11 Foolproof Ways to Save Money On a Low Income

Saving money when you have a low income starts with the proper mindset. With the right planning and attention to detail, it is absolutely possible to make progress toward savings goals.

Check out the following steps to start saving no matter what your income may be:

1. Create a Budget

If you don’t know how much money you have or how much you need to pay bills, you won’t know how much you have to save each month. Creating a budget and sticking with it will give you a place to start when it comes to determining how much you have left over after expenses to save.

Make sure to include all the big expenses — like rent, utilities, food, gas, and car payment — and allot funds for categories like household needs, clothing, entertainment, and a bit of a buffer in case of an emergency. Look at your credit card and bank statements to see how much you tend to spend on average, and estimate how much you’ll need each month. Then, write down every dollar that you spend throughout the month to keep track and hold back if you’re overspending in any categories.

2. Open a Savings Account or Savings Pod

Trying to save by hiding cash at home is one of the quickest ways to lose it or spend it on a whim. Current offers Savings Pods for account holders that pays 4% in interest, far more than the average savings account.

This way, you put your saved funds out of sight so that you’re not tempted to spend them. And you can earn more money while your funds remain available in the event of an emergency or for whenever you decide to access it.

3. Drop Unneeded Monthly Memberships

Now that you have your budget mapped out, you know how much you’re spending and on what each month, and you have a safe place to put your savings, it’s time for the hard part — cutting expenses.

Do you need subscriptions to five different streaming services? Do you get razors every month in the mail or items from Amazon Subscribe & Save that you don’t really need? Take notice of all the monthly bills that are automatically charged to your accounts and cut all the ones that are not absolutely necessary.

4. Take a Hard Look at Your ‘Unavoidable’ Expenses

When planning a budget, it is normal to write out the rent payment or mortgage and car payment as if they are unavoidable and must be paid. The truth is, however, that everything is up for negotiation when you are trying to save money, especially if you have an important goal to save for.

When it comes to your rent or mortgage, there are multiple options. You may choose to downsize or move to a less expensive neighborhood, move in with a friend, or take on a roommate who will pay you rent.

If you are making a car payment, especially if it’s a large one, it is a good idea to sell the car and buy a less expensive one, take public transportation if possible, and/or buy a bike to get around. If you can get by for six months to a year by riding a bike or using public transportation with the occasional car share ride when you need it, you will likely end up with a big chunk of money in hand to jumpstart your savings.

5. Save Money on Food

Food costs are one of your biggest variable expenses each month, which means it’s the first place to start when you begin looking for more money to save on a low income. If you spend a lot of money on eating out or buying prepackaged meals you could save $100 to $500 in this category alone.

Here are some ways to save on food expenses:

• It’s time to limit or drop takeout and restaurant trips entirely. Make dinner with friends instead, go on picnics, and plan ahead rather than putting yourself in a position to need to grab fast food when you have limited time.
• Make coffee or have drinks with friends at home instead of going to coffee shops or bars.
• Bring lunch to work instead of eating out or hitting the vending machines. Even if you work at a restaurant or grocery store, and use employee discounts to buy your lunch at work, you’ll still save if you bring it from home.
• Check out sites that provide tips on low-cost meals and how to eat healthfully on a budget like this one and this one.
• Once you know what to make, get busy shopping for ingredients at the grocery store rather than buying prepackaged meals or deli items.
  

6. Save Money on Utilities

If you are paying for water, gas, and electricity, it’s time to make a few small changes that will add up to savings in your budget and more money in your Savings Pod. You can do the following:

• Take shorter showers and use less hot water. Every minute, most showers dump 2.5 gallons of water, so if you’re taking long showers, that is adding up to quite a bit of water. Additionally, the amount of gas or electricity used to heat that water adds up at the same time.
  
• Use door draft stoppers. Place these stoppers on the inside of the front and back door if there is a gap and air is getting in and out. This will help to decrease the amount of cold getting in and heat leaking out in winter and vice versa in the summer. Similarly, it’s a good idea to seal up air leaks around windows as well.
  
• Unplug appliances when not in use. Even if they are turned off, many appliances continue to draw power. You can save by unplugging them, especially computers and TVs, rather than just flicking the off switch.
  
• Program your thermostat. If you work outside the house, like it to be cooler at night when you’re sleeping, or are going on vacation, you can save money by programming your thermostat to switch to more affordable temperatures when you are out of the house, in the morning when you’re leaving, and when you are on vacation.
  
• Use energy-efficient light bulbs. Choosing LED light bulbs over incandescent saves you money on light bulbs, and it decreases the amount of energy it takes to keep them lit. Additionally, during the summer, incandescent bulbs give off more heat, which requires the AC to work harder to keep the house cool.
  

7. Commit to Buying Nothing New

Every so often, make a commitment to avoid buying anything new for a month. You will need to buy food, pay bills, and replace items you need like shampoo or socks, but your commitment will mean not buying new books, clothes, household items, streaming services, online movies, sports gear, and other items. Instead, focus on repairing and maintaining what you have, finding an alternative solution, and connecting with groups that focus on giving away free items and not selling things.

Instead of shopping, you’ll spend more time decluttering and selling your old stuff that you don’t want, cooking meals from scratch, and making gifts to give to others. In the process, you’ll stack up your savings.

8. Change Where You Keep Your Money

Many financial institutions offer incentives for moving your money to their organization. For example, when you open a Current account and choose direct deposit for your paycheck, you get access to your paycheck two days early every time. The sooner you have the money in hand, the quicker you can pay interest-bearing bills or put it into a Savings Pod so it can earn for you.

Additionally, you have the ability to earn points when you make purchases using the card attached to your Current account. Not only does this mean that you will avoid running up debt on a credit card when paying your bills, but you’ll get points that add up and be redeemed for cash back in your account. Some merchants pay 15x points for purchases so those rewards can add up quickly.

Another nice bonus is that Current reimburses you for all fees paid for using the card at ATMs. Most banks will charge you to use any ATM that is not theirs. All of this means more money at your disposal to pay bills and save.

9. Pay Your Monthly Bills Automatically

For every monthly bill you have decided to keep, schedule your monthly payments to be paid automatically via credit card or pulled from your bank account. Late fees are expensive and added interest can really cut into your savings when you have a low income.

Be sure that you are only connecting reputable companies with your bank account to avoid fraud. Know that if you cancel a subscription and the company keeps charging your credit card, you can dispute the charge and get your money back.

10. Pay Down Debt

Though your goal is savings, it is worth it to take a look at how much you are spending each month on debt as well as the money that is slipping away in interest and fees.

Look at how much room you would have in your budget if you no longer had to worry about paying off a credit card, a school loan, a personal loan, your car, or a loan to a family member or friend. It can make a lot of sense to focus on paying off some debts after you put together a savings fund for emergencies, so you have more breathing room in your budget and more cash at the end of the month to save.

Remember to do the following:

• Pay only the minimum payments on all debts if you’re working on paying off a specific debt first.
• Make the minimum payments on time to avoid extra late fees and a hit to your credit score.
• Save up at least $1,000 first, so you have money in the event of an emergency and don’t need to put the expense on your credit card and add to your debt (and interest costs).
• Pay off the smallest debt first to free up the minimum payment in your budget. Then, apply that minimum payment to the next smallest debt as well as your extra money to wipe out that payment.
• If savings become very important, you can pause this process at any time with extra room in your budget.
  

11. Look for Extra Gig Work

If you like your job despite the low income or are having a hard time finding a higher paying job, consider joining the gig economy. There are lots of ways to earn money on the side to help you move more quickly toward your savings goals, including these options:

• Dog sit and walk dogs through an app like Rover
• Provide occasional childcare
• Drive for a car share service like Uber or Lyft
• Grocery shop or deliver food for apps like Instacart and DoorDash
  

12. Put Away Your Savings First & Last

With a tight budget in place, you should be able to allocate a minimum amount to savings every month, knowing that you will have enough to pay your other bills. Put this amount into your savings as one of the first “bills” you pay so you make sure it gets done.

At the end of the month, you should have extra money that you made through gig work, unexpected income or overtime, and savings on things like food and utilities. Make a payment to yourself for whatever is left, so you are not tempted to spend it.

Get Started

You can accomplish multiple items on this list by opening up an account with Current. Check out the app and set up your account within minutes, so you can start taking advantage of all the benefits that will help you to jumpstart your savings.


References

Budget Byte$.

Cheap Recipe Blog.

10 Ways to Save on Utilities. (April 2020). USA Today.

The Ultimate Guide to Buying Nothing New for a Year. (October 2020). Forbes.

Facing Financial Hardship? 14 Ways to Save Money. (April 2020). Forbes.

How the Debt Snowball Method Works. (April 2022). Ramsey Solutions.

Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC.