The past 15-ish months have been devastating in many ways. We saw a grave loss of life, many people lost jobs or income, and mental health issues crept up because of the COVID-19 pandemic. As the U.S. opens back up, you may be tempted to get back to bottomless brunch, traveling, concerts, sporting events, and everything else you may have missed out on. At the same time, you may be in a situation where you to save when money is tight.
But, unless you can find free events, most of those are going to cost you. If saving money has been a major struggle for you because your income isn’t where you want it to be, here are a few ways to put more away on a low income.
Finding yourself in a continuous cycle of debt can be a major blow to building your savings. If debt is a pain point for you, the best place to start is coming up with a debt repayment plan that will actually work. The debt snowball, debt avalanche, and hybrid payoff methods are tried-and-true ways to work toward becoming debt-free—the ultimate goal.
The debt snowball approach prioritizes paying off the lowest balance first and working toward the largest balance, which is designed to keep the momentum going with small victories. The debt avalanche method prioritizes the balance with the highest interest rate and works toward the lowest, so you can save more on interest in the long run.
Depending on your financial situation and creditworthiness, a debt consolidation loan could also be a good way to speed up your debt repayment process. Debt consolidation loans allow you to streamline your debt into a single monthly payment with a lower interest rate.
Once you’ve paid off your debt, you can allocate what you would’ve put toward paying The Man toward paying yourself in the form of savings.
Creating and sticking to a budget may be a clichéd personal finance tip but for good reason: it works. Evaluating your budget to see where you can trim some fat is a key way to save when money is tight.
Are you spending too much on your mobile phone bill? See if you can reduce it or find a cheaper service provider. Electric bill through the roof? Make sure you turn off lights when you’re not using them, keep the A/C temperature in check, and unplug unused devices. Grocery bill more than you bargained for? Try purchasing store brand items, buying in bulk, and only buying what you need. Cutting costs here and there can go a long way toward building your savings.
Budgeting tools like Mint can help you stay on track. But also, you can take a more DIY approach with some popular budgeting systems—including the 50/30/20 rule, the envelope system, and the zero-based budget. With the 50/30/20 budgeting method, you allocate 50% of your income toward needs, 30% toward wants, and 20% toward savings and/or debt repayment.
If you subscribe to hella streaming services but don’t use ’em all, there’s a good chance you can cut back. Do you really need Netflix, Hulu, Disney Plus, Amazon Prime, and HBO Max? On the lowest end, all of these would cost you roughly $47/month. If you went with just Netflix and Hulu, you could cut that down to just under $15/month for a savings of about $32/month—good for about $384/year. That’s a decent amount of cash to stash away in your emergency fund or put toward another savings goal.
If you absolutely need to be able to watch In the Heights when it comes out on HBO Max or keep your access to Marvel content on Disney Plus, consider doing what all good millennials do and bum the logins from your parents or team up with a group of friends to split the costs. Venmo is a beautiful thing, amirite? Hopefully, these tips on how to save when money is tight get you going in the right direction!
By Casey Musarra
Casey Musarra is a personal finance writer with over a decade of writing experience and a credit score hovering near 800. She has written several hundred articles on topics ranging from taxes to debt-free living. Previous bylines include newsday.com and philly.com.
