Money management is the first step towards building wealth and attaining financial independence. We all know that managing our finances is important yet fail in making significant progress, especially in tasks like cost reduction and saving.

Spending less than what you earn is the ultimate personal finance goal because it will help you easily save and is practical to both high-income earners and low-income earners. How do you spend less on a low-income budget?

If you operate on a low income, you may find it quite difficult to save money. It would be best if you learn money management tips for a low-income earner, how to cut costs, and how you can sustain your finances once you have established a solid saving plan.

5 Essential Tips to Help You Save on a Low Income

The basic tips for saving money include establishing a solid money management plan. It would be best if you also adopted a strong mentality, preparation, and set actionable goals. What are these basic tips?

1. Be Positive

You will narrow your scope of work and creativity if you entertain negative thoughts. Hence, you will miss out on various opportunities and ideas. To be positive, you need to quit complaining or thinking that you are incapable of earning more money or saving more.

Image with the words "Think Positive" sign

Read the statements below to help launch your positivity:

  • I am capable of saving.
  • I am capable of earning more
  • I have the capability and time to indulge in my hobbies with a low budget.

Staying on a positive track can be challenging, especially when you are operating on a low budget. A positive mindset should be the very first step before you consider other approaches.

2. Be Ready to Make Sacrifices

You will need to make lots of sacrifices when saving money on a low income. The principle of sacrifice is giving up something now for more later. When it comes to money management, sacrifices will pay off. Aspects of money management, like savings, will require sacrifice.

For example, you may lack enough money to pay for a vacation right now. However, with sacrifice and savings, you will eventually get the amount you need to achieve your goal in a calculated period. Have you had to make any sacrifices of late? Have they paid off?

3. Set Actionable Goals

You may have various goals in mind when it comes to money management. For instance, you may want a vacation, a new car, a new phone, or a new home. Setting actionable goals requires you to figure out what matters most to you and why.

When it comes to setting financial goals, you should have both long term and short-term goals. Furthermore, make sure you write them down and read them daily or pin them somewhere you will see them regularly, like on your fridge.

Studies show that you are more likely to achieve any goals when you write them down. Neuropsychologists studies show that writing financial and other goals helps you to encode them in your long-term memory, thus making it more likely to achieve them.

4. Come up With a Budget

Many people fail to operate their finances around a budget. A budget will help you track your spending and learn how every dime you spend adds up over time. You may think that you need to have financial education to operate a budget. However, this is not true.

What Is a Budget?

A budget is a tool to help you make financial decisions about your expenditure. There are simple budgeting techniques you can quickly learn without attending a finance class.

Whereas there are various types of budgets, not all work for everyone. However, the 50/30/20 Rule comes close.

The Rule States That: Dedicate 50% of your income to your needs, allocate 30% to your wants and 20% to your savings and debts.

Creating a monthly budget, A print out of a monthly budget with pen and calculator on a desk

A budget has three significant benefits. These benefits include:

  1. It will prepare you to endure tough financial times. Your savings will help you establish an emergency fund.
  2. You will take a shorter time to achieve your goals. You will have a set financial plan on how to achieve your goals.
  3. You will be able to account for all your money. You will not question your credit card bill or wonder how you used up your money.

Dedicate about 1-3 hours to create your budget. This time frame will help you to be thorough.

5. Create a Plan to Pay Off Your Debts

Do you have any outstanding debt amount? Is its high interest or low interest? Do you have an idea on how to clear these debts? Debts restrict your saving power. Furthermore, you may give up the essential needs to pay off debts.

It would help if you had a plan to clear your debts. It will dictate how long you have to become debt-free. Create a simple and effective method and make sure you adhere to it strictly.

How to Cut Costs and Save on a Tight Income

How do you get started? Once you have a plan underway, you will want to know the quickest methods to get your finances on track. Here are the biggest saving tips when you are on a low budget:

a. Try and Cut Your Most Significant Expenses

Your basic needs take up most of your expenditure. If you lower your costs in these aspects of your life, they will have the most significant impact on your savings. They are:

  • Food
  • Housing
  • Transport
man hand holding card with the word expenses. cutting expenses and costs concept


Housing takes up most of your income. Many people spend more than necessary on it. Financial experts advise you to allocate 30% of your income to housing needs like rent and mortgage.

How Do You Cut Costs on Housing?

  1. Try and Find a Roommate to Split Rent. It would help if you considered downsizing the size of your room. For example, if you reside in a two-bedroom alone, you can consider moving into a one-bedroom apartment.
  2. Move-in With Your Parents. Most parents are fully welcoming to their children. You will not pay rent. You may worry about your dignity or social status in this case. However, one of the essential tips of money management on a low income is to sacrifice.

You could spend the rent expenses to catch up on your finances when you live with your parents.


You may be spending a lot of money moving around. You can save a lot of money on transportation.

How Do You Save Cost on Transportation?

  1. Look Out for and Acquire Better Insurance Rates. Your insurance will help you cater to some costs on your car. Additionally, in case of an accident, the insurance will help out with the expenses. Here are 10 Ways You Can Cut Down Car Insurance Costs.
  2. Give Your Car Regular Maintenance and the Best Service. How often do you change your engine oil? Maintenance costs less than repairs, mainly when a severe problem arises due to neglect.
  3. Use a Bicycle, Public Transport, or Even Walk Where Possible. You will be able to contribute positively to your health, the environment, and your finances when you opt to walk or ride a bicycle now and then.
  4. Use Taxi Apps. Uber is an example of a cost-effective taxi app. You will save on gas costs and have the same flexibility as you had in your car.


People will regularly overspend on food. We tend to overspend and yet hardly notice it. Have you tried to add up your expenses on the visits you make to restaurants, small meals, iced coffee, and fast food? They will argue that they are preserving their health.

That is true. However, can you still maintain your health with cost-effective dining? Yes.

How Do You Save on Food?

Prepare Your Meals at Home and Create Bulk Meals. For example, if you cook a lot of food, you can store it in the fridge and warm it in the microwave later. You will be able to save if you eat that lasagna from the refrigerator rather than get burgers at a fast-food outlet.

Bulk Grocery Shopping. You will be able to make use of coupons when grocery shopping. You will also be able to eat healthily. There are many ways to save on grocery shopping, for example, purchasing them in bulk and buying groceries that are in season.

Here are 21 Tips To Help You Save On Groceries.

b. Pay Yourself First

You can translate paying yourself first as’ save first and spend later.’ Some will argue that you need to invest first, but it comes down to investing in yourself, which is another form of paying yourself.

Ensure you set up automatic transfers to your savings immediately you receive your paycheck.

c. Moderate and Prioritize Your Expenditure

It will be unrealistic to tell you not to spend at all. We need to cater to our basic needs, wants, hobbies, and savings. You can enjoy your life without breaking the bank if you prioritize and moderate.

How Do You Prioritize?

Find Out What Is Important to You and What Is Necessary. For example, if you love working out, you prioritize on a gym subscription. Moreover, if you enjoy watching TV, weigh and prioritize between Cable TV and Netflix.

You will be able to eliminate expenses you don’t use or need when you prioritize. It would be best if you then moderated after you prioritize.

How Do You Moderate?

Moderation means you will have to limit your unnecessary expenditures because you have already prioritized them in your budget. For example, you could go to the movies less often if you already have a Netflix subscription.

d. Find Ways to Supplement Your Income

Are you comfortable with your low income? Do you intend to increase your revenue? You will increase your spending power if you increase your income.

How do I Supplement my Income?

Start a Side Gig. There are many side hustle ventures you can start. For example, you can begin freelancing or blogging. Do you have a service or skill you can offer online? Try freelancing online platforms that are not limited to writing online. For example, ones that accept web designers or logo designers.

Uber driver looking at smartphone in car

e. Buy Second Hand

The second-hand market has many quality goods to offer. Some of the items you can purchase second hand include cars, clothes, electronics, furniture, instruments, etc. You could consider using online platforms like Craigslist or eBay for such items.

For clothes, you could visit the dollar store.

f. Negotiate

Negotiation skills can save you a lot of money. Who would want to miss out on the best deal on a low-income budget? People mostly negotiate on purchases, for example, cars.

However, you can even negotiate other things like your salary, bills, interest loans, among others.

g. Use Cashback Systems

Cash backs systems let you earn money whenever you shop. Remember, every dollar counts and cashback systems offer great savings tools. Furthermore, you can rely on multiple cashback tools and apps. For example, Rakuten, Paribus, Swagbucks, and iBotta.

Here is a list of Top 10 Apps That Pay You To Shop.

4 Tips to Help You Manage Your Money After Saving

We want to maintain the financial stability run once you have employed the money management tips. Once you have your savings in check, you can follow these management tips to secure your financial stability:

1. Pay Your High-interest Debts

Remember the debt payment plan you set up in the essential money management tips? It is time to put it in action. You will need to pay off these debts with all your savings to achieve financial freedom faster.

Once you settle all your debts, you can now save comfortably. Here is How You Can Eliminate Your Credit Card Debt In 5 Simple Steps.

2. Create an Emergency Fund

A study carried out by the Federal Reserve Body showed that only 53% of the respondents could comfortably cover an emergency expense of $400 without having to sell an asset or borrow the funds.

Use your savings to create your emergency fund. Even if you are on high-interest debt, you still need an emergency fund. It will help you avoid debts once you fully settle them.

3. Track Your Net Worth

Your net worth indicates your financial performance. You can calculate it if you subtract your debts from all your earnings or all you own. Make it your goal to grow this number every year.

4. Invest

Investments are an excellent way to grow your income. What you invest in is up to you. However, you need to conduct adequate research before making an investment decision. You can also rely on investment managers to help you make investment decisions.

Please read on 11 Easy Ways You can Start Investing As A Beginner to learn more on ways you can start investing as a beginner.


For effective money saving when on a low income remember the essential tips: be positive, be ready to make sacrifices, set actionable goals, come up with a budget and create a plan to clear off your debts.

Knowledge of money management tips is not enough. It would be best if you take time to set actionable goals that will help you realize financial freedom.


Please enter your comment!
Please enter your name here