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


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 acquiringbasic 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

reducing the cost of monthly cable

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Is there a way to reduce the cost of your monthly cable TV or mobile phone bill? Are you better off switching to a low-cost streaming media-service provider instead? Streaming media-service providers are competing heavily these days, so take advantage of their deals and offers if you can’t completely give up your TV programs. There’s a big difference between a $100-a-month cable TV service and a $16-a-month streaming service.

Could switching to another mobile service provider help reduce your monthly bill? Is there a better and cheaper plan you can opt for? With so many hidden charges and fees you’re likely paying for, perhaps it’s time to rethink your mobile phone’s features and coverage so you can save more money.

While these efforts may seem small and insignificant, they are still guaranteed savings for your bank account and will provide some wiggle room in your budget.

2. The Less You Dine Out, the More You Save

While it’s tempting to eat out after a hard day’s work, cutting down on fast food will not only make you healthier, it will also save you a great deal of money. Remember, eating out doesn’t necessarily mean getting quality food. What it surely entails is paying extra for convenience. Fast food is both bad for your health and your pocket, so why not prepare your own food instead? If you don’t have the time nor the energy to prepare a home-cooked meal on weekdays, there are simple 10-minute recipes for healthy meals on the internet you can work with.

3. Shop Moderately and Use Discount Coupons or Deals When Available

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Even your grocery shopping can be a source of savings. Work with a weekly budget, buy only the essentials, and cut down on purchasing unnecessary things as much as possible. Buy food with the longest expiration date to avoid waste. Keep an eye on discount coupons or deals and use them.

4. Use Cash Instead of Your Debit or Credit Card for Day-to-Day Expenses

Paying with cash for daily expenses will help you keep track of your spending better. It makes budgeting easier because you are only allowing yourself to spend the money you have in your wallet instead of resorting to paying with your debit or credit card.

5. Pay Off Your Credit Card or High-Interest Debts to Avoid Spending on Fees and Interest Charges

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Sometimes it’s unavoidable to use your credit card, especially for an unexpected expense. Try to pay off your credit card debts or high-interest loans as soon as possible to avoid spending on fees and interest charges every month. This is easier said than done, but try to work out a plan to manage your payments.

These are just some simple but surefire ways to save money on a tight budget, especially for people with low income. There are still other means you can explore, but they will require more analyzing and planning from your end.



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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

You can only spend what you have, which means your income after taxes have been taken out. These include state, local, and income taxes as well as Medicare and Social Security. Your paystubs will give you a clear idea of your after-tax income. Deductions for health care, IRA contributions, and others should be added back in.

2. Differentiate Your Needs from Your Wants

For you to come up with the right budget allocation, identify your needs and your wants. Needs are the indispensable things in life such as food, utilities, prescription medicines, and shelter. If you have a credit card debt or a personal loan, paying the required minimum payment can be considered as a need.

Any other expense that will only cause you some minor inconvenience should be classified as a want rather than a need. Even then, you still have to decipher between a want and an indulgence. There’s a distinction between the two.

3. Calculate Your Spending on Needs


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The total of your rent or mortgage, utility bills, groceries, car payments, auto insurance, health insurance, and all other needs should only amount to 50% of your after-tax income. If this doesn’t apply, you might need to make adjustments to your car payments or shop for lower rates on auto or health insurance.

4. Your Wants Get 30%

This is where differentiating between a want and an indulgence comes in. Wants do not necessarily refer to extravagant things like signature purses or expensive watches. That $16/month streaming TV service is still considered a want more than a need. Buying a caramel macchiato every morning from your favorite coffee place is also considered a want. Anything that does not significantly affect the quality of your life, no matter how small or affordable, may still be considered as a want.

5. The Final 20% Goes to Your Savings and Debt Repayments

Any extra payment you make on a debt counts as debt repayment, so it falls under the 20% category. This allocation serves two purposes: to either pay off your debt with extra payments or to add more savings to your retirement account or emergency fund. This is the part where you set aside resources for a rainy day. That 20% is crucial in saving money on a tight budget.


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.


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.