How to Save Money on a Low Income – 9 Tips

Having a low income means that you should be stronger at saving money if you want to stay on top of your finances.

Most people focus on how much money they make and don’t put as much effort into managing and saving money better.

While how much you make is important, I have found that most people could benefit greatly from being stronger at saving money.

You could be surprised at how much money you could end up saving by adjusting some key expenses.

There are many ways to save money but here I have listed the tips that are the best to use.

These 9 useful tips include the following:

  1. Reduce the Food Expense
  2. Create A Calculated Budget
  3. Decrease Utility Costs
  4. Cut Down on Entertainment
  5. Build a Safety Net of Money
  6. Cut Out Unused Miscellaneous Costs
  7. Review All Car Expenses
  8. Utilize Local Food Banks
  9. Learn to Live Frugally

These are only some areas to focus on but if you do use these tips, then you should be able to cut down on your expenses.

Through this post I hope to provide you with useful information on how to save money on a low income.

Plate of Food
Reduce the Food Expense

Reduce the Food Expense

The most changeable expense is often food and can be significantly reduced developing and practicing good spending habits.

The food expense can sometimes balloon up to much more than we think through small but consistent going out to eat meals and snacks.

The best ways to reduce the food expense include the following:

  1. Prepare Food at Home
  2. Don’t Go Out to Eat as Much
  3. Create Shopping List and Stick to it

Always prepare the majority of your food at home so that you are ready for the day and you will find yourself not going out to eat as much.

This can take some practice but once you get used to it you can start saving money very consistently.

I try to prepare easy to make foods and always plan ahead with my food for the day. By doing this everyday I will not get too hungry and will be much less likely go out to eat for some food.

Don’t go out to eat as much and focus on preparing food at home so that you are always prepared for the day. If you go out to eat regularly now, then try to reduce how much you go out to eat instead of cutting out going out entirely.

I’ve had success slowly reducing how much I went out to eat by creating a really consistent food prepping system at home.

The longer I practiced these good food prep habits at home the more I was able to reduce my going out to eat expense.

Creating a shopping list and sticking to it is going to give you a great opportunity to reduce your food expense. This is because you will not buy extra food when you are at the grocery store.

Review your recent grocery shopping receipts and determine what are the items that you need to have and what are extra items.

Cut out the extra food items and only buy the food that you need and you will decrease your food expense considerably.

Create A Detailed Budget

Creating and maintaining a detailed budget is going to help you save money effectively.

There are a few key steps to take to create a budget. But once you do them you will be able to know exactly where you financially stand.

Calculate the following in order:

  1. Expenses
  2. Income
  3. Post Taxes Income
  4. Net Income (Income after all expenses and taxes have been factored in)

A detailed budget will help you understand what all of your expenses really cost and what you have left over after all of these expenses.

Calculating each of these parts of your budget will give you critical information about how much money you accurately have and where you can improve.

First calculate your expenses by adding up all the expenses on your online banking payment history.

Doing this should catch most of your expenses. Whatever other expenses you have can be tracked down through some checking of old receipts and accounting for any cash transactions.

Second you determine your income for the year by taking your weekly income and multiplying it by 50 to get your annual income.

This will give you your gross income for the year before taxes have been factored in.

Using 50 instead of 52, even though there are 52 weeks in a year, will help give you a realistic buffer for how much sick time or other unpaid time during the year.

I like to give myself those 2 weeks as unpaid time due to unexpected reasons. This is because over the course of a year there are bound to be up to 2 weeks when you have to take time off whether you are sick or for another unforeseeable reason.

Calculator Being Used
Utilize Helpful Tools

Third you find out how much you have to pay in taxes this year by getting connected with a helpful resource.

If you go to the Free Income Tax Calculator, then it will calculate your taxes for year quickly. All you have to do is enter your income for the year and your basic information and it will do the calculations for you.

Finally, once you have your yearly post taxes income, you can subtract your yearly expenses from this amount to give you your total net income for the year.

Yearly Post Taxes Income – Yearly Expenses = Net Income for the Year

Follow these steps in order and you will have created a detailed budget that will be essential for keeping you up to date on your financial situation.

If you want to learn how to create a budget or more detailed information about creating an effective budget, read How to Create A Good Budget.

Decrease Utility Costs

Reducing the utility costs can give you extra savings and mostly involves using common sense.

Certain utility expenses can become quite significant in the winter months. But with a couple tips you can help reduce these expenses that balloon up during the winter.

There are mainly three utility expenses: Heat, Water and Electricity bills.

Each of these expenses can be reduced by focusing on specific areas.

These areas are where you are letting heat leave your home, where water is being wasted or where extra energy is expended.

Thermostat on Wall
Lower the Thermostat

The heating bill can be reduced using the following tips:

  1. Cover up the Windows and Other Heat Losing Areas
  2. Reduce Thermostat Setting

These two tips can reduce how much you are spending on the heating bill. Reducing the thermostat setting and instead wearing a few extra layers will help you decrease the heating bill.

If you want to read more about cutting down on the heating bill, read How To Save Money on the Heating Bill.

The water bill can be another utility cost to focus on because there are ways to reduce how much water you are using.

Shower Running
Reduce Shower Length

Some helpful tips include:

  • Reducing Shower Length
  • Use Machine Dishwasher instead of washing by hand

Reducing how long you take for your showers is going to save you money.  Using a machine dishwasher is going to use less water than washing the dishes by hand, unless you are particularly fast.

Find areas where you can simply not use as much water and you’ll start cutting down that water bill.

The electricity bill can be where a lot of savings can happen because there are often situations where people leave lights on in unused rooms.

Utilize these 2 tips:

  1. Turn the Lights off in Any Unused Room
  2. Install Dimmer Switches

Turning the lights off in any unused room and installing dimmer switches is going to help you cut down on how much electricity you use.

This can be accomplished by practicing good habits and the more you do it the better you will get at saving.

A dimmer switch can help keep the light in a room from being too bright while also not expending extra energy.

If you use these suggested tips to reduce your energy expenditure, then you will save money on these significant utility expenses.

Cut Down on Entertainment

There are many entertainment costs that people have in their budget that are not used enough to be worth it.

There are many areas where you could cut down on entertainment costs but these listed below are some of the easiest to change.

Cut Down on Entertainment Expenses

Areas to focus on include:

  • Decreasing number of streaming services(Netflix, Hulu, HBO)
  • Extra Cable features including multiple cable boxes in your place
  • Bundling Cable and Internet

How many people really utilize all the streaming services they are paying for?

Decreasing how many streaming services can be an easy way to cut down on your entertainment costs without much hassle.

You can unsubscribe from an extra subscription to any major streaming service such as Netflix, Hulu and HBO and save money.

You can even resubscribe to these streaming services in the future. The price will be the same and your account will still have your features saved.

If you have cable in your household, then there are often extra features built into the price of your cable plan that are not used enough for you to be paying for them. If you have multiple cable boxes in your home, cut it down to just one.

There can often be many channels that don’t get watched for most households. So finding a way to reduce how many channels you are paying for could help save money.

Finding a way to bundle your cable and internet together could help you save on both of these expenses. Review your current plan and get quotes from other cable providers to see if there is any room to cut down on your cable bill.

If you want to read more about saving money on cable, read How to Save Money on the Cable Bill.

Stack of cash
Build a Safety Net of Money

Build a Safety Net of Money

Building a safety net of money could end up giving you a critical financial buffer that protects you from unexpected expenses. An accepted safety net of money to build up in your bank account is 3 months worth of expenses.

Once you establish a safety net of money equal to 3 months worth of expenses, then you will start to feel much more secure with your money.

Establishing a strong safety net will be very useful for giving you a financial buffer and get you out of a situation where you live paycheck to paycheck.

3 Months Worth of Expenses = Strong Safety Net

Some experts suggest building up to 1 month worth of expenses as quickly as possible. This is because once you even have some of a safety net built up, you will be significantly more secure with your finances.

Finding what amount of money is enough to be a solid protection will take some experimenting.

If you want to learn more about building up a strong safety net as well as how to completely change the way you think about money, read The Total Money Makeover Review.

Cut Out Unused Miscellaneous Costs

There are sometimes expenses that have slipped through the cracks that could be cut out of our budgets.

These could be any miscellaneous costs that you thought you would use more or are simply not using anymore and can be cut out.

Some major miscellaneous costs include the following:

  1. Unused Subscriptions
  2. Gym Membership
  3. Movie Theater

These are only a few of the costs that could fall under the miscellaneous category but all can be adjusted.

Reviewing your bank account and seeing if there are any unused subscriptions that you are still paying for, could help you easily cut that expense out of your budget.

If you have not been going to the gym lately and you aren’t realistically going to change that, then you can either stop your membership or freeze your account. I have frozen my account before and it has worked well for saving money for a couple months.

You can sometimes freeze your account with your current gym by contacting them. Tell them you want to freeze your account and not use the gym for the next couple months.

They will usually freeze your account for those months and you will not pay the membership fee for that amount of time. You can return to using the gym after those two months are up.

I like to go to the movie theater to relax but this can get expensive.

Finding a way to watch movies at home, whether renting a movie or watching them on a streaming channel, will likely save you money.

These miscellaneous costs can become significant. I always leave room in my budget for a miscellaneous category to help account for some of these sneaky expenses.

Red car
Review All Car Expenses

Review All Car Expenses

Car expenses can be quite expensive for most people and finding ways to cut costs here could potentially be very significant for saving money.

The car expenses could be costing you much more than you might think and you could save money here with a few quick changes.

The main car expenses include:

  • Car Insurance
  • Gas
  • Car Maintenance

Car Insurance is the one that could be costing a lot and could be significantly reduced by reviewing your current car insurance details.

I like to look at all the main categories for my plan and review whether they are make sense being what they are set at.

It is important to have enough coverage to cover you in an accident but that doesn’t mean you can’t adjust your specific plan to save some money.

You could be paying more with your current car insurance provider. It is worth researching and getting quotes to see what other car insurance providers would charge you.

If you want to read more about saving money on car insurance, then read Most Affordable Car Insurance Companies.

Reducing gas comes mainly down to driving less and finding ways to get around while not driving as much. Once you figure out ways to reduce your driving, you will save money on gas and other car expenses.

2 Cyclists Riding
Bike More to Cut Down On Driving

A few ways to reduce how much you are driving include using the following more:

  • Public Transportation
  • Biking
  • Walking
  • Carpooling

If you start adding more of these activities into your routine, then you are going to save money on gas as well as car insurance and car maintenance expenses.

How much you drive in a year affects how much gas you use. But how much you drive is a factor for how expensive your car insurance will be.

You can potentially reduce your car insurance by 5 to 10% if you reduce enough of your driving distance per year.

If you can drive less than 10,000 miles per year, then you could be eligible for a discount with your insurance provider.

Also, driving less will reduce the wear and tear expenses that add up over time which can increase your car maintenance expenses.

If you want to learn more about saving money on gas, read How to Save Money On Gas.

Blue Car with Hood Open
Perform Basic Car Maintenance

Car maintenance can include:

  1. Car Check up/Tune up
  2. Car Wash
  3. Tire Replacement
  4. Other Miscellaneous car replacement costs

Some of these expenses are frequent whereas some could go two years before needing to be replaced. The important objective is to save up enough money each month to be ready for when these maintenance expenses can occur.

I try to include car maintenance into my budget by breaking down my yearly cost for this expense into monthly amounts.

If I spend $210 a year on car maintenance, then dividing that $210 by 12 would give me $17.5 per month cost.

$210 = Yearly Car Maintenance Cost

$210/12 = $17.5 Monthly Car Maintenance Cost

Getting into the habit of breaking down all of your expenses this way will allow you to be prepared for when these expenses occur.

Whatever you spend currently on car maintenance, gas and car insurance can potentially be reduced with key adjustments.

Utilize local Food Banks

There are usually food banks that give away food for free to people who need it. This is a place where food is given away and if you really want to save money on your food expenses, then this could be a helpful resource.

Doing a little research can help tell you where your local food bank is and what the hours are, as well as what rules there are for picking up food.

I found that going here whenever I was particularly strapped for cash was very beneficial.

There is often great food that is simply thrown away each week because no one comes to pick it up.

If you have a low income and are searching for ways to save on money, then try your local food bank and get a great amount of healthy food to take some financial pressure off of you.

Learn to Live Frugally

I live in an expensive area so I have had to keep my expenses lower so that I could comfortably live here.

Learning to live frugally is likely going to end up saving you a ton of money because you will get used to cutting down on extra expenses.

You might think that saving $5 a month on one expense will not add up to a significant amount. But if you add up a lot of little savings together, you can save hundreds and maybe even thousands per year.

Imagine if you saved the following from your budget over the next month:

  • $10 on an unused subscription
  • $15 on gas expense by driving less
  • $10 on one less streaming service
  • $20 preparing food at home more
  • $10 turning down thermostat some

The total you would save from these changes would be $65 per month and these are only a few of all the possibilities for saving money on your expenses.

The amount that you would save in a year’s time just doing these changes would be $780.

$10 + $15 + $10 + $20 + $10 = $65 Monthly Saving

$65 x 12 = $780 Yearly Saving

None of these changes would require a huge change just a consistent change.

Reviewing all the expenses listed above could land you much more savings than this especially if you are willing to live frugally.

Take the time and look over all the major expenses listed here and start practicing good spending habits and you should find yourself saving money.

Follow These Tips to Potentially Save Big

There are many ways to reduce your expenses and if you follow the tips listed here, then you will likely save significant money.

Whatever your income level is, you should always find time to review your expenses and cut out any extra ones that are weighing you down.

Use the information in this post to help save yourself some money by using the tips suggested here.

I hope that you enjoyed this post and found some useful information on how to save money on a low income.

If you have any questions, please feel free to leave them below and I will answer it to the best of my ability.

24 Replies to “How to Save Money on a Low Income – 9 Tips”

  1. These are some really great ideas. I’ve been implementing some of them for years. I do need to have the maintenance man come and turn the heat down on my water heater – something I don’t know how to do.
    I love the local food pantry. They’re very helpful to the community around here.
    Thanks for posting this! I’m going to keep returning for more of your savvy ideas. 🙂

  2. Really great article Jesse, thanks for providing all of these awesome tips! I found it to be super helpful 🙂

    Since starting to work from home in the last few months, I have been able to cut right back on food costs (in particular eating out and getting takeaways coffees throughout the day) which has helped immensely with saving. It’s incredible just how much I was spending on food each week without realising!

    One thing I need to be more mindful of though is my utility costs… guilty haha.

    Thanks for the read Jesse!

  3. Lots of great money saving tips! It really shows that the little things can add up to make a big difference. I will be reviewing this list to see where I can cut out some spending for myself.


  4. This is an amazing article and you pretty much break it down in a way that is easy to understand. With this information, I now know that I can most likely save between $150 -$200 a month by utilizing these tips. Thanks again for this article. Keep up the great work!!!

  5. Hi there, this was a really helpful post. I think the miscellaneous costs are the ones that I really need to watch. They can really add up and we don’t realise how much it is. I like what you said about multiplying figures x12 as when we do that, it’s really surprising just how much we are spending or how much we can be saving.

    1. I am glad that you liked this post!
      The miscellaneous costs can be sneaky and can turn into a much more significant cost than you might think.
      If you liked the multiplying figures by 12 to get the yearly total for your expenses and you are interested in learning more about saving money, read How to Create a Good Budget.

  6. Great tips for learning to live on a low income. As a retiree it is most important on a fixed budget.
    One thing I would like to add to the food budget is to make a menu for each week so you know what to purchase at the store. This does two things, you create a shopping list, and you are less likely to go out to eat if you already have a meal planned.
    I already work at the local food pantry as a volunteer, it helps many people each week that are on a low budget.
    Do you think for people on a budget, that making a safety net is the hardest part? Saving is the hardest part of not having a lot of money.

    1. Creating a menu for the week does sound like a smart idea so you know what to buy at the store.
      I would say that for people on a tighter budget that making a safety net can be very hard to do.
      Focusing on areas where you can save money in your budget is going to help you have extra money that you can hopefully put towards building a stronger safety net.
      I am happy that you liked the tips in this post!

  7. Great post Jesse. I have been trying to save money here and there but sometimes with our busy lives it hard to remember to do the small things. I will have to pause before I pull in to get my coffee in the AM or think twice about stopping for fast food for lunch. I think a lot of habits need to be formed to help remind us daily of how if we save a few pennies here and there they will add up quickly. Thank you for great tips and help kick start my thinking towards saving more money.

  8. Thanks so much for this article.

    You have some great ways to help reduce expenses. And breaking them down to monthly amounts, so that it feels like less of a burden to save, is fantastic!

    I’m going to forward your post to my grown children to read. Sometimes they can take advice better from someone they don’t know, than from their parents! lol

    I would really like to see them make good habits early in life, then try to change further on!

    Thanks again,

    1. You are welcome!
      I agree that sometimes hearing advice from an outside source can be received better.
      Developing good habits early in life can set you up well.
      I am very happy that you found useful information in this post!

  9. Jesse,
    Great post, we’re in a bit of a bind lately due to a few life situations that came up, no big deal. But your advice really hit home.

    This article told us where we can cut back and where the best places to cut back are. With our budget, I’m thinking the eating out so often could use a little trimming.

    I also like the sounds of that book you mentioned, Total Money Makeover, I’ll be heading over to get a copy of that right quick!

    Keep up the good work,

  10. I enjoyed reading this post. I can relate so much to this topic because I have been practicing these tips lately.

    I’m about to quit my full-time job soon, and I’m getting my finances ready in the months ahead as I look for other opportunities. I’m lucky to have 6+ months of living expenses stacked up in the event things don’t work out as planned. So I’m keeping these tips in mind as I go through some challenges ahead.

    This article was very valuable- I’ll bookmark this site and keep reading more of them.

  11. I love these tips. It super important to be be as frugle as you can. So often I see people spending in necessarily and complaining about money. I particularly like your tips on covering up windows, turning the thermostat down and using food banks. If you are on a low income you have to keep as much as you can. Thanks for the helpful post. I’m sure lots of people will find this useful. As a traveler I too adopt some of these principles and they’ve helped us immensely. We touch on them in our blog too!

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