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7 ways to save money on a low income


By Deacon Hayes,

Saving money when your income is in the six-digit range is easy, but how does one go about saving money when living on a lower income? The U.S. Census Bureau estimates that the median income for those living in the United States in 2015 was $54,462.

If your income is at or below that median amount, you may be finding it difficult to save any money at all. However, saving money – even on a smaller income – is possible with a little creativity. Here are some tips for helping those living on a lower income to increase their savings rate.

Keep housing costs at bay

Housing costs are usually the biggest expense a person or family has. Between the cost of a mortgage or rent payment and the cost of utilities, repair and upkeep, housing costs can drain a budget quickly. By keeping housing costs low and not buying or renting more than you need, you’ll have more money available for saving. A general rule is to keep total housing expenses below 35% of your take-home pay. Here are some more in-depth ideas for saving money on housing.

For renters

  • Find cheaper housing if it’s available
  • Talk with your landlord about trading work on the property for a reduction in rent
  • Get an apartment with a property manager position available – apartment building owners often give property managers a free apartment

For homeowners

  • Keep an eagle’s eye on utility costs and cut down wherever possible. Keep lights off, don’t waste water, keep the thermostat down in the winter and up in the summer
  • Rent out a room in your house or space in your garage to help cut down on the house payment cost
  • Maintain the house and keep it in good condition to avoid costly repairs, but avoid upgrades that aren’t necessary

Get and stay out of debt

Not only will accumulating debt mean that you have more in monthly payments to make each month, it will mean that you’re delaying financial freedom thanks to interest payments. reports that the average interest rate on credit cards that carry a balance is 13.93% as of 2015.

If you’re carrying the average credit card balance per U.S. adult of $5,232, that means that you’re giving $728.82 each year to credit card companies thanks to interest charges. By avoiding debt or working to pay off the debt you have quickly, you can put this money into savings instead.

Keep entertainment costs at bay

Eating out, hitting the bar after work, going to the movie theater and other entertainment purchases can add up to a big dent in your budget pretty quickly. Here are some ways to help keep entertainment costs low yet still have fun.

  • Have potluck dinners at home instead of gathering at restaurants
  • Have movie nights at home, complete with popcorn and soda
  • Take advantage of free forms of entertainment such as hiking, biking and free city activities such as concerts and movies
  • Set a once-a-month entertainment outing date and use Groupon deals or other coupons to save money

Buy only when necessary

Many times budgets take a hard hit and savings suffer due to unnecessary expenditures: You see an opportunity to upgrade your electronic gadgets. Or you have a tough week at work and want to recover via a “new and shiny” purchase or an expensive night out.

Temptation to buy unnecessarily can also come in the form of peer pressure from those around you who spend with reckless abandon or from kids who want things that “everyone else” has.

Make a commitment that you’ll only buy when necessary until your savings account is built up to a comfortable level. And when you do need to buy, work to buy used if possible or to at least buy on sale.

Get a handle on grocery expenses

The average amount of money a family of four spends on groceries is estimated at nearly $1,000 a month (that’s about $250 per person), but with a little planning it’s not unreasonable to be able to cut that number in half.

There are dozens of ways to save money on groceries such as:

  • Making a menu plan each week and sticking to the plan when you shop
  • Planning your weekly meal menu around what’s on sale at local stores
  • Avoiding frivolous food purchases such as soda and chips (Bonus: you’ll improve your health by cutting out the junk food)
  • Learning to cook from scratch instead of buying pre-made or processed meals and snack foods

By keeping a handle on your grocery bills, you’ll have more money to put into savings each month.

Utilize a zero-sum budget

A zero-sum budget means that you structure your budget in a way that every dollar has a set destination before you get your paycheck. If there’s any money left over after you account for expenses, designate it into a savings vehicle such as a retirement fund or an emergency fund. By having a plan for every dollar before it hits your bank account, you can avoid wasting money in the black hole that is unplanned spending.

Automate savings

Automating savings is likely one of the best ways to save money, no matter what your income is. By having a specified dollar amount come out of your paycheck and into a retirement or non-retirement savings account before you even see it, you’ll simply adjust to living on less and start saving money with little to no effort on your part.

Saving money – even on a low income – is possible. With a little ingenuity and a willingness to sacrifice purchases that hold no value to you, you can begin to save more money each and every week.

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