Frugality Magazine - Frugal Living Tips for Financial Freedom

How to Save Money on a Low Income

Living on a low income can be tough at the best of times, but trying to save money alongside can be nearly impossible. Nearly, but not quite. In today’s blog post we’re going to look at some ways that anyone can manage to save money for the future – even when living on a tight budget…

The Key to Saving Money on a Low Income

The key to saving money on a low income is quite simple: you need to start off by increasing the gap between what you earn and what is left over (if there’s anything).

Then you need to put a system in place that will automatically transfer this disposable income into a savings account, rather than it being swallowed up in everyday living.

But how…?

Increase Your Income

First and foremost, you can find ways to increase the amount of money that you earn and, in doing so, find you have extra money to save. While this might sound like a pipedream, there are so many options available that almost everyone is capable of doing at least one “side hustle”.

At its most basic consider your current paid employment – is there any way you can work overtime, take a promotion, transfer to another better-paying employer or even get a second job that fits around your main income source?

Thinking rather more laterally there are all manner of small businesses that can be set up for next to nothing. My personal favorite is starting a blog – which can be done for just a few dollars each month.

Many bloggers have started off knowing nothing, and have ended up building an income larger than their full-time job. If you want to learn how simple it is to set up your own blog then read my tutorial here.

There are, of course, all sorts of other low-cost business opportunities available to you. You could, for example, start a pet-sitting business, import products from China to sell on Amazon (better known as “Amazon FBA”) or you could write books and publish them on Kindle.

For a huge list of ways to make extra money at home click here.

The point is this: don’t think that your income necessarily needs to be fixed. No matter what your situation is, there are ways to learn new skills (or use existing skills) to make additional money on the side.

Starting a blog, for example, offers total flexibility and many stay-at-home moms and busy professionals manage to carve out a few hours each week to grow their blog around their other commitments.  

Earn Cashback

Another great way to increase your savings rate is to earn rewards and cashback whenever you spend money on your everyday purchases. Sign up with companies like Ebates before making a purchase and you’ll often find that you can earn a percentage of what you spend back as gift cards or Paypal cash.

In time, these cashback accounts can really start adding up, allowing you to find yet more money to add to your savings without necessarily having to change your spending habits.

Challenge Everything

Some years back, when I was struggling with my debt, I decided that I had to audit my spending in order to slash as much as was humanly possible from my budget. Despite being reasonably frugal at the time (or so I thought) I managed to slash over 10% off my monthly spending without feeling too much of a pinch.

The secret is to spend only on your debit card for a month. Then, at the end of the month, go through your bank statement with a sharpie, looking at everything you’ve spent. Ask yourself if there are any expenses you could cut completely without too much pain. Also, consider how you can reduce the costs of any other expenses.

I found, for example, that I was paying for a few online services that I hadn’t even used in months. I also managed to reduce our TV package, my car insurance and my cell phone tariff, each change helping to save me more money.

So challenge every single penny that comes out of your bank account, and aim for incremental improvements every month, getting ever more savvy with your budget cuts until you regularly have a comfortable sum of money available for your savings account.

Automate Savings

One common mistake that we all make is to eat up any excess cash we might have in everyday life. We treat ourselves to that take-away after a tough week, or buy a slightly nicer brand of food. Before you know it, that money you were going to put into your savings is all gone until your next payday.

A safer option for those serious about saving money is to ask your bank to automatically transfer an agreed sum of money every time you get paid into your savings account. This way, you’ll barely even notice the money “disappearing” and won’t be tempted to spend it during the month. Remember the old adage: pay yourself first.

Get the Best Interest Rate

Lastly, as I’ve discussed elsewhere, the rate of interest you get on your savings can have an astonishing impact on how much money you have later on in life. Even a difference of one or two percent can have a huge impact.

No matter how much you’re able to save regularly, you therefore owe it to yourself to get the very best interest rates possible. If you’re willing to shoulder a small amount of risk then you may want to consider turning your back on traditional bank accounts – with their dreadfully low interest rates – and instead consider one of the higher paying options.

This article outlines all sorts of ways you can increase the interest you’re earning on your savings.

As you can see, while trying to save money right now may seem hopeless, there are all sorts of tactics that you can use to put money aside for the future. Even those of us on the lowest of incomes still has a very real chance to gently build up savings, no matter how tight your budget might feel right now.

How to save money on a low income. While many people think they don't earn enough to start saving money, the reality is that by following these tips anyone can start to put money aside and prepare for a strong financial future.


Tarantula-keeper, sun-worshipper and obsessive frugality blogger. For loads more money-saving advice come and join us on Facebook.

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Hi, I'm Richard, a UK personal finance blogger on a journey to financial freedom.

I've paid off my consumer debt thanks to a frugal lifestyle and now I'm saving hard for the future.

Why not stay in touch by following me on social media?

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