5 Sure Ways To Save Money On A Tight Budget

It's a fact of life—everyone goes through money problems once in a while. The loss of a job or combined income, a major illness, sending your kids to college, or other unexpected expenses can drain your savings pretty quickly. That's why whenever you face money problems, it's always best to be prepared by knowing ways to save money on a tight budget.

Ways To Save Money On A Tight Budget

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Ways To Save Money On A Tight Budget

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A considerable number of Americans are minimum-wage earners living with limited means. For people with low income, saving money can be a rather difficult task. On a minimum-wage income, paying the bills and acquiring
basic necessities can be hard enough. Having anything left over for savings can seem impossible.

The good news is, there are ways to save money on a tight budget. Your efforts may seem nominal at first, but setting aside a few bucks for a rainy day eventually adds up. So how do you go about the process when it appears you only have enough to pay the bills? The key is to cut down on things you don't really need or you can live without.

Here are some ways to save money on a tight budget for people with low income:

1. START WITH THE SMALL STUFF

2. THE LESS YOU DINE OUT, THE MORE YOU SAVE

3. SHOP MODERATELY AND USE DISCOUNT COUPONS OR DEALS WHEN AVAILABLE

4. USE CASH INSTEAD OF YOUR DEBIT OR CREDIT CARD FOR DAY-TO-DAY EXPENSES

5. PAY OFF YOUR CREDIT CARD OR HIGH-INTEREST DEBTS TO AVOID SPENDING ON FEES AND INTEREST CHARGES

WHAT IS THE 50/30/20 RULE FOR SPENDING AND SAVING?

Ways To Save Money On A Tight Budget

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One of the most effective ways to save money on a tight budget is to follow the 50/30/20 rule—a method for spending and saving which was coined by Massachusetts Senator Elizabeth Warren along with her daughter, Amelia Warren Tyagi. The mother and daughter team authored “All Your Worth: The Ultimate Lifetime Money Plan,” a book that was published in 2005.

The 50/30/20 budgeting rule recommends that 50% of your budget should be allocated for basic “needs” like housing, groceries, utilities, auto payments, and health insurance; 30% may be allocated for leisure or “wants” such as shopping, hobbies, and eating out; while 20% should be put into your savings.

Sounds simple enough; but how do you go about the budgeting process? It all starts with how much you are earning. Follow these steps to come up with an organized and workable budget.

1. COMPUTE YOUR INCOME AFTER TAXES

2. DIFFERENTIATE YOUR NEEDS FROM YOUR WANTS

3. CALCULATE YOUR SPENDING ON NEEDS

4. YOUR WANTS GET 30%

5. THE FINAL 20% GOES TO YOUR SAVINGS AND DEBT REPAYMENTS

HOW TO START A BUDGET WITH LITTLE INCOME

Ways To Save Money On A Tight Budget

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Budgeting is all about allocating. Think of your income as a pie that needs to be divided based on your expenditures. Whether that pie is big or small, the important thing is that you have to live within your means and find ways to save money on a tight budget.

Apply the 50/30/20 budgeting rule even when you have little income. If you're only earning $2,000 per month of after-tax income, live within a $1,000 budget to cover all your needs expenses. Doing so might entail looking for a roommate to share the rent with, taking public transportation, or doing other cost-saving measures to cut down on the cost of basic necessities every month.

If money is really tight, prioritize debt repayments or savings over your more dispensable wants. When you finally have some breathing space, then you can dish out some of that wants budget and live a little. But remember, don't splurge on anything too lavish.

CONCLUSION

While we've provided you with these tips on ways to save money on a tight budget, the decision-making process remains yours uniquely. Budgeting is never an easy task—especially if you have little to work with. But just like any endeavor in life, it's a learning process that carries its share of stumbling blocks along the way. Don't be discouraged—you'll eventually get the hang of it and find your comfort zone.

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