When the unexpected happens and money is tight, it’s normal to worry about how you’re going to make ends meet.
But whether you’re going through a short-term budget crunch or dealing with more challenging financial issues, there are ways to feel more in control of your financial situation–and make the money you have go farther.
The key to coping when money is tight is to take a close look at your current budget, find expenses you may be able to pare back or eliminate, and potentially find some new income streams.
Here are some smart spending and saving strategies to try when you’re tight on money.
Getting Honest With Your Budget
When most of your income already goes to essentials, you may wonder if there is really enough money left over for a spending plan.
But taking a close look at your monthly spending can be especially key when money is tight because the less money available, the more important it is to keep those dollars under control.
To get a full picture of your spending, you may want to actually track your spending (every cash/debit/credit card transaction and every bill you pay) for a month or so.
You can do this by carrying around a notebook or saving all of your receipts. There are also a number of phone apps that can make the process of tracking your daily spending easy.
Once you have a sense of average monthly spending, it’s a good idea to compare this to what’s coming in. You can look at your bank statements for the past few months to get an idea of much after-tax income you are taking in on average per month.
Comparing what is coming in vs. going out may be anxiety-provoking, but knowing exactly where you stand when money is tight can be a critical first step toward easing the strain.
Uncovering Places to Save
Once you have a good sense of your monthly spending, you may want to group expenses into categories, and then list them in order of priority, starting with the essentials and going down to the “nice to haves.”
Once you’ve established which expenses are the most important, you can start looking for places to cut some of your unnecessary spending. Cutbacks may not feel fun, but they can be extremely beneficial when money is tight.
For example, if you are spending a lot on restaurants and take-out, you might consider cooking at home a few more nights a week.
Or, if you’re overspending on clothing, it might make sense to institute a short-term spending freeze on new clothes, or a freeze on spending money at a certain store for a period of time.
If you mostly watch streaming services, you might consider ditching that pricy cable subscription. If you love buying the latest best-sellers, It might be a good time to renew your library card.
You may also find you’re paying for memberships and subscriptions you no longer need or want. These are line items you may be able to scratch from the expense list completely.
Negotiating with Service Providers
Another way to save money when your budget is tight is to see if you can reduce some of your monthly “fixed” expenses.
Some of those recurring bills (like cable, internet, cell phone, car insurance) may not actually be set in stone.
It can take little research—and nerve—but you may be able to negotiate for a lower rate from many of your providers, especially if you’re dealing with a company that’s in a competitive market.
Before you call or email a business or provider, it can help to know exactly how much you’re paying for a service, what you’re getting for your money, and how much the competition is charging for the same or similar service.
It’s also a good idea to make sure you are communicating with someone who actually has the power to lower your rate and, if not, ask to speak with someone who does.
You may also want to let providers know that if they can’t do better, you may decide to switch to another company.
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Cutting Back on Bigger Expenses
If money is especially tight right now, it can also be a good idea to take a look at the big items in your overall budget.
For example, is your car payment too high? If so, perhaps you could lease a less expensive car, or buy a used vehicle to cut monthly payments.
If rent is eating up too much of your income, you might want to look into finding a cheaper place to live that’s still nice, taking in a roommate, or moving in with friends.
These options may be the last steps you take as you look for ways to reduce expenses, but they really can help you save a sizable amount of money every month. The lower you keep these costs, the easier it will be to live well within a tight budget.
Knocking Down Debt
Having too much debt can make money feel especially tight, and it can also hurt your chances of achieving financial security down the line.
That’s because when you’re spending a lot of money on interest each month, it can be harder to pay all of your other expenses on time, not to mention grow your savings.
Reducing debt may seem like a tall mountain to climb when money is tight, but choosing the right debt reduction strategy may be able to help you chip away and slowly improve your financial situation.
Since credit card debt typically costs the most in interest, you might consider tackling these debts first, and then move on to the debt with the next-highest interest rate, and so on.
Another approach is to pay the minimum toward all your accounts, and then pay any extra you can afford toward the debt with the smallest balance. When that debt is wiped out, you can move on to the next smallest balance, and so on.
If you can qualify for a lower interest rate, another option might be to take out a personal loan that consolidates all those high-interest debts into one more manageable payment.
Starting an Emergency Fund
It might sound crazy–if not impossible–to put money into savings when you’re tight on money.
But here’s why you may want to make putting a little bit away into an emergency fund each month a priority: If you’re living on a tight budget, just one unexpected expense—like your car breaking down or a visit to an urgent care clinic—could put you over the financial edge.
If you start putting just a small amount aside each month into an emergency fund, it won’t be long before you have a decent financial cushion that could prevent you from having to run up high interest credit debt the next time something unexpected rolls around.
Good places to start–and grow–your emergency fund include: a high-interest savings account, a checking and savings account, or an online savings account.
These options typically offer higher interest than a standard savings account, but keep the money liquid so you can access it if and when you need it.
Spending Only Cash for Everyday Expenses
There’s something about plastic that can make it feel like you are not really spending money.
While it might not be practical to pay your rent or utility bills in cash, switching to cash (and leaving the credit cards at home) for other expenses can be a great idea when money is tight.
The reason is that paying with cash places a harder limit on your spending and helps you become more aware of your choices. When you can literally see your money going somewhere, you may find yourself becoming much more intentional in the way you spend it.
Groceries and entertainment can be great categories for going cash-only. Cash can also be a good option for clothing and the (occasional) restaurant meal.
Another benefit of cash is that it’s more difficult to get into debt since you can’t spend cash you don’t have.
Starting a Side Gig
Once you’ve done some basic budgeting, it may be clear that additional income could help ease things while money is tight.
Sometimes all it takes is some extra time and energy to earn some extra cash, whether it’s selling things you no longer want or need (and decluttering at the same time), taking on a side hustle, or using your talents to pick up some freelance work.
Some ideas for generating extra income include:
• Selling things on eBay, Craigslist, or Facebook Marketplace
• Having a garage sale
• Creating an Etsy store and selling homemade goods
• Driving for a rideshare or food delivery service
• Giving music lessons
• Renting out a room on Airbnb
• Walking dogs
• Cleaning houses
• Handling social media for small businesses
• Selling writing, photography, or videography services to clients
If money is feeling tight right now, it’s easy to feel worried and out of control.
But you may be able to regain a sense of control by taking a deep breath, sitting down, and really crunching the numbers. This entails looking at your monthly take-home pay, as well as your average monthly spending, and seeing how it all lines up.
Once you have a sense of the numbers, you can take steps to reduce unnecessary spending, negotiate to lower monthly bills, chip away at expensive debt, and even start building a financial cushion.
It might not happen overnight, but these steps can help ease money stress and put you on the road to a more secure financial future.
Looking for a simple way to manage your spending and saving while money is tight? Consider opening a SoFi Checking and Savings® account.
With SoFi Checking and Savings, you can easily see your weekly spending on your dashboard in the app, which can help you stay on top of how much you are spending, and make sure you are on track with your budget.
Signing up for SoFi Checking and Savings can also help you save on fees, since SoFi Checking and Savings doesn’t have any account fees, monthly fees, or many other common fees. Plus, withdrawing cash is fee-free at 55,000+ ATMs worldwide.
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