7 Practical Ways to Save Money On a Low Income

Living on a low income can be extremely difficult, but saving money isn’t impossible. It just takes a little time, discipline, and a new approach to managing your finances. If you’re trying to stretch your paycheck or build a safety net, there are practical strategies that can make a difference. Let’s dive into seven ways you can save money on a low income, even when the numbers are tight.

1. Create a Budget That Works

When your income is limited, not having a budget won’t cut it, you need a budget that prioritizes the essentials, or something like the zero-based budgeting system. This ensures you cover your needs first, avoid unnecessary spending, and create a foundation for savings, even if it’s small at first.

How to Create a Budget on a Low-Income

1. Assess your income: Write down every source of income, wages, side hustles, or assistance programs to understand what you’re working with. Knowing your exact income helps prevent overspending.
2. Identify fixed expenses: These are must-pay bills, such as rent, utilities, transportation, and insurance. Total these amounts to determine your essential costs.
3. Set a strict limit for variable expenses: Groceries and personal items fall into this category. Plan these based on your weekly or monthly needs, not things you want.
4. Eliminate discretionary spending completely: Pause all non-essentials like subscriptions, dining out, or new clothes. Focus only on what keeps your household running.

• Use budgeting apps like EveryDollar or a notebook to track your spending.
• Set aside a small emergency fund for surprise expenses, even $10 a week can add up.
• Pay bills immediately when your paycheck arrives to avoid late fees.

Resources

• Visit your local community center for free financial counseling.
• Apply for government assistance programs (e.g., SNAP or WIC) if eligible.

This type of budget isn’t permanent but it’s a big step toward stability, it will help you regain control of your finances while avoiding debt.

2. Shop Smarter for Groceries

Groceries are often one of the biggest budget categories, but they’re also one of the easiest areas to save money. By shopping strategically and planning meals, you can significantly reduce your spending without sacrificing nutrition.

Meal planning and cooking at home are a must. Even simple meals like pasta or stir-fries can cost a fraction of dining out, and the savings add up quickly. Start by creating a weekly menu based on sales, coupons, and what you already have in your pantry. Apps like Flipp can help you browse local store ads for deals.

Steps to Save on Groceries:

1. Shop with a list: Never walk into a grocery store without a plan. A list keeps you focused and prevents impulse buys.
2. Buy in bulk: For staples like rice, pasta, and beans, bulk purchases often cost less per unit. Check warehouse clubs like Costco or Sam’s Club if you have access.
3. Shop the store brands: Generic or store-brand products are usually just as good as name brands but cost significantly less.
4. Stick to seasonal produce: Fruits and vegetables in season are cheaper and fresher. Freeze extras for later use.
5. Check out my blog post for more tips on how to save money on groceries.

Extra ways to save on groceries

• Use cashback apps like Ibotta or Rakuten to earn money on purchases.
• Check local food banks or community programs for assistance if needed.

3. Use the Cash Envelope System

If overspending is a constant problem, the cash envelope system can help you take control. This method forces you to spend only what you have physically set aside for specific categories, keeping your budget on track. The cash envelope system is simple yet incredibly effective for managing your spending. Here’s how to get started:

1. Identify your spending categories: Break your expenses into clear, manageable groups such as groceries, transportation, entertainment, and personal care. Tailor the categories to your lifestyle, but avoid making them too broad.
2. Determine your spending limits: Based on your budget, assign a specific amount of cash to each category for the month. For example, you might allocate $200 for groceries, $50 for transportation, and $30 for personal care.
3. Fill your envelopes: Withdraw the total cash you’ve budgeted and place the allocated amounts in separate labeled envelopes.
4. Spend only from the envelopes: When you need to make a purchase, use the cash from the corresponding envelope. If the envelope is empty, that’s it for the month in that category.

Using cash creates a strict limit that’s harder to ignore than swiping a card. You’ll become more mindful of your purchases and less likely to spend on impulse. Plus, watching your envelopes empty can help you reassess what’s truly necessary.

• Start small: If going 100% cash feels overwhelming, try it with just one or two categories like groceries or transportation.
• Track your progress: Use a notebook or budgeting app to note your spending and analyze patterns over time. This can help you refine your envelope amounts for the future.
• Prepare for irregular expenses: Set aside a separate envelope for occasional costs like car maintenance or medical bills. Fund this envelope gradually by adding a small amount each month.

4. Maximize Discount And Free Resources

Using discounts and free resources is one of the simplest ways to stretch your income. Try to make looking for deals and freebies a habit. Commit to spending just 15 minutes each week searching for discounts, comparing prices, and bookmarking resources you find useful. Small, consistent actions can lead to significant savings over time.

Ways to Save with Discounts

• Student or senior discounts: Many retailers, restaurants, and entertainment venues offer discounted rates for students and seniors.
• Loyalty programs: Sign up for store rewards programs to earn points, coupons, or cashback on purchases. For example, stores like CVS or Walgreens often have loyalty systems.
• Thrift stores and consignment shops: Find clothing, furniture, and household items at a fraction of retail prices.

Free Resources in Your Community

• Local libraries: Borrow books, movies, and sometimes even tools or appliances for free.
• Food banks: If groceries are a struggle, food banks and pantries can help fill the gap.
• Nonprofit organizations: Many provide free services like financial counseling, career training, or legal advice.

5. Reduce Your Utility Bills

Utility bills can take a significant chunk out of your monthly income, but there are several practical ways to cut these costs without sacrificing comfort. Small changes in how you use electricity, water, and heating can lead to noticeable savings over time.

Tips for Lower Electric Bills

1. Unplug devices: Electronics consume energy even when they’re off. Use a power strip to easily turn off multiple devices when not in use.
2. Switch to LED bulbs: LEDs use significantly less energy than traditional incandescent bulbs and last much longer.
3. Use energy-efficient appliances: Look for the Energy Star label when replacing old appliances. If buying new isn’t an option, use your existing appliances wisely, for instance, run full loads in the washer or dishwasher to save water and electricity.
4. Control heating and cooling: Use a programmable thermostat to adjust temperatures when you’re not home. In winter, lower the heat by a few degrees and wear layers to stay warm.

Water Conservation Tips

• Fix leaks: A dripping faucet or running toilet can waste gallons of water daily. Repairing leaks can save you money on your water bill.
• Install low-flow fixtures: Showerheads and faucets with low-flow features reduce water usage without compromising performance.
• Time your showers: Aim for shorter showers, which use less water and energy for heating.

Resources

• Energy Assistance Programs: Many states offer assistance for low-income households to help with energy bills. Check with your local utility company or visit Benefits.gov for information.
• Home Energy Audits: Some utility companies provide free or discounted energy audits to help you identify areas where you can save.
• Rebates and Tax Credits: Look into rebates for energy-efficient upgrades or federal tax credits for renewable energy installations like solar panels.

By actively managing your utility usage and tapping into available resources, you can significantly reduce your monthly expenses and free up money for other priorities.

6. Shop Secondhand

Living secondhand doesn’t mean sacrificing quality. It means finding creative ways to get what you need for less, whether it’s clothes, furniture, or even electronics. Here are a few options to shop secondhand:

• Thrift stores: Great for affordable clothing, home goods, and furniture. ThredUp is a great platform that sells secondhand clothing, including brand names at discounted prices.
• Online marketplaces: Use platforms like Facebook Marketplace, eBay, or OfferUp to score deals.
• Buy Nothing groups: Join local groups where neighbors give away items for free.
• Garage Sales: Anything from clothing, furniture, and household items at really cheap prices.

Just make sure to always inspect items for quality and functionality. You can also swap or trade with friends and family to refresh your wardrobe or household items without spending money. Another thing to consider is adopting a DIY mindset. For example, repair clothes instead of buying new ones, or upcycle old furniture to give it new life. These small efforts can save hundreds of dollars over time.

7. Find Small Ways to Increase Your Income

When you’re on a low income, even a little extra money can go a long way. Side hustles or part-time gigs can help bridge the gap between your income and expenses. Consider your existing skills and available time. When money was tight, I personally started doing housekeeping for a few hours on the weekends, this little side hustle brought me an extra $200 monthly. It was a nice chunk of money that went towards paying my bills. My advice is to look for opportunities that align with your current lifestyle and not try to do something you can’t personally handle just for money.

Ideas to Boost Your Income

• Freelancing: Offer skills like writing, graphic design, or tutoring on platforms like Fiverr or Upwork.
• Gig jobs: Consider driving for Uber, delivering food with DoorDash, or pet sitting or dog walking.
• Part-time jobs: Apply to jobs such as housekeeper or custodian, customer service rep

Treating the extra income you earn purely as savings and don’t let it become part of your regular spending budget. You should automatically transfer side earnings to a separate savings account to avoid the temptation to spend them.

Conclusion

Saving money on a low income takes time, discipline, and determination. While it might feel challenging at first, every small step adds up over time. By creating a budget, shopping smarter, and leveraging free resources, you can stretch your income further and take control of your financial future.