5 Tips for Saving Money When You Have Low Income

by Connie Mei · 14 comments

Most of us want to save money so we can build wealth and plan for the future. We have goals we want to reach (like traveling) or things we want to buy (like a dream home). However, this can seem impossible when you’re surviving on low income.

According to CNN, 25 million American households are living paycheck to paycheck. When money is tight, saving any amount can be the last priority on your list. You’re just trying to get by.

So how do you save more money when you’re making minimum wage? How can you reach your financial goals on a low income?

When it comes to finances, it’s important not only think about the now but also the future. Even if you’re earning a minimum wage, you can still save little by little. Here’s how:

Tackle High-Interest Debt First

In order to start saving more, you have to tackle your debt head-on. Specifically high-interest rate from personal loans, or credit cards, because they force you to pay outrageous fees and interest charges.

When paying off debt, you need an attainable, yet challenging plan to pay it off. Start by prioritizing your debt so you’re paying off the ones with highest interest first.

Then, as you go forward, avoid accumulating any more high interest debt, especially credit cards.

Cut Down Your Biggest Expenses

Trying to save money when you have low income it can be very difficult. Sometimes it feels impossible to cut down even a dollar or two every month.

Aside from the usual money-saving ideas, like cooking meals at home and canceling your cable bill, what more you can do? Instead of trying to cut back your small expenses, focus on the larger ones so you can make more of a significant impact.

For most people, housing costs tend to be biggest part of their expenses. If you’re renting, consider downsizing to a smaller home or living with roommates.

If you own your home, take at look at whether or not refinancing your mortgage for a lower rate would be beneficial. You can also rent out a room or parking spot for additional income.

Take Advantage of Free Money

Take advantage of “free money” when you can. As a family with low income, you may qualify for the earned income tax credit (EITC). According to the IRS website, the EITC, can be a large refund on your taxes, helping you keep more of what you earned. Sometimes even as much as a few thousand dollars.

You should also look into a 401K at work and see if your company matches up to a certain percentage of your contribution.

If they do, you should take advantage of it and start saving as much as possible. It’s basically free money that will help you save towards retirement.

Keep Your Budget Lean

To save more, you have to take control of how much you spend. Choose the categories you want to indulge in, and keep the rest of your budget as lean as possible. You’ll have to make sacrifices but it’s not impossible.

Just learn to spend in moderationFor instance; cut back on how often you dine out. You can still enjoy a nice meal at a restaurant, just not multiple times a week.

Start a Side Hustle

If you can’t cut costs anymore than you already have, consider diversifying your income by starting a side hustle to earn extra money. Aside from your full-time job, you can get a job on the side to provide another income source.

Many side hustles can be done right from your own home in your spare time. Think about what you’re good at doing, what kind of hobbies that can earn money, or what you already enjoy that can be turned into a side job.

Popular side hustles include freelance writing, data entry, and graphic design.

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Saving money when you make minimum wage is certainly hard but can be done. It’s important to understand what your priorities are, and create a values-based spending and saving plan.

Once you do, you’ll be smarter and savvier with how you spend money and ultimately, be able to save more.

What’s another way to save more money while earning minimum wage? What are some tactics you’ve tried in the past when your income was low?

Editor's Note: Did you know about the service called $5 meal plans? For $5 a month, they send you recipes of delicious, healthy, yet cheap food that costs just $5 a meal.

Several of my friends signed up and they are able to eat at home more because the instructions are easy to follow, making everything convenient. The deal also comes with grocery shopping lists, which saves them so much time. Check it out yourself by clicking here and you too may be able to save more and become healthier at the same time.

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{ read the comments below or add one }

  • Laura says:

    Try looking for a Community Action agency in your area, if you have trouble finding one online, try dialing 211, its a directory of community resources. The Community Action in my county has programs for computer classes, match savings program, budget coaching, getting ahead – a class on achieving your goals, credit and home purchase counseling, and more.

  • Saani Mohammed KAMIL says:

    i am a Ghanaian worker on a low income and living in a deprived area
    Which I can’t do any aside business there and wanting advice on how to depend on my low income to archive my goals

  • Chrissi says:

    I consider myself lucky enough not to be living paycheck to paycheck, but I fear being in that situation, so try to have a bit of a back-up.
    I participate in online opinion questionaires such as Globaltestmarket or Valued Opinions, and get my pay-out from them in the form of Amazon gift vouchers, which come in really handy when things are tight and my daughter needs stuff for school.
    I am also with a site called Qasa, which may only be available in Germany, but they pay out cash for clicking on website links – okay, it isn’t much, but I got €20 from them last year.
    As my Mother used to say, “every little helps!”

  • Zuzupetals says:

    Great topic! Thanks for addressing lower income struggles.

    Habits most of us can do but I’d say especially lower incomes:

    1. Get as organized as possible! As said above, have a budget. Discipline yourself to live within it. Trouble shoot. Become unstoppable in your quest for financial wellness.

    2. Become a saver! If you are behind on bills you’ll need to get current but if all your obligations are paid up put aside some savings and if possible first each check / month even if it’s simply a few dollars, start the habit and then let it accumulate.

    I’ve been inspired by my grandma who saved 20% of everything she made a a school teacher. She always had money for meeting various family needs as they arose. She worked hard to tend a large garden and put up produce. Some may not have room for a garden but possibly some patio pots? Grow your own tomatoes for example. I tell myself often “I am a saver” (like her). It may take longer than others I know who have more than me but I don’t focus on keeping up with or competing with them. My accomplishment with personal finance mean all the more because I’ve done it on less.

    Secondly, it really does change everything to have $5k to your name. This is my current goal. My stress levels have decreased and peace of mind begins to propel me to create more of that. This $5k is not for anything that isn’t a true emergency. I’m guarding it and plan to help it grow to $20k.

    As you are getting more organized review and tweek your budget month to month to better meet your evolving needs and values. Mine stays much the same but I feel less trapped in knowing I can adjust categories if I find it helps better meet true needs.

    3. Along with saving some cash, work to build up a reserve of foods you actually eat. This helps with meal planning (a cost saver) and having a fall back when you have an unexpected expense or change in income. You can adjust groceries that month if you need.

    4. If you haven’t done so already, cut the cable. Use the library, Netflix and free apps. I like vidAngel for the editing feature. It’s $1-2 per rental. If you are putting money into savings and paying all your bills reward yourself with something small like a show or even better free time outdoors doing something budget friendly that you enjoy.

    5. A lot of cell phones are lowering costs. Make sure you aren’t over paying.

    6. Same with shopping for insurances as others have mentioned. Being properly insured is important to me as a lower income person so I don’t scrimp to have less coverage but do shop periodically for competitive ones.

    7. I took up delivering pizza for some extra earnings. My car is not new but runs well. I don’t know that I’d want to run through a nice car this way but in my situation it works. I work 3 nights a week for a few hours. It cost approx $100 to buy my uniform. I set aside out of earnings my mileage for repairs and gas and then deduct it on my taxes. I’ve earned approx $400 – $900 a month give or take after mileage. I asked for the short shift so I could still get to bed before too late. I didn’t want to burnout so I stay with a very part time plan. You could do more or less depending on your goals. It’s helped pay for some health initiatives (one reason I’m currently lower income). Its an
    option to help pay off your debts! Build up 6 mo of reserves! Fund a
    Roth IRA! Finish your degree. Fund a side business.

    Wishing you health and financial strangth as a saver!

    • Alicia says:

      All great ideas. I’ve lived my whole life being a low income person. Always thinking of new ways to get ahead or cut back. How to live paycheck to paycheck. Somehow I manage but I do have to say I have had help from family or friends when it gets so over welming. I do well for awhile. Then doom my car won’t pass inspiration that’s when I need help. Savings is not enough so it seems every 6 months I start over to save if any. I pray a lot to make a dollar to two to keep going to keep myself from being homeless. I’m blessed .not easy but I manage not to bother people with my problems

  • Gabriel says:

    I have always found that looking at yourself as a business is the best way to budget. If you look at yourself as a business, you begin to do things naturally that cut cost. The biggest concern for business is cutting cost so naturally you will find ways to live cheaper. For instance, rather than an apartment, get a room mate. Rather than eating out, cook for the week. Rather than just having a job, find a way to start a micro business. etc.

  • Toby says:

    This has been so informative and very direct at dealing with the problem of doing a budget on a low income. Every point is clear and simingly easy to apply, the only challange is one`s own drive to make it happen. Thanks for the info.

  • Kellie says:

    In talking to people in my circle — those who earn very little as well as good wage-earners — the biggest obstacle I see in their paths is attitude. If a person has decided they are a victim, that’s where they will get stuck every single time. Always harping about bills, bills, bills. Well where on earth did the bills come from? Your own choices. I know some things cannot be avoided, but this is where emergency savings is critical and makes the difference between a crisis and an inconvenience. You are only a victim if you choose to be by refusing to acknowledge your own contribution to your problems and refusing to save anything for the future.

    I know someone who has earned (and spent) an extra $240,000 over the course of the past decade (in addition to a regular, well-paying job which covered living expenses); has absolutely nothing to show for it, and STILL racked up credit card debt along the way! I heard Dave Ramsey say once, You can’t out-earn a spending problem. This is the perfect case in point. Great article! thanks!

  • Michelle says:

    These are all great tips. I think making the sacrifices is where people get stuck.

  • Argie says:

    This article was refreshing – more realistic for me than most articles. Sometimes you get hit with an unexpected bill – such as needing a plumber if your pipes freeze – and living paycheck to paycheck you don’t have a cushion for emergencies. All the advice columns say you should have an emergency fund, but that just isn’t real for a lot of people. And even if you do have one, once you get hit with an emergency it takes a long time to build it up again. In the past, I have gone through the house and rounded up everything that hadn’t been used yet (a package of screws to fix a doorway, a blouse that hadn’t been worn and still had the sales tags, some shelving that hadn’t been put up, a bucket of never-opened paint that wasn’t custom mixed, a package of just-bought curtains) – and came up with $80 to get my sewer pipes reamed out. This is desperation, but it helped in that emergency. Some people say you should sell everything you don’t need, and that’s good advice if you are ready to do it, but it takes time to make a sale and you always take a hit financially and often emotionally when you have to part with things you really want to keep. And a warning about side hustles. If you accept money for doing something, you are setting yourself up as a professional, and if the job you are doing is something that people get professional accreditation for, you can wind up in hot water legally. I don’t know how it works everywhere, but in this area you have to have accreditation to babysit other people’s children, especially if you advertise. Same for other jobs that people used to do with no hassle. Look into the legal requirements before you invest in setting yourself up for a side job from home.

  • I’m a big proponent on cutting your big expenses. Sure you can save some money when you cut your smaller expenses, but the real impact comes from slashing your insurance premiums or refinancing your house.

  • Taylor Lee says:

    Good advice! I would also recommend trying to get into an entry-level job with job training (e.g. something in the trades).

  • dojo says:

    Great tips. The secret is to get serious about saving money and be consistent. The income is not a reason not to save (a lot of high-earners have almost no savings, so the problem is with how you budget and how you stick to it). Getting a second job (or a side hustle) is a great way to earn more income and diversify your revenues. Who knows, maybe one day the ‘hustle’ turns into a profitable business.

  • I think this was a great post. There are a lot of tips out there, but most you’re making enough income to assume you have more choices. Although we’re not living pay cheque to pay cheque, I hope this helps out those who are.

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