How to Save Money Fast on a Low Income

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save money on a low incomeIt’s always a good feeling when you receive your paycheck. You’re finally being rewarded for the hard work you’ve put in.

Unfortunately, our efforts don’t always produce the desired results. This is why your paycheck may not always reflect the effort you put into it.

The good news is, there are many ways you can stretch your paycheck to make your money go a lot further it looks on paper.

In this article, I’ll go through some effective techniques that will show you how to save money on a low income.

But first, if you earn a low income or live paycheck to paycheck, don’t feel bad or lose hope. It’s important to know that you can make it. It may take a bit of work. However, you can do it!

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Low Income and Living Paycheck to Paycheck

According to the U.S. census, the average household income for 2017 was $61,372. Unfortunately, nearly 13% of Americans live in poverty. That’s nearly 40 million people.

Interestingly enough, being married helps you avoid this. Less than 5% of married couples belonged to this group. On the other hand, 12.4% of single dads and 25.7% of single mothers did. I guess it shows that a two-income household goes a long way.

Another sad insight that the recent government shutdown revealed was nearly 80% of workers live paycheck to paycheck.

So what can you do to make sure that you’re able to save money even if you don’t receive a big income?

Here’s how.

How To Save Money On A Low Income

Saving money when there isn’t much of it coming in can be tough. But, it can be done!

It’s important to believe that you can do it. It may take a little more work. And, you may need to get a little bit creative.

But, don’t let it overwhelm or stress you out. Most importantly, don’t EVER give up. I’ve seen enough people pull themselves out of poverty or being homeless and becoming successful to believe that.

The first and most important thing to figure out is your game plan.

Here are two strategies you can take. There is no right or wrong method. Nor is there one better than the other. Both work very well.

Which one suits you better will mostly depend on your personality and how much of a change in lifestyle you’re willing to make.

Approach No. 1: Cut Back on Your Biggest Costs

The first strategy focuses on your biggest expenses. Often, about 70% to 80% of your costs come from 20% to 30% of the things you spend on.

So, by focusing on cutting down these big-ticket expenses, you’ll be able to just slash your budget on by modifying a few things in your life and get enough savings out of it.

The downside here is that depending on what items come out to be your largest monthly expenses you may need to drastically reduce them.

That means you may experience quite a bit of a lifestyle change.

What are Your Biggest Costs?

The first question you’ll need to answer would be, “what are the items you pay for the most each month?” For most people it will be these three:

  • Housing
  • Food
  • Transportation

But, this isn’t always the case, depending on where you live and what you do.

How Do You Go About Implementing Strategy #1?

If you decide on using this cost-cutting strategy, the first thing to do would be to evaluate all your costs.

Step 1: Compile All Your Bills and Receipts

In an ideal situation, you’ll have all your receipts, bills and statements on hand. This includes your food bills when you eat out, grocery receipts and all the other stuff you buy. This way, you can easily see how much you’re spending on clothes, shoes, eating out and other things.

Do collect your electric and water bill as well as take note of how much you pay for rent, transportation, and other expenses.

Step 2: Tabulate All Your Monthly Expenses

The best way to see how much all your expenses are is to list them down one by one.

Microsoft Excel would be a good software to do this in. You can likewise use a piece of paper with two columns and write everything down.

I prefer using Excel because it will let you sort your expenses from highest to lowest. This makes it easy to spot which ones are potential cost-cutting candidates. It also lets you add up small receipts without having to keep pressing the memory button on your phone’s calculator.

Step 3: Evaluate the Biggest Costs You Can Cut

Now, it’s time to start slashing expenses. Start from the biggest expenses and see what you can reduce or get rid of.

From experience, the biggest ones often come in the form of rent, eating out and transportation.

  • Rent is somewhat easy to cut but also hard to do. By this I mean, moving to a much cheaper or smaller apartment quickly cuts your monthly bill by a few hundred bucks at least. But, it also means giving up a few things you’re used to like a comfortable or bigger home.
  • Eating out is another easy fix. But, takes a bit of discipline, especially if everyone at work likes going out for lunch together. However, I can say from experience that the savings you get by bringing your own lunch to work every day is well worth the sacrifice.
  • Finally, transportation. Transportation costs usually shoot up if you own a car. That’s because of gas, parking, insurance, and maintenance. But, having a car may also more convenient compared to commuting, depending on where you live.

These are just some examples of what and how you can cut expenses. What you slash and how you do it will really depend on what your biggest costs come out to be and how you want to tackle them.

Approach No. 2: Cut Many Cost Categories by a Little Bit Each

Strategy #2 take a somewhat opposite approach to strategy #1. Instead of drastic cuts on the biggest costs, you slash a little bit from almost everything.

This approach will affect your lifestyle less dramatically than strategy #1. But, it also takes a lot of balancing and rebalancing to get right.

That’s because if one cost changes, you may need to find other categories to make up for it.

I believe that this strategy works better if:

  • You don’t want to change any aspect of your lifestyle by too much.
  • Your expenses show that you don’t really have one to three really major expenses. Instead, most costs are spread out evenly.
  • You’re willing to do a bit more tabulating, balancing and re-calculating more often.

In the beginning, this strategy will take more time and work. That’s because of all the financial juggling. But, after you’ve done it a few times, you’ll be surprised as to how fast you can memorize your costs.

It’s like remembering the costs of different grocery items without trying to do so.

How Do You Implement Cost-Cutting Strategy #2?

  • Step 1 will be the same as step 1 in strategy #1.
  • Step 2 will also be the same as step 2 in strategy #1.
  • Step 3: Start Cutting a Little Bit from Each Cost Category

Here, MS Excel will be a great help. It will let you easily do trial and error computations to see how much you can cut for each category.

There is No Right or Wrong: Which Strategy You Choose Depends on Your Preference

In my case, I went with strategy #1. That’s because the cost of housing easily stood out. It also made the decision much easier since once I accepted that I had to cut that cost significantly, the rest was simple to slash.

While having a bigger place was nice, I’m quite happy with a smaller one. That’s because you can easily realize the savings. It also helps that cleaning and maintenance takes a lot less time and effort.

Besides rent, the bills also went down on their own because there were less lights, appliances, and space to cool.

That said, the choice really comes down to you. I do urge you to try both methods just to see what the effects are. After all, only step 3 is different.

When you see how much you need to cut from strategy #1 and strategy #2, you’ll be able to make a better decision since you’re aware of what sacrifice each approach requires you to make.

More Ways to Save Money On A Low Income

In addition to the approaches above, here are some things that will help you save more money even if your job isn’t paying you a high salary.

1. Find Ways to Increase Your Income

Let’s face it, money solves a lot of problems. At least when it comes to material things.

Unfortunately, our world is a material world. That is, to buy anything or use any service, you’ll likely need to pay for them.

So, the best way to make up for a low income is to make some extra cash.

  • Ask for a raise. If you feel you deserve one, try asking your boss for a raise. Make sure to have a logical argument you can present to him or her that will show them you deserve it.
  • Get a side gig. Hustling on the side is much easier today than it used to be. That’s because you can work from home. This means you now have the option to earn money from home or go out and get part-time work. Among the best ways to do so are:
    • Blogging
    • Freelance writing
    • Being a virtual assistant
    • Selling things online
    • Photography
    • Tutoring
    • Dog walking
    • Babysitting

2. Pay with Cash

If you find yourself spending more than you should be, try locking your credit card away in your desk drawer and start using only cash to pay for things.

Using cash stings more than paying with credit cards. There’s something psychological when you see money leaving your hands, knowing that you worked hard to earn it.

In addition, when you have the urge to buy things, you may need to find and drive to an ATM just to procure the cash. That in itself could deter you.

3. Earn Cash Back When You Buy Things

For things that you’ve already bought or necessities, you’ll have to purchase anyway, take advantage of cash back.

Ebates is a great cash back service that pays back a percentage of your purchases. This lets you do your normal shopping and get some money back at the end of every month.

Depending on what and where you buy things, you can get anywhere from $20 to $150 a month from Ebates.

What’s great is that their program includes many well-known brick and mortar as well as online stores that you probably already do your shopping with. This includes Kohls, Target and Walmart.

4. Create a Budget

Creating a budget is one of the most important things to learn to do. This is especially true if you’re on a low income or watching your finances

Having a good budget ensures that you don’t overspend on things you don’t need.

The good news is, if you followed or did any of the strategies above, you’re already more than halfway through to completing your budget.

All you need to do is list down all your income and other earnings every month, then balance that out with your expenses.

The goal is to get a zero. That means your expenses are fully covered by your income.

To save money, you can cut costs or increase income so the balance (total income minus total expenses) becomes positive. The positive number is the savings you get at the end of every month.

5. Keep Track of Your Food Expenses

One of the biggest problems with expenses is that we tend to underestimate them. By that, I mean we tend to think we spend less than we actually do.

As a result, that can really mess up your monthly expense estimates.

So, the best way to really know how much you’re spending on food is to keep every receipt. This means collecting all your receipts from eating out and also your groceries.

Here’s how to do it:

The goal here is twofold.

  • Know how much you’re really spending on food
  • Be able to compare eating out with eating in and preparing your own food at home and work.

Step 1: Keep all the receipts for eating out.

Step 2: Make sure to also keep all your receipts for groceries. This lets you compute how much you’re spending for food you make yourself.

Step 3: Print a calendar.

Step 4: For the next month, mark each day in your calendar with a red or blue pen. You can likewise do this for a week or for two weeks if you want to speed things up.

Here’s how it works.

  1. Each day will have a few entries.
  2. Each entry corresponds to a meal.
  3. If you ate out, use the red pen to indicate this. Then, include the name of the place and the total bill including tips in the receipt.
  4. If you ate at home or brought your own food to work, use the blue pen to indicate that.

For example, on February 10, you got a $3.00 coffee at Starbucks for breakfast, packed your own lunch, and bought dinner at Subway for $13.00 (sandwich, salad, and drink).

The entry for Feb. 10 would look like:

  • Starbucks: 3.00
  • Brought lunch to work
  • Subway 13.00

Step 5: Tabulate the Cost of Eating Out and Groceries for the Week, 2 Weeks or Month

The color-coded meals will let you quickly add up all the costs for each. This will help you get an idea of how much you tend to spend per meal when you eat out vs. eat in.

For groceries, one quick way is just to divide the total supermarket receipt for the number of days that the food covered.

You’ll be surprised to see how much of a difference eating out and making your own food costs. I know I was shocked at my results.

6. Manage Your Grocery Bill

Buying groceries and preparing food yourself is much cheaper than going out all the time. But, you can also spend more than you need to at the store.

That’s why it’s very important to have a plan before going grocery shopping.

Here are a few quick tips to help you save on your groceries.

  • Make a master list of all the things you really need. This includes produce, milk, meats, bread, and other pantry items. Leave out the extras like junk food, soft drinks or candies.
  • Always make a list of what to buy before going to the store. This prevents you from buying unnecessary items.
  • Plan your meals for the week in advance. Doing so not only saves time but it also lets you know what ingredients you need to feed the entire family.
  • Take an inventory of what’s in the fridge, freezer, and pantry regularly. This will let you know what items you need to buy and what you don’t need to buy more of.
  • Don’t get sidetracked once you get to the store. Having the right mindset before you go inside helps prevent you from buying things that aren’t on your list.

7. Walk or Ride a Bike If You’re Not Going Far

If you’re going somewhere nearby, walk or ride a bike instead of taking the bus or driving. This not only saves you money but also lets you get some exercise.

Walking is great because it helps you lose weight, allows you to get some sunlight and keeps your muscles active.

8. Get Rid of Cable

Having cable is a nice luxury. Unfortunately, it also costs quite a bit. If you can, get rid of cable and other unnecessary subscriptions.

But, if you can’t live without cable, try finding a cheaper provider. You probably don’t need the hundreds of channels anyway.

Alternatively, how about Netflix or Hulu? They’re much cheaper options and have good show lineups.

9. When You Have Extra Cash, Use It to Pay Off Debt

Whenever you have extra cash, pay yourself first. Then, pay your debts.

Depending on how deep in debt you are, you may want to switch the order of the two.

In either case, never let your debt go unpaid for too long. That’s because every day that goes by the total amount you need to eventually pay back increases. This is thanks to the interest they accrue which keeps accumulating with time.

So, whenever you have extra cash on hand, pay off your credit cards, student loans, and other debt first.

Just as importantly, don’t forget to pay yourself. This is one way to keep yourself going.

Working hard and not getting anything out of it can work. But only for a while. After that, it can make life miserable. So, you need to take care of yourself as well.

10. Buy Only What You Need

When you’re short on cash, it’s very important to buy only things that are necessities.

To do so, you want to distinguish between your WANTS and your NEEDS.

  • Wants are things you’d like to have. But, can live without. They are luxuries that you’d love to have in your life.
  • Needs are your necessities. You can’t live without them. These include shelter, food, healthcare, and other life essentials.

So, if you find yourself buying things you want but don’t need, it’s a good idea to return them to their shelves.

For bigger items or things that cost a certain amount, don’t buy on impulse. Always take a day or two and sleep on it before making your decision.

Often sleeping on things helps us make better decisions because we see things from a different perspective away from the initial moment of wanting it.

11. Automate Your Savings

This is one way of paying yourself. By automating your savings, you make sure that you don’t get to see the money that’s coming in.

This is a great way to save money because it prevents you from thinking of things you can spend the extra cash on.

By making your salary go straight to savings, it bypasses your eyes which often tell your brain, “we have money to spend on something, what do you want to buy?”

That’s never a good thought when you’re trying to save towards a goal.

12. Consider Your Entertainment Costs

Taking family time to do things, going out with coworkers after work or hanging out with friends is all part of life. It’s fun and it helps us bond with our kids or other people in our lives.

That said, it’s always important to be aware of what kind of entertainment and how much you’re likely to spend. This is especially true if you’re trying to save money.

A good way to save money on entertainment without depriving yourself of all these things is to find cheap or free alternatives.

For example, cheap date nights are great. And, they don’t need to be boring.

Instead of taking vacations to Disneyland, why not take the family camping or fishing. They’re great ways to explore the outdoors without spending a fortune.

13. Get Rid of Your Landline

If you find yourself receiving all your calls via your cellphone, you may not need your landline anymore. This isn’t always the applicable especially if there are many people at home. Or, if there’s someone who uses the landline.

But, if no one does, there’s no reason to keep paying for that phone bill every month.

14. Use Coupons

Coupons really help if you know how to use them. It does take a while to learn to coupon before you’re able to save a good amount of money regularly. But, that extra effort is well worth it.

The only caveat to couponing is to avoid buying things you don’t need, just because you can get them at a cheaper price.

While they may be cheaper, they’re still costing you something. And, if you don’t really need them, then that’s money out of your pocket.


No matter how much money you’re making, there’s always a way to boost your savings. Whether it’s cutting down your expense or supplementing your income with a side gig, you’ll be able to make enough so that you can set aside extra cash for the future.

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