, the tips I am going to mention may help you!
1. Open a Savings Account and Automate Your Savings
I can’t stress this enough! You need to have a savings account that runs on automatic transfers if you really wish to make some progress.
Honestly, your savings lying around in a checking account is no good. Make your money work for you by depositing it into a savings account. Most high-yield savings accounts offer up to 4% of interest rate which means a good return on your money without lifting a finger.
Set up automatic transfers from your checking account to your savings account each month. The amount could be anything, depending on your financial situation. But I recommend that you save at least 10-20 percent of your income to head somewhere.
You can always find additional ways to make money and grow your income too.
2. Go Over Your Necessary Expenses Again
Utilities, grocery, rent, and mortgage–these are some expenses that are completely unavoidable. But take a hard look at your budget again. Is there any room for negotiations?
For instance, you can consider getting a smaller apartment at another location to save on rent. Or try getting a roommate to save on utilities.
It’s also possible to cut back on grocery bills by shopping at a cheaper store and purchasing at wholesale rates.
Expert tip: if you are trying to save on groceries, try making an elaborate meal plan at the start of each month. This will help you figure out exactly what items you need from the store and avoid unnecessary shopping!
3. Look at What You Don’t Need
Do you have unused subscriptions that eat up hundreds of your dollars every month? Well, it’s time to cancel them! You can also consider sharing your subscriptions with someone to save a few more dollars.
Reselling is also a great idea if you are on a tight budget but want your savings to accelerate. Start scouring your home for items you do not use or no longer need. Sell them on platforms like Craiglist, Poshmark, or local thrift groups. This will help you increase your cash flow as well as declutter your home!
How Much Should I Save Each Month?
You should strive to save 15-20% of your monthly income.
But that should not be the fixed rule. Tailor the amount based on your financial goals, prioritizing emergency funds, short-term objectives, and long-term savings like retirement. Adjust as needed per your needs.
- Salary: $1,000 – $150 to $200
- Salary: $5,000 – $750 to $1,000
- Salary: $10,000 – $1,500 to $2,000
- Salary: $15,000 – $2,250 to $3,000
- Salary: $20,000 – $3,000 to $4,000
The best way to save money is to find a method that fits your lifestyle.
Personally, I found that setting specific goals, like saving for a dream vacation, makes it more motivating.
This not only aligns with my financial goals but also ensures consistency.
For instance, if I find it hard to give up my Netflix subscription but can easily cut back on dining out, I prioritize keeping Netflix or vice-versa.