Last Updated on February 21, 2025
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Learn How To Save Money on A Tight Budget
Some may believe that saving money is possible only if you have lots of it. That is not true. The key to saving money is adjusting your expenses to your budget (for example, if you have a wedding ahead you need to know how much you can spend). As long as you don’t live beyond your means, you can save money.
You can also fix your credit fast with this approach. Learn how to save money on a tight budget. Anyone can apply the following tips. It doesn’t matter how much you earn. It is all a matter of having the right budgeting and spending practices.
Save Money Right After You Get Paid
Are you constantly asking yourself why you can’t save money? A reason why some people can’t achieve this goal is procrastination. It happens when you want to save money, but you always postpone this task. You may tell yourself that you’ll do it with the next paycheck. That approach isn’t taking you anywhere.
There is no better way to do it than right after you get paid. This is the perfect time because you have money. Instead of immediately indulging in shopping, put aside something first. You might want to pay rent and bills. These are obvious priorities. Still, do this only after you put money aside.
Having an intact budget at your disposal to put money aside has advantages
- You can save more money.
- You’ll adjust the rest of your expenses accordingly.
- You’ll achieve a greater result in the long term.
Let’s say your savings goal is 10% of your income. Let’s calculate how much this means based on the moment you put aside this amount.
| Available budget | Savings amount |
$5,000 | $500 | |
Amount saved in 6 months with this method | $3,000 | |
| Remaining budget | Savings amount |
$3,000 | $300 | |
Amount saved in 6 months with this method | $1,800 |
As you can see in the example above, the difference is significant. If you put aside 10% of a $5,000 salary, it’s $500 per month. Doing this once you get your salary is the safest way.
This is when you have all the money available. If you first pay your recurrent expenses, your budget diminishes. Instead of $500, you’ll save only $300 or less. This can amount to hundreds of dollars less in your savings account at the end of the year.
Prioritize your savings. There are different strategies for this. The method illustrated above is called the “pay yourself first” strategy. It is a flexible budgeting method that enables you to allocate money to your priority. In our example, the priority was savings, but you can use this method for any other expenses. For example, you can use it for
- Utility bills
- Mortgage
- A down payment
- College money
You get to choose your priority. The goal is to think about how much you can realistically allocate to it. After you allocate that amount for the first month, make this a habit. A car down payment might be your priority. To save money in six months for this, you might need $200 per month. Make sure you put aside this money at the beginning of the month. Then, adjust your spending to the remaining budget.
In our example, we mentioned a 10% share of your income for savings. Usually, this is the minimum amount you should strive to save each month. However, other budgeting strategies go beyond this percentage.
The 50-30-20 budget method is one such example. This is a budgeting strategy that involves three categories:
- Savings
- Necessities
- Non-essential expenses
In the first category, you assign money for personal goals. You can use this category for a mortgage, a new car, retirement, etc. This should be 20% of your monthly income. The second class is necessities. This is the spending category that takes the largest part of your income, 50%.
This amount should be enough for rent, bills, and groceries. The remaining 30% goes toward non-essential expenses. This means everything you like or want to spend money on. Here, you can include:
- Clothes
- Entertainment
- Subscriptions
This method aims to satisfy all your needs and save money at the same time. If the 20% savings goal is too much, adjust it. You might only be able to save 10% from your current income. Stick to this until you can afford to save more.
Use Round-up Savings Tools
Do you often use a debit card for shopping? Some cards have a key to helping you save money. It’s called a round-up function. This feature saves tiny bits of what you spend. It does this by rounding up your spending amount to the nearest whole dollar. It might seem like a drop in the ocean, but at the end of the month, these cents add up.
You can activate the round-up feature directly from your bank account. If you have an internet banking account, this should be easy. If not, call or visit your bank to activate this option. Make sure you also check out the cost.
Round-up tools allow for different customization options. You can use them to round up the spending amount to the closest whole dollar and add more to your savings. After the round-up is applied, once you reach $5, for example, the round-up amount can automatically be transferred to your savings account.
Here is a brief illustration of what you can achieve by rounding up your payments.
Amount paid | Nearest whole dollar/round amount | Amount saved |
Payment 1: $29 | $30 | $1 |
Payment 2: $8.5 | $9 | $0.50 |
Payment 3: $48 | $50 | $2 |
Total amount saved | $3.50 | |
Multiplier option: x 2 | $7 |
Just from three payments, all below $50, you can save $3.50. Imagine spending ten times as much. Your savings will also increase tenfold. You would get $35.50 in your savings account automatically. If you also apply a multiplier option, you can double the amount.
The bottom line is that round-up features help you save money. The good part is you do it unconsciously. You don’t change your spending habits or track your expenses. Each time you pay, you automatically save money too. Round-up features are a great way to save money on a tight budget because:
- You configure the option, and it works by itself.
- You don’t have to make a conscious effort to put money aside.
- They only take tiny portions of your budget.
- At the end of the year, you can achieve significant savings.
Start with round-up savings if you find it hard to put money aside monthly. It’s a great first step to building a savings account.
Buy Products from Thrift Stores
Thrift stores are an excellent way to save money if you’re on a tight budget. Many people, even those who don’t necessarily need to save money, go to thrift stores these days.
All sorts of bargains might be waiting for you there. Some second-hand items from thrift stores have barely been used. You can enjoy the same quality as if you bought new products. Plus, some thrift stores offer regular discounts of 50% or more.
Besides clothes, there are plenty of other items you could buy as second-hand products. Furniture is a good example. Some people feel awkward about wearing clothes someone else wore before. With furniture, this is not the case.
Most people have no problems using older furniture. You can find excellent and affordable second-hand furniture. If you redecorate or move home, this is a perfect way to save hundreds of dollars.
Challenge Yourself to Save Regularly
There are many savings challenges you can find online. These offer you a solution to put aside money on a regular basis. The basic steps to take are
- Setting a savings goal (e.g, save $500).
- Choosing a frequency (e.g. weekly/monthly savings, etc.)
- Applying the plan according to the schedule.
For example, a method is to save money each week. You can start in week one by saving $1. The following week, double the amount, and so on. Extend the challenge for as many weeks as possible.
You can also fluctuate the savings amount. You might reach a maximum limit you feel comfortable with, for example, $15 per week. This is not a lot over a month. It brings you to a savings total of $60. But multiply this amount by 12 months, and you will have $720 at the end of the year. In five years, this means $3,600 in your savings account. All this, with only $15 saved each week.
The bottom line is you don’t have to save a lot. The key is to be consistent. Never skip a week in your savings schedule. After a period, you’ll be satisfied with the result. Also, try not to tap into your savings too soon. Otherwise, you’ll start again from zero and risk losing your motivation.
Challenge Yourself to Spend Less
This might prove more complicated than saving money each week. If you wonder how to save money on a tight budget, spending less is crucial.
There are different strategies for this too. One of them is the 30-day challenge. This method involves limiting your expenditure to essential items for 30 days. Try to spend money only on what you consider a must:
- Food
- Gas
- Bills
- Mortgage
Except for necessities, you shouldn’t buy anything else for 30 days. Postpone spending on takeout food, coffee, concerts, cinema, etc., for a month. This is an excellent strategy to reevaluate your real needs. Many times, we spend money on things we believe we need. Yet, the truth is we can live without them. For example, you can meet friends at a park instead of at a restaurant or cafe.
Try the 30-day challenge to reset yourself. After this period, you’ll realize you can live with less. Also, a similar strategy is the 30-day minimalism challenge. This method can also help you reset your priorities. It refers to decluttering your life, be it physically or mentally.
It encourages you to get rid of stuff you don’t need. What’s this got to do with how to save money on a tight budget? This strategy also implies reflection and self-assessment. Once you’re more connected to your actual needs, you’ll be able to save more. Plus, you might even see that you need to improve your budget.
Save Money on Your Utility Bills
One of the reasons why saving money is difficult is utility bills. These necessary expenses can wreak havoc on your budget. It is especially true if you can’t pay your bills on time and incur penalties.
To avoid this, you can use the half-payment method. This saving strategy uses a portion of each check for biweekly pay. You set aside 50% of the money you need for your monthly bills. From two paychecks, you have the full amount for your monthly bills.
Frequently Asked Questions (FAQs)
How can I save money on a tight budget with budgeting?
The digital envelopes system is an excellent strategy to start with. It means creating separate accounts or digital envelopes for each spending category. Create one for
- Groceries
- Utility bills
- Gas
- Rent
In each envelope, only deposit the necessary amount for that expenditure. Only use the amount in each envelope for each spending category.
How can I save money on a tight budget with kids?
A solution is to minimize your expenses. Try to reduce your non-essential spending. Give up things such as takeout food or subscriptions you rarely use. Try to buy more products from thrift stores, especially kids’ clothes. Young children need new ones regularly.
How can I save money on a tight budget without compromising my comfort?
If you don’t want to change your spending habits, make other adjustments. The way to save money, in this case, is by cutting each expense category by a bit. Try to spend 2-5% less on food, gas, clothes, etc.
Sources:
Wax, D. (2017, July 24). A basic guide to thrift store shopping. Lifehack. Retrieved July 26, 2022, from https://www.lifehack.org/articles/featured/a-basic-guide-to-thrift-store-shopping.html
Lam, J. (2020, July 13). I used the ‘pay yourself first’ savings hack to save $5,000 in a year, and there are 5 reasons it worked for me. Business Insider. Retrieved July 26, 2022, from https://www.businessinsider.com/personal-finance/reasons-love-pay-yourself-first-savings-strategy-2020-7