14 Tips for Saving Money on a Low Income

By Krystal Ndoni · September 27, 2022 · 12 minute read

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14 Tips for Saving Money on a Low Income

If you have a low income and sometimes struggle to make ends meet, you are hardly alone. As of now, 64% of Americans live paycheck to paycheck, meaning almost two out of every three people are feeling somewhat strapped.
Factors that can make saving money challenging include inflation (the cost of living has been rising steeply) and heavy debt loads, with the average person carrying $6,000+ on their credit card balance.

These two forces can quickly eat away income, making it feel impossible to save. Thankfully, there’s a way forward—with a little strategizing.

Here, learn 14 smart tips for how to save money on a low income. They can help boost your financial wellness.

Smart Ways to Save Money with Low Income

1. Finding a Budget Method That Suits You

A budget is a way for you to track your income, help you make good financial decisions, and plan towards goals.
It paints a picture of how much money you have coming in and going out and how you are allocating funds, which you can use to identify areas for improvement. A budget also will help you see what resources you have available to cover your living expenses. With it, you can see how to make money stretch further.

There are a wide range of budget methods to choose from. A traditional approach is building a line item budget, which involves tracking your expenses in a spreadsheet. You can build a spreadsheet from scratch, or use a template.

Google Sheets has a free template that’s great for beginners, and you can also create a budget in Excel.

Apps are an automated form of budgeting—they track all the expenses for you. If you prefer keeping track by hand, you can find budget-ready notebooks.

Whatever style or programs you use, it’s essential to find one that works for you, helps you save, and can assist in your progress towards a financial goal. Decide what technique works best for you.

2. Watching Money Spent on Food and Drink

If you’re thinking about how to save money with a low income, one wise move can be dining in. That may mean opting for pasta at home instead of the cute Italian place nearby.

Making meals at home is typically cheaper than eating out. And the gap has widened: In 2021, meals at home increased 2% in price. The cost of eating out, however, increased 9% that same year!

Cooking at home is cheap as long as your grocery bill is sensible. Look for budget-friendly recipes that are simple and use all the ingredients in your pantry. Search online for affordable recipes, including recipes under $10. You’ll likely find many options.

Choose more affordable proteins like eggs, beans, chicken, fish, and quinoa over beef and lamb. Red meats typically cost more than other proteins. The U.S. Bureau of Labor Statistics shows that ground beef, a less expensive cut, ranged from $4.10 to $5.90 per pound in May 2021. Any cut of chicken, on the other hand, ranged from $1.50 to $3.40 per pound.

Finally, you might want to trade wine for beer…or go on a dry spell. Alcohol is a costlier commodity than other beverages. Consider looking for alternatives like antioxidant-packed teas, juice, or reliable tap water. You might decide to save alcoholic drinks for special occasions like celebrations for a while to cut costs.

3. Getting Rid of Debt One Step at a Time

Studies show that debt can cause stress and negatively impact mental and even physical health. Paying off debt can be a major motivation to save money. It’s one less bill to pay at the end of the month, and the freedom is empowering.

How to approach debt reduction? Always be sure to pay at least the minimum amount due. Then consider these two techniques that can help you be financially stable with a low income:

•   In the snowball method, you use extra funds to pay off the smallest debt first, giving you a sense of accomplishment for wiping out a balance. Then you move on to the next smallest debt.

•   In the avalanche method, you use extra funds to pay off high-interest accounts first, regardless of the balance. That can be a wise move since this is the kind of debt that often keeps people owing money for a long period of time. Credit card debt, which currently has interest rates of 15% to 19%, is a common example of high-interest debt.

You also can combine your debts into one account with a debt consolidation loan. These personal loans typically have a significantly lower APR (annual percentage rate) which can save you considerable money in the long run.

4. Finding Ways to Get Rid of Non-essentials

Look at your budget, and separate your list of basic living expenses from non-essentials.

Essential expenses will include housing, food and drink, transportation, utility bills, and more. An example of transportation costs might be car payments, car insurance, gas, monthly train passes, and so forth.

Non-essentials usually include wants vs. needs (items like clothing you like but don’t require, and entertainment). If you’re a sneakerhead or handbag collector, it may be time to pause shopping. But if you need fresh clothes and shoes for work, set a target amount you can afford to spend that month. Make your dollars stretch with sales racks at stores or second-hand steals.

Love video games and eating out? Look at alternatives. Consider investing in cheaper board games and hosting game nights. Or, make friends with video console owners!

5. Changing to a Cheaper Entertainment Subscription Model

Can’t live without Netflix? What about Netflix, HBO, Disney, and Hulu? Combined, those streaming services can quickly total $35 per month before taxes. In one year, that’ll set you back $420.

While it’s important to unwind, sometimes cutting entertainment is worth the savings. Consider free entertainment on your TV or computer. There are plenty of apps that offer free on-demand and live streaming services. You can also get classic TV antennas that pick up free national channels.

Finally, try the library. Most carry more than just books—movies too. You just need a library card.

6. Cutting Back on Larger Expenses

Looking for other ways to save money on a low income? You can also find cheaper options for large bills in your budget to save money when you have a lower income.

Your biggest expense will probably be housing, so start there. Several factors affect rent or mortgages, like location and amenities. Consider living in a cheaper neighborhood temporarily. Also, a home with fewer amenities like a patio or pool are typically cheaper.

Consider getting roommates to split housing costs or even going rent-free. If you have family nearby—it might be worth asking to live with them for a low fee or even rent-free, provided you have a plan to get on your feet or can contribute to the household (say, by cooking or cleaning).

Transportation is another large cost. If your job is a safe and reasonable distance to bike to, try it out. Bikes are low-cost maintenance—with the benefit of staying fit and going green.

7. Saving What You Can

Try to cut habits that add up. A $5 fancy coffee once a week costs $260 a year. On a smaller income, that can eat away your earnings. If you can save $5 or $10 a week—that’s a good start. It’s better than saving zero dollars. But, developing a financial plan is a key step to saving anything you can.

You won’t know how much money you have until you have a budget in place. Once you have a picture of your money, look at where you can cut costs. It may be in categories like groceries, shopping, or entertainment, which are flexible costs.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!

8. Separating Money for Yourself From Other Expenses

Though you pay utility companies, the landlord, and your debt, remember to pay yourself. One technique: Save whatever change you have leftover from bills. Put it in a jar, and deposit it into a savings account regularly.

Living within your means or spending less of what you earn on living expenses can help you keep more of your earnings. If you have a significant amount of money leftover at the end of each month, create new savings goals like a home purchase fund or a retirement fund.

9. Turning On Alerts for Bill Payments

Get reminders for your bills. This will help you avoid late fees, which can eat up your funds.

When you open an online bank account, you can sign up for alerts on upcoming bills. Some banks offer a feature on mobile and browser programs that allows you to create alerts for your bills. You can add any type of upcoming bill you have, like your internet or electricity bill due dates, and get reminders via text, email, or phone notifications that a bill is due soon.

10. Spending Less on Your Car

A car can be expensive. Some tips to make it more affordable:

•   Buy a car—don’t lease. You get more value paying off a car compared to leasing a car. A lease also comes with more restrictions and costly penalties. It’s also more expensive in the long run than buying pre-owned.

•   Buy used. Used cars are cheaper. And, because they’re used, the insurance tends to be cheaper as well. Buying a pre-owned car means it won’t lose value as quickly as a new car. Some estimates say that a new car loses 40% of its value in the first year.

•   Aim to get a car that gets great gas mileage. An SUV or truck can easily cost $75 for a full tank. If you’re paying for a gas guzzler, it might be worth downsizing to a car that gets better gas mileage.

11. Finding Ways to Cut Entertainment Costs

Reading, listening to music, and tuning into your favorite program has its health benefits. From reducing stress and pain to improving memory—it’s important to have a little fun.

Instead of booking concert tickets for your favorite band, consider listening to their tunes on free apps (YouTube, for instance). Also check listings and see which local bands are playing; that could be a good way to discover some new favorites.

If you enjoy a good show, check out free TV streaming apps like Tubi or Pluto TV. Both have a great selection of movies and shows on demand or live.

12. Eliminating Your Bad Habits

When asking yourself, “How can I improve my financial situation?” look at your good and bad spending habits.
Do you buy groceries at the gourmet deli instead of a cheaper supermarket? Do you tend to eat out because you didn’t pack a lunch? Do you leave the AC running in your apartment while you’re out all day?

These are all costly habits you can change. Find a cheaper grocery store. You’ll find your dollar can stretch a lot further with cheaper prices. Try meal prepping on weekends so you can pack lunches for work each week. Lastly, run electricity only when you need it—and compare bills. You’ll likely see a difference.

13. Committing to a Month of No Spending

A no-spend challenge can be a fun way to save.

A no spend-challenge means that you avoid discretionary spending altogether, except for necessities like rent and groceries. That means not spending money on movie theater tickets, clothes, or even chocolate.

Write down a list of your non-essential expenses, like buying a cup of coffee each morning or eating out with friends on the weekend. Try alternatives like making coffee at home or taking a walk in a park instead of brunch with your friends. Let them know you’re doing the challenge—they might even join.

14. Getting Help if You Need It

If you find yourself still living paycheck to paycheck, there’s help.

If you have substantial debt, consider getting free debt and credit counseling from the nonprofit National Foundation for Credit Counseling (NFCC). The sessions take place over the phone or online. Call or fill out an online form to get started.

Also, cities, states, and the federal government provide help in the form of subsidized housing, discounted healthcare and free groceries. Simply call the 211 network 24/7 to share your situation and get connected to the right people.

You can also use the government’s benefit finder that can match you with the right programs.

15. Automating Your Savings

Once you have a budget in place, it’s easier to know how much to save a month.

To simplify saving (as mentioned briefly above), try automating transfers, a feature many banks offer that moves money from your checking account to your savings account on a certain date. For example, if you’re paid every Friday, you can set up an automatic transfer of the desired amount to your savings or investment accounts.

If you put away just $50 each week, you’ll have $2600 at the end of the year.

Why Saving Money With a Low Income Is Possible

No matter what your income, it’s tempting to live like a rock star or just try to keep up with your higher-earning friends. Or you might feel like your smaller earnings are not worth saving, and you’ll wait till you make more. But it’s possible to save more than you think even on a lower income.

If you make savings a priority and adjust your lifestyle to your income, it can pay off and help you increase your financial wellbeing. Simple changes like learning to budget, shopping at cheaper grocery stores, trading in your car for a greener one, or buying second hand can all help you take control. These moves can also help you pay down any debt you may have, build your rainy-day savings, and achieve longer-term financial goals.

The Takeaway

Whether you earn a lot or a little, living within your means always pays off.

Budgeting is the first step to getting your finances organized. It’ll help you see how much money you have to cover your monthly expenses and how much you have leftover for savings. You’ll also see a clearer picture of your spending habits.

Once you have a sense of your spending habits, find ways to spend smarter. That means finding cheaper options for necessities and cutting non-essential spending.

Finally, set attainable savings goals and put your cash away in a high-yield account. SoFi can help you here: When you open an online bank account with direct deposit, you’ll earn a competitive APY, pay zero account fees, and have tools to track your expenses, set up bill payments, and automate savings.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.


Why is saving money so hard?

Saving can often be hard because of our mindset. We don’t focus on creating and sticking to a budget and instead spend feely, in the moment. If you are following a budget but find it hard to free up cash to save, you might take on a side hustle to help bring in more income.

What happens if you don’t save money?

Not having savings puts you in a precarious position. Having money in savings is a safety net for unexpected expenses like a medical bill or job loss. Without one, you may find yourself unable to pay for bills, which could cause you to take on high-interest debt and/or pull you closer towards poverty. It’s wise to have at least three to six months’ of living expenses stored away in case of emergency.

How do I get the motivation to save when I do not make much?

With social media in today’s culture, it might seem like everyone has what they want (except you). So it’s important to put on blinders, and focus on your journey. Delete apps that encourage you to overspend, and ask trusted friends or mentors to navigate this territory together. Save whatever amount you can: Don’t get discouraged by comparing yourself to others’ savings plans.

Photo credit: iStock/Rocco-Herrmann

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

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