12 Ways to Save Money on a Tight Budget

12 Ways to Save Money on a Tight Budget

Are you living on a tight budget because of the squeeze from inflation? Is your credit card balance rising each month? It can be difficult to save with stagnant wages and rising prices. Here are some ways you can save money even though you're on a tight budget.

1) Focus on small changes in various budget categories

If you are on a tight budget, small changes can lead to money savings. One example is preparing food at home instead of eating out. Another is to save electricity by turning off the lights when you are not using them, turn up the AC a few degrees in the summer, and turn down the thermostat a bit in the winter. When it comes to streaming services only have one active at a time and pay close attention to the renewal dates. If possible get the free trials and always cancel before they come due.

If you are a coffee drinker, and you are in the habit of buying it on the way to work, consider making coffee at home and taking it to work. We blogged extensively about budgeting for coffee.

There is also a 50/30/20 rule, where 50% of your income goes to required expenses, 30% you spend on things you want, and 20% goes to savings. This may not be possible given the price of rent these days, but if you can set some goals and help you tell if you are way outside a healthy financial situation with your budget.

2) Use a budgeting app

To save money and avoid debt a budgeting app can help you start to track expenses. It is vital to know where you are at money wise and where it goes each month. From there you can being to plan how to spend less and save more. There are many budgeting applications to choose from, including the free budgeting tool we created at Wealth Meta.

3) Take advantage of student loan forgiveness

Student loan debt is the latest financial crisis brewing in the markets. Depending on where you took your student loan and where you work, you could be eligible for loan forgiveness. This is something you will have to plan for and be strategic about. If you are still in college it is good to be aware of these programs because it can mean a huge savings over your lifetime. The exact amount that can be forgiven depends on a number of factors including whether you are a single or married borrower.

4) Shop around for insurance rates

It pays to change insurers every 3-5 years. The way the industry works is they get you to sign up at a low price on a teaser rate. Then every year they jack up the price little by little until it becomes outrageous. So it pays to get fresh quotes every few years. Switching is easy and the old company will refund you whatever you had already paid but not used when you cancel the policy. 

Another way you can save on home and car insurance is to insure both your home and car with the same company. This is called bundling and usually results in a nice discount. Even if you don’t own a home, getting a renter’s policy through your auto insurer can result in a discount that essentially pays for itself.

5) Refinance your mortgage

Refinancing your mortgage is another way to save money. You can do this by lowering your mortgage interest rate by 0.5 percent or more, and all of your mortgage-related costs will be lower. That way, you can save a lot of money without even realizing it. Recently rates have gone way up so refinancing isn’t practical, but eventually rates will come down and you’ll be able to get a better deal. If you have a high interest loan and your credit score has improved you may be able to refinance and get a lower monthly payment.

6) Find a way to save on rent

Rent is typically going to be your highest monthly expense. Landlords have been raising the rent pretty consistently given high inflation. If you work from home you may be able to move to an area that is further from the downtown and a bit cheaper. If you live alone it would make sense to get a roommate and share expenses.

7) Get a bank or credit card bonus

Have you ever thought of opening a new bank account and getting paid? Some banks and credit cards offer these kinds of programs just for singing up. Could be a way to make $100 or so without doing much work.

8) Automate your savings

Sometimes you forget to set aside money for savings, especially if money is tight. A good option is to automate your savings. WIth this budgeting strategy a certain amount of money is automatically transferred to your savings account each month. This way you “pay yourself first” vs spending down everything in your checking account each month.

9) Take advantage of pre-tax savings options

Some employers offer what is called a 401(k) match on your contributions, essentially providing free money to help build your retirement savings. Employer matching programs typically require workers to contribute a minimum amount to qualify. For example let’s say the employer match is 3%. If you contribute 3% of your pay, the employer will kick in an additional 3% making the effective contribution 6%. 

What’s more, with a 401(k) that money is pre-tax which means your taxable income is reduced by 3%. You are not taxed on the employer contribution either. This ends up being a really great way to save for retirement automatically. The drawback is you can’t access that money until you retire but that way it grows over time which means it is working for you while you sleep.

10) Consolidate your debt

If you have debts spread across personal loans, credit cards, a car, etc you may be able to consolidate that into a single monthly payment at a much lower rate. Check our our loan consolidation calculator for what you might be able to free up in your budget.

11) Find cheaper ways to travel

There are many ways to reduce your travel expenses. Some of them are Airbnb accommodations, hostels, flying using point programs, and grocery shopping vs restaurants. Traveling on a budget is very doable, here are some ideas for a family trip to Europe on a budget.

12) Check your paycheck withholdings

If you get a tax refund from your earnings at the end of each year, might be able to reduce your withholdings so you get more cash each month. If you do get a refund it is a good idea to plow that money into savings or debt vs spending it right away.

Conclusion: Now you see that people on a tight budget can still save money. It's up to you to choose some of the ways you're going to do it.

The post 12 Ways to Save Money on a Tight Budget is part of a series on personal finances and financial literacy published at Wealth Meta. This entry was posted in Personal Finance, Budgeting
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