18 Ways To Save Money On A Tight Budget

Managing your finances can be stressful, but when money is tight, it can be even harder to make decisions for yourself and your family. Your options might seem limited, and it’s easy to feel overwhelmed and out of control.

Though it may require more work, there are ways to save money on a tight budget. Whether you need to make small changes temporarily or change your budget strategy overall, there are tactics you can use to begin to build your savings.

How To Save Money On A Tight Budget: 18 Tips

Whether it's a job loss or other life circumstances that led you to your current situation, saving money and budgeting is still possible. Here are 18 ways you can leverage to strengthen your finances, even when times are tight.

1. Adjust Your Budget

A budget is a spending plan. Reevaluating your current budget or creating a new budget can help you find ways to save more money. Use the income you have and allocate it to different spending categories. These can include your fixed and variable costs, debts and savings. Looking over a budget can help you identify expenses to cut or areas where you’re overspending. The goal is to know exactly where your money is going each month so you can use it to reach your financial goals. 

If your income is irregular, it may be helpful to set aside money for bills and other expenses each month when you have a higher income month. That way, in those times when you make less, you’ll be better able to cover your bills.

2. Download A Budgeting App

A mobile budgeting app can help automate much of the work for you. Depending on the app, you can set spending and saving goals, and break down your budget into different categories. Many apps allow you to link your bank and credit card accounts to automatically track your spending. If you prefer, you can track your spending manually by inputting how much you’re spending in the app, too.

There may also be other useful features to help you with your financial goals. The Rocket Money^SM app for example, not only has a budgeting feature, but it helps you create and track goals, alerts to remind you of your goals, and analyzes how much you're able to spend each month.

3. Try The 50/30/20 Method

The 50/30/20 rule is a budgeting method that breaks down your after-tax income into three spending categories: needs, wants and savings. Needs make up 50% of the budget and should include things like groceries, utilities, housing and minimum debt payments. The next 30% should go toward things you want. This can be anything from subscription services to vacations. The remaining 20% goes towards saving and paying down debt.

First, add up all your household monthly income and make a list of your expenses. Allocate your expenses into each of these three categories and divide your after-tax income to determine your budget for each category.

The 50/30/20 method is more like a guideline rather than a rule. It can help you build a habit and prioritize saving and paying down debt.

4. Open A High-Yield Savings Account

A high-yield savings account offer a higher annual percentage yield, or APY, that can help you earn money on your savings. These accounts work much like regular savings accounts. You can make deposits and withdrawals when needed, but some banks may charge a fee for withdrawing too many times in a single month.

These accounts help you save more money by offering a set APY amount that compounds on a frequency determined by your bank. This could be daily, monthly or yearly. When your interest compounds, it’s based on a new balance amount which can help your account balance grow more quickly. Most banks have online access or a mobile app where you can manage your account.

5. Automate Your Finances

There are ways you can automate your finances including automating your bill withdrawals and savings deposits. Your employer may allow you to set up automatic deposits from your paycheck into one or more savings accounts. That way, you stay on track to pay your bills and also ensure you’re saving money from every paycheck. In time, you probably won’t even think about the money you have sitting in savings.

Before automating your savings, make sure you have a clear budget and determine the amount you save won’t leave you with too little to spend.

6. Make Weekly Grocery Lists

Creating lists for groceries can help you stay within a tight budget. That way, you’re not tempted to stray from your savings goals if you have a plan of exactly what you’re going to buy. Creating a weekly grocery list is also a good alternative to spending money on dining out or ordering takeout.

To help save even more money, consider looking at flyers for your local grocery store to see if there are any sales or coupons. You can do some comparison shopping and plan to stop at the store that offers the best prices.

7. Monitor Your Utility Use

Keeping track of your utility usage, including electricity, air conditioning and heating, can help you cut back on energy usage and save on the cost of utilities. For example, washing clothes in cold water or hanging clothes to dry can save you some money on electricity bills. The same goes for turning off lights or using a fan instead of running your air conditioner. Other examples include taking shorter showers or using cold instead of hot water in the washing machine.

To make this easier, the U.S. Department of Energy says to set your programmable thermostat around 68 degrees Fahrenheit during the winter when you’re home and set it lower when you’re asleep or away from home. During the summer, you can set your thermostat to 78 degrees when home during the day, 82 when you’re asleep and 85 when you’re out of the house for maximum savings. These guidelines are generalized and may not provide savings depending on your location and home.

8. Negotiate Your Cell Phone And Cable Bills

Yes, you may be able to negotiate your existing bills, like your car insurance payments or even your internet bill. Contact the company and ask if there are any incentives they can offer you.

It is usually helpful to shop around elsewhere to see if there are lower fees and use that as part of your negotiation tactic. You can even mention you’ve been a loyal customer (assuming that’s true) and you would like to keep being their customer as a motivator.

You can also have Rocket Money negotiate your current bill payments for a fee on your behalf to save you time and hard-earned dollars.

If you’re successful, consider taking the money you’ve recovered and putting it towards savings.

9. Lower Your Car Insurance Payment

You can save money on car insurance by shopping around for better rates, taking defensive driving classes and making improvements to a credit score. Prices vary from company to company, and you’re more likely to save money by getting at least three price quotes. Your state insurance department may also provide comparisons of prices from major insurance companies.

10. Cancel Unwanted Subscriptions

Having multiple subscription services can add up. While it’s not necessary to cancel all of them and forgo any fun things, it may be useful to carefully go over what you’re paying for. Then, see which ones you’re not using, or aren’t super happy with, and consider canceling them.

Rocket Money can help with managing and canceling unwanted subscriptions. This allows you to track your subscriptions and cancel any unwanted ones.

11. Set Cash Aside

If you receive any windfalls, like a raise or money from an inheritance, consider setting a chunk aside for savings. It could even be smaller amounts from things like monetary gifts, or cash-back rewards. To ensure you’re not tempted to spend the money, consider opening a separate savings account. You can even name the account to something that aligns with your financial goals to act as a further motivator.

12. Avoid Using Credit Cards

While credit cards are a great tool, it can be tempting to spend more money than you’re able to pay back, which could lead to credit card debt. Adding an extra debt payment could hinder your ability to save money.

Instead, consider using credit cards sparingly. You can switch to cash only — the cash envelope budgeting method is useful, as you can’t spend more than what you’ve set aside for the month.

If you’ve built up debt, consider using methods like the debt snowball method to pay off credit card debt. The basic principle is to create a shorter-term goal and focus on paying off smaller debts first. This gives you a sense of achievement and motivates you to continue. Make minimum payments on all your debt but put as much toward your smaller debts each month as your budget allows.

13. Try A No-Spend Challenge

A no-spend challenge is one where you stop spending on what you consider unnecessary items for a period of time. The money you would have spent instead goes toward savings. For instance, you commit to not ordering takeout for a month, giving you $100 worth of wiggle room in your budget. Take that $100 and put it toward your savings goals.

14. Look Out For Discounts

Take advantage of different types of discounts and coupons that can help with saving money or paying for living expenses such as groceries. Hundreds of retailers, restaurants, airlines and other companies offer discounts for seniors, students, teachers, first responders or military members.

15. Sell Items You Don’t Need

There’s no point in hanging onto items you no longer use or need. Instead of tossing them or giving them away, you can sell these items to bring in some extra money. You can sell items online through websites like eBay, Facebook Marketplace, Poshmark and more. You could also organize a yard sale to sell any type of personal item you can think of.

16. Take Up A Side Hustle

It seems like everyone has a side hustle these days, but this is one of the best ways to bring in extra cash. Some of the best side hustles to consider include driving for a rideshare service, shopping for and delivering groceries, food delivery, dog walking or performing odd jobs. You can even earn cash without having to leave the house by taking paid online surveys, becoming a virtual tutor or freelancing.

17. Refinance Your Mortgage

A mortgage refinance is where you replace your current mortgage with one that hopefully has more favorable rates and terms. It can help you by saving money on interest costs if you’re able to qualify for a lower rate. Meaning, your monthly payments might be lower, and you can use the money you saved toward other goals.

Another approach is to extend your mortgage term by refinancing so you can have some breathing room in your budget. Keep in mind that even though your monthly payment is lower, you’ll end up paying more in interest over time because you’re making more payments.

18. Consider Low-Income Assistance Programs

There are different types of low-income assistance programs that can help you and your family make ends meet. If you’re at or below 130% of the federal poverty level, you may qualify for government programs, including SNAP for food assistance and WIC for women, children and infants, rental and buyer assistance programs, help with utility bills, welfare benefits or Temporary Assistance for Needy Families (TANF) and more. Contact your state social service agency for more information about state and local programs.

Saving Money On A Tight Budget FAQs

Below are frequently asked questions about saving money on a tight budget.

How can I save money fast on a low income?

There’s no foolproof way to save fast on a low income, but the first step is to create a budget. This can give you a better idea of where your money is coming from and where it’s going every month. Cut back on spending as much as you can and look for ways to save money on food, bills and other necessities.

What is the best way to save money on a tight budget?

The best way to save money on a tight budget is to make small changes. Turn off lights when you’re not using them, avoid impulse purchases, cancel subscriptions you don’t use and eat in more often. You can also look for discounts by couponing or shopping sales or consider low-income assistance programs.

How can I make the most of a tight budget?

You can make the most of a tight budget by paying your bills as soon as they come in and only buying what you need. If you can, put money toward savings and always make sure you’re paying at least the minimum amount of any credit card debt.

The Bottom Line

There are ways to save money on a tight budget, but it does require some more upfront work. Aside from scrutinizing your spending habits, find little ways you can continue to pare down your spending, or even ways to earn more money.

Download the Rocket Money app today to help keep your budget organized, monitor your spending habits and stay on track toward achieving savings goals.