Saving money can be a challenge no matter your income level. If you’re someone who is wondering “How can I save money with a low income?”, you aren’t alone. Between rent, groceries and bill payments, there’s usually not a lot leftover at the end of the month, right? It can feel overwhelming to know where to start.
Don’t worry! If you’re someone with a low income, there are many easy ways you can ensure that you have some cash leftover for your emergency account, fund retirement and maybe even indulge a treat or two.
Read on to learn the best ways to answer “How can I save money with a low income?”.
Why Should You Save Money?
When life is so short, why should we save money? There are many reasons why. The most important reason: a reserve of cash is crucial in case of a rainy day. If you suddenly get sick, lose your job or if your car breaks down, you’ll need to cover your recurring, immediate expenses. Saving money and learning how to not live paycheck to paycheck is also important because you need to put some of that money aside and invest it for retirement.
When you get older, you likely won’t be able to work, so you’ll need to plan to live off your savings and investments. Another important reason for saving money: it can help you become more disciplined. In a world where you are encouraged to buy what you want without any regard to the cost, saving money teaches discipline and the benefits of delayed gratification.
When you can save more money, you’ll have more to spend on a higher-reward item such as a vacation or plane ticket to see family. While there’s nothing wrong with treating yourself, being able to save money is a great feeling. You’ll feel accomplished and happy when you see your bank balance grow.
If you need motivation to save money, choose one goal to work towards. Even if it’s just a new pair of shoes you otherwise couldn’t afford with your current spending routines, setting a goal can help you stay motivated.
Create a Budget
The most important way you’ll stand a chance at having money to save at the end of the month is creating and sticking with a plan: also known as a budget! I’m sure you’ve heard about the importance of budgeting time and time again, but its benefits cannot be understated. Here are the key steps you’ll need to take to bridge the gap between where you are currently in your financial journey and where you want to be:
Step 1: Determine Your Current Spending, Saving and Investing Habits
Before creating a goal and a saving strategy, you’ll need to understand where you’re at financially. Open your banking app and pay stubs and write down the following information:
- How much you make per month. Budgeting best practices stipulate that you should use your after-tax income, not your before-tax income as this is what you’ll actually have left to spend. If your income fluctuates, calculate the average of your net income from the last 3 to 6 months as an estimate.
- Fixed expenses such as your rent payment, utilities, car payment and any other recurring, necessary bills.
- Variable expenses such as groceries and clothing.
- ‘Fun’ expenses – this includes any trips to the mall, your Netflix bill and any other things you spend money on that aren’t necessary to your survival.
- How much you save and invest, if you currently do at all.
Step 2: Determining Your Saving and Budgeting Goals
After you’ve determined these numbers, you’ll be able to answer the question: “Are my current saving and spending habits getting me to where I want to be?”
In the likely event that the answer is “no,” you then can create a course of action on how you’re going to save money and how much you want to save per month.
If you’re feeling overwhelmed, start with one goal. What do you want to save money for? If you don’t have an emergency fund of 3-6 months of living expenses, focus on building this first. After, you can focus on other goals such as opening a savings account for your child’s education, replacing an old appliance in your home or maybe even paying for a family vacation.
After you’ve determined your goal and how much you want to save, decide how much you need to put away per month to reach your goal. For example, if you need to save $3000 in a year, you’ll want to put away $250 per month. Next, you’ll need to figure out how you’re going to come up with the extra $250 per month.
There are two main ways you can save the extra $250 per month (or whatever your goal is):
- Increasing your income by getting a higher-paying job or taking on a side hustle, or;
- Decreasing expenses by cutting out unnecessary purchases, meal planning, buying cheaper food and doing challenges such as a no spend month.
Once you’ve set up your goals and know how much you need to save, spend and invest, find a budget template so you can track what you make and exactly how much money you have to spend and save on every single category. Pinterest has tons of free and low-cost options. Find one that works for you!
Step 3: Choose a Budgeting Template or App
There are a few different ways to track savings. Here are the main methods:
- Google Sheets or Excel spreadsheets
- Pinterest budgeting and savings tracking templates
- Budgeting apps such as Mint or YNAB (You Need a Budget)
Get creative, test out each method and choose one that works for you!
Commit to Becoming Debt-Free
Before you even think about saving money, if you’re in debt, you need to look at eliminating it as quickly as possible is the best choice for you versus saving and paying off debt at the same time. Debt isn’t always a bad thing. A mortgage payment or student loan means you’ve invested in something that will pay you back in the future. A mortgage payment means you’ll eventually own a home. Taking out student loans with the aim of acquiring a qualification and securing an income is a good thing. However, other forms of debt such as credit card interest, should be eliminated as soon as possible.
Take a look at how much ‘bad debt’ such as credit card interest you have. Commit to paying it off as soon as possible. How can you do this on a low income? Cut out an unnecessary expenses such as takeout or subscriptions and use the amount normally paid towards this to your debt instead.
Important: if you’re in debt, be sure to talk to a financial advisor. Everyone’s situation is unique and should be handled on a case-by-case basis.
How Can I Save Money with a Low Income by Saving a Percentage of My Income?
After creating a budget and tackling your debt, you need to commit to saving a portion of your income. If you’re just getting started with saving, 10% is an achievable number. For example, if your net income right now is $2,000, commit to saving $200 per month. If this number is too much, start with just $50 or cutting out a discretionary expense and re-allocating that money to your savings account. Each month, increase your saving goal until you’ve reached the 10% goal. Be sure to record how much you save per month. Track your savings on an Excel spreadsheet or in a journal.
Once you’ve saved 10% of your income for a while, you can try new saving methods like the 30 30 30 10 budget or the 52 week savings challenge.
How Can I Save Money With a Low Income in the Kitchen?
While there are several ways you can answer the question to “How can I save money with a low income?”, focusing on what you eat, how you plan meals and what you buy at the grocery store will have a major impact on your budget. Here are the key steps you need to take to save money on a low income.
Take Inventory of Your Fridge, Freezer and Pantry
Before heading to the grocery store, check your fridge, freezer and pantry for leftovers and canned food. While it’s a lot easier to just run out and buy what you need, committing to using what you have first will save you money. If you throw out $10 worth of food per week, you’ll waste over $500 a year! Therefore, maximize what you have first to save money.
How Can I Save Money with a Low Income While Eating Well?
Aside from using what you already have, it’s crucial that you meal plan your breakfasts, lunches and dinners. When you commit to meal planning at a designated time every week, it’ll be a lot easier to stick with it. Choose a time when you’ll be completely distraction-free to write down what you want to eat in the upcoming week. You can either write down your meal plans on a notebook or pick a journal or planner such as this one on Amazon. Alternatively, you can try a magnetic meal planner like this one, which has a convenient tear-away shopping list.
If you’re looking to really save as much money as possible, try to use the same ingredients in more than one meal and try to buy low-cost grocery items. For example, you can choose six-bean mix and carrots as core ingredients. From this you can make a bean salad for lunch and a six-bean chili for dinner. Why try to use ingredients in several different meals? When you buy in bulk, the cost per unit is usually lower.
Once you’ve created your meal plan, write down the ingredients you need to buy to make your meals.
Price Compare and Do Price Matching
Aside from meal planning and always making a grocery list, it’s important to compare supermarkets’ prices and do price-matching, if possible. Use an app such as Flipp to find the best deal on an item.
Additionally, try to shop at stores that offer price matching. What is price matching exactly? Essentially, it’s when you go into the store and show them the lowest price of an identical item from another store. The cashier will match the price of the cheaper store, saving you the difference.
Buy Generic Brands
Buying the store brand is a major way that many people overspend on groceries. While you might think that the brand-name item is higher quality because it has a nicer label and costs more, the store brand is generally just as good. Next time you’re at the grocery store, look above and below eye level. Generally, cheaper items are placed away from eye level so you’re more apt to buy the expensive products. Even a few dollars saved here and there by buying generic can really add up!
How Can I Save Money with a Low Income When My Housing Costs are High?
“How can I save money with a low income when my housing expenses are so high?” you might ask. The truth is, with some flexibility and creativity, it is possible to significantly cut down on your housing expenses.
Live with Family or Friends
If you have family or friends nearby or are willing to relocate, why not live with loved ones? Even a temporary stint of a few months or a year can really help you cut down on expenses. Living on a low income means you should be cutting down on as many expenses as possible. When you live with family or friends, you can save thousands of dollars per year.
If a family member or friend offers a room or the basement, be sure to offer some rent as compensation. Just because you’re living there doesn’t mean you can do it for free! At the very least, offer to buy groceries, cook or contribute to household chores.
Get a Roommate or Rent Out a Room
If your family or friends are too far or cannot offer you a space to live in, why not rent out a space and share it with a roommate? Alternatively, search for a room for rent. Choosing to live with a roommate as opposed to renting your own space can save you over 50% on your housing. While sharing a space with a roommate isn’t for everyone, it’s an option you should seriously consider if you’re wondering how to save money while on a low income.
Try Out Long Term House Sitting
While not for everyone, long term house sitting is a great way to live rent-free. Long term house sitting involves taking care of a person’s home for 6 months or more. You typically live rent-free in exchange for small tasks like walking and feeding pets, gardening and collecting the mail. Long term house sitting is ideal for those who have remote jobs and are flexible with where they live. Sign up for a website such as Trusted Housesitters to get started. Long term house sitting is a great way to live rent-free – or, if you own a home, rent it out and collect income to pay off your mortgage.
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How Can I Save Money with a Low Income Using the No Spend Challenge?
If you want to save money with a low income, doing a no spend month is a simple way to build your savings account. Trying a no spend month is exactly what it sounds like: forgoing any unnecessary purchases for a whole month and learning how to live with less. You’ll only want to spend money on essentials necessary to survival such as food, housing and personal hygiene.
When is the Best Time to Try a No Spend Month?
The best time to trial a no spend month is during a time where you don’t have a lot of one-off purchases such as Christmas or birthdays. Alternatively, choose to do a monthly challenge such as the No Spend January challenge. Another great thing about the No Spend January challenge is that it falls right after Christmas: the perfect time to create and maintain new habits. You can also do a No Spend November challenge so your wallet is well-stocked for December spending madness.
How To Plan a No Spend Month
Know How Much You Save and Spend
Before trying a no spend challenge, you’ll need to know how much you save and spend, on average. Assemble a printer, paper and highlighters for this task.
Take Inventory of Your Spending Habits
Once you have your supplies ready, you’ll need to find your bank statements. Log into your bank account and print out your statements from the last 3 months. Do the same for all your credit cards.
Next, highlight exactly what you spent on each of these categories:
- Your necessary spending i.e. rent, utilities, groceries – needs
- Your ‘fun’ spending i.e. movie tickets, entertainment and travel – wants
Use a different colored highlighter for each spending category (needs vs. wants)
Next, add up the total for each category. Then, determine the average of how much you spent on ‘fun’ expenses from the last 3 months. This number will be your monthly saving goal for the no spend month.
Example: Average from Last 3 Months
For example, let’s say you spent the following on ‘fun’ over the past 3 months:
- $500 in July
- $800 in August
- $700 in September
500 + 800 + 750 / 3 = $683.33
Therefore, your goal will be to save approximately $685 during your no spend month.
Setting Achievable Goals During the No Spend Month
Is the prospect of completely cutting out spending overwhelming? If so, you aren’t alone. Why not focus on one category? Here are a few ideas to choose from:
- Coffee – How often do you purchase coffee to go? Cutting out your daily $5 caffeine habit and making your own coffee at home instead is a great way to start a no spend month for just one category.
- Takeout and Delivery – how many times per week or month do you order your favorite pizza or Thai dish? Instead of ordering in, shop for some special ingredients and make your own dishes at home. Even if you spend more on groceries than you might normally do, it’s still a fraction of the cost of paying someone else to prepare food and bring it to your door.
- Alcohol – one of the most common discretionary purchases you can make. Commit to switching to sparkling water or kombucha instead always buying your favorite IPAs. Even a month of no spending on alcohol can really help your bank account.
- Subscriptions – while your Netflix or Spotify accounts are a fun source of entertainment, they aren’t necessary to your survival. Cancel your Netflix and Spotify and opt for reading or streaming on YouTube. Many libraries also offer online subscriptions for access to pdf e-books, movies and podcasts. Check with your local library to see what they have on offer – you may be surprised!
“How Can I Save Money with a Low Income and Succeed”? – Hold Yourself Accountable
Log Your Spending in a Journal
Once you’ve decided on a category for a no spend month or have committed to completely cutting out nonessential purchases, start your 30 day challenge. While it’s easiest to start it on the first day of a month, you can start any time you like. Just be sure to keep track of which day you started. For example, if you start on May 11th, be sure to write it down and set a reminder in your calendar for when the no spend month ends.
Each day, keep track of what you spend in a journal. Write down:
- What the item was that you bought
- What category it fits into – housing, groceries etc.
- How much it cost
- Whether it’s a need or want – for the no spend month, the aim is to only spend on needs.
Why log your spending in a journal? When you write things down, you’re a lot more likely to curb unnecessary spending.
Only Use Cash
If you really want to succeed at a no spend month, going all cash is a great way to set yourself up for success. When you physically handle cash, you’ll be a lot more conscious of how much is leaving your hands. On the other hand, if you were to tap a credit card, it’s a lot less tangible and a lot easier to let money leave your wallet.
Find an Accountability Partner
Feeling unmotivated and need some help? Why not ask a family member or friend to hold you accountable. Saving money on a low income isn’t an easy task. Meet with a family member or friend once a week over coffee to share your progress with the no spend challenge and frugalism in general. Each week, you can share your progress with a family member or friend and talk about any challenges you face.
Even if you aren’t comfortable sharing the exact amounts of money you’re saving or spending, having an accountability partner is a great way to stay motivated. If your family member or friend is also looking to save money, you can serve as his or her accountability partner as well!
Reward Yourself for a Successful No Spend Month
When the no spend month is over and you’ve successfully cut out purchases according to your goal, treat yourself! Just because you’re saving money on a low income doesn’t mean you should deprive yourself. A small treat can help you stay motivated by activating the reward center in your brain. Even a specialty coffee or pair of earrings can help you keep on track with savings goals. If you’re feeling extremely ambitious, you can try a no buy year. Cut out all unnecessary purchases in one category such as takeout coffee. Invest or save the money you don’t spend and reward yourself with a treat after one year. Try it out and see how much you save!
Ask for a Raise or Switch Jobs
So you’ve been at the same job for a year or more. The cost of living has gone up, but your salary hasn’t. Have you asked for a raise? If not, it’s worth a shot. Asking for more money can be scary, but it’s worth it. Be prepared with a list of accomplishments you’ve achieved at work. Include numbers such as increasing sales by x%, training x new employees, and more. Schedule a meeting with your manager and emphasize the value you’ve brought to the company. Add more punch by bringing a copy of industry-standard salaries from Glassdoor to prove that you’re being underpaid.
If the answer is ‘no,’ you have two choices: wait a few months more to ask again or start job-hunting. Generally, if you want to make more, it’s best to hunt for a new job. Between 2021 and 2022, the average worker who switched jobs saw their pay increase by nearly 10%, while those that stayed in their current job saw a decrease of nearly 2%. While it’s a lot of work and can be scary, applying for and getting a new job is well worth the risk. Remember: if you have a low income, you want to increase your earnings as much as possible. You can do hard things!
Take on a Side Hustle
Aside from decreasing expenses, asking for a raise or changing your job the other major way you can save money on a low income is the classic side hustle. There are tons of ways to make extra money in your spare time ranging from online, seasonal and in-person gigs. Here are some of my favorite side hustles to take on and how to get started.
Online Side Hustles
Paid Market Research Studies
Want to get paid to talk? Guess what – it’s possible to make up to $200 an hour for your opinion. Paid market research platforms allow people like you to provide feedback to companies about existing or upcoming products and services. Some of the best platforms include Respondent, User Interviews and dScout. Sign up for an account, verify your account and fill in your details.
The Importance of Filling In Information on Paid Market Research Platforms
You’ll generally need to fill in a survey with demographic details such as your work experience, age, interests and technology you own such as your laptop or smartphone. Don’t worry – these companies don’t sell your information, nor are you obligated to fill out every single answer. However, it’s best to do this. Why? When companies know your information, you’ll be a lot more likely to qualify for studies. Companies spend valuable time and money improving their products and services, so they want people with experience using their products or within the target audience to provide feedback and advice to improve them.
Be sure to be honest with your answers as well. Dishonestly can result in a permanent ban from a platform.
Applying and Qualifying for Studies
After you fill in your details, you’ll be able to apply for research study screeners. These are brief surveys (5-20 questions) that provide details to the researcher and help them confirm whether or not you’re a good fit for a study. Sometimes you may also be asked to provide a brief video submission as is the case with dScout. If you qualify, a researcher will send you an email or text message to book an interview slot on a first-come, first-serve basis.
Studies range from video interviews where you provide feedback on a product or service to actually walking through a demo and sharing your screen while you provide live feedback on a prototype the company is testing.
How Can I Maximize my Earnings?
Are you an expert in a specific field? You’ll be a lot more likely to qualify for studies in niche areas such as IT, marketing or finance. As applicants in niche fields are harder to find, companies are also often willing to pay more to participants for specialized studies. Even if you aren’t qualified in a niche area, paid market research studies are a great way to make some extra cash. Studies won’t replace your income, but if you consistently apply to screeners every day, you could possibly reel in a couple extra hundred bucks per month that can go directly towards your savings account.
User Experience Testing
Aside from paid market research platforms where you provide live feedback or a testing demo, you can make money through user experience testing. UX testing platforms such as UserTesting ask you to share your screen and walk through a website or app demo. You’ll be asked to complete a series of tasks and speak your feedback out loud about the navigation process, your opinion on the design, and more.
Sign up for an account on these platforms, verify your information and take the demo test. If you pass the demo test, you’re ready to go! When a study is available, you’ll receive an email notification. If you want to maximize your chance at getting a study (studies fill up on a first-come, first-serve basis), keep the browser tab open for the website.
Selling Digital Products on Etsy
If you work from home or have extra time and are creative, you can sell digital products and turn a decent profit. Selling Canva templates on Etsy or another online platform is the ultimate passive income setup. There is a good amount of work involved in finding designs, building an online platform and advertising, but once you have a good setup, you can make an infinite amount of sales on a single product. While selling digital products online is a lot of work and the competition can be fierce, if you put in the work and target products with low competition and high demand, selling digital products can be a great side hustle for low-income earners with spare time.
In-Person Side Hustles
Flipping Items
Are you handy and enjoy shopping? Flipping electronics, appliances or furniture is a potentially lucrative side hustle. Search on Facebook Marketplace for old items that you can repair. Take them home, repair them, mark the cost up and resell items. If you do this several times a month and average a profit of $50 per item, you can make a decent sum of money.
Doing Seasonal Yard Work
Doing seasonal yard work such as raking lawns, gardening and even washing cars is a great way to make some extra cash as a low-income earner. Take some time out of your weekend to ask neighbors if they’re in need of some assistance with yard work. Even seasonal work can help you save for higher-expense months such as the holiday season in December.
A Final Word on Answering the Question “How Can I Save Money With a Low Income?”
There are tons of answers to the question “How can I save money with a low income?”. Increasing your income is mostly mindset and a little bit of execution. Don’t get stuck in a fixed mindset and don’t be discouraged – with a little dedication and commitment, you can increase your income and save money.
Start small with one or two habits and build from there. Before you know it, you’ll have a solid savings account and even some extra cash to treat yourself!
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Janita is a frugal living expert and owner of Frugal Fun Finance. With over five years of personal experience finding and trying out the best ways to make and save more money, she's eager to share her knowledge. Janita's strategies have helped her save thousands of dollars for funding investments and traveling to over 20 countries.
Janita completed training in personal finance at The University of Western Ontario and McGill University, two prestigious Canadian universities. Her expertise has been shared on GoBankingRates, Yahoo Finance, and NASDAQ.com.
