It’s the end of the month and you’re anxious and worried, again. This is a common feeling for you. All the money in your checking account is gone and you still owe 2 more bills. Unfortunately, this is a dilemma for many people out there. It can seem very impossible to save money on a tight budget.
However, I am going to give you 9 actionable steps you can take today.
With these steps, you will find many creative ways to save money and master your budget. By the end of the article, I am confident you will find areas to free up anywhere from $50-$500 per month in savings in your budget. If you don’t have a budget yet, no worries. Read this article first then come back to this one.
1. Review small expenses & subscriptions
The first thing you are going to want to do is take a good hard look at your bank statements. With this, I want you to go through and take note of all expenses under $10 and add them up. Oftentimes, it is these very small expenses that add up to big expenses over time.
Now, I know a lot of gurus harp on focusing on more impactful savings than your $2 cup of coffee per day. However, if you are reading this, I am assuming you are looking for any and all ways to free up some more money.
So, I am sorry to do this to you my friends, but cut out that $2 cup of coffee everyday.
Another item you’re going to want to look at is monthly subscriptions you are not using or you don’t need. I’ve said this before, if you are trying to save money and create some more breathing room in the budget, time to cut out all streaming services.
There are so many great ways to consume entertainment for free (YouTube, Spotify Free, etc.)
Let’s say you were spending $2 per day on coffee and used Netflix & Apple Music. By eliminating these two bills you could free up nearly $90 per month in your budget. That’s an extra $90 you can use towards paying down debt or increasing that emergency fund.
2. Avoid credit cards!
If you are living paycheck to paycheck or finding you are coming up short on bills every month, avoid credit cards at all costs.
Credit card debt is one of the most crushing forms of debt you can have. Trust me, I’ve been there. When you are charging items you can’t afford to a credit card, you are essentially robbing your future self of savings.
For example, let’s say you have $10,000 worth of credit card debt and can only afford to pay the minimum due. It will take you 29 years to pay off. But that’s not all.
You would end up paying $16,874 in interest! So in total, $26,874…
I heard this quote somewhere and it couldn’t be more true:
“Buying things and paying 18% interest is possibly the worst money decision you can ever make.”
Perhaps the more important benefit of avoiding credit cards on a tight budget is that you develop good spending habits.
You see, when you are buying things on credit that you cannot afford, you are playing a dangerous game. That $5 fast food meal then turns into a $1,000 iPhone. Next thing you know, your palms are sweaty as you’re holding a credit card bill that shows a balance due of $20,000 that is charging 24% interest.
So, by all means, do not use credit cards when you are on a tight budget.
3. Shop around
My girlfriend is all about a good deal and negotiating. By doing this, she is saving quite a bit of money on things that would normally cost more money. With that, you too should be shopping around for better deals to help decrease the amount of spending you are doing.
With the age of the internet, you can easily google search items to find the cheapest price. Let’s say you are shopping for a new pair of shoes. You’ve landed on the perfect new shoes but they retail for $100. Eek.
By taking that same pair of shoes and popping it into the Google search bar, you may be able to find the same pair of shoes at a lower cost. I did this one time and saved about $35 dollars. Just by taking my time, shopping around, I was able to save $35. It’s not a lot, but when we’re low on cash, every dollar counts!
Since we are on the topic of shopping, I also would recommend that you give yourself a ‘7-day waiting period’ on ‘wants’. ‘Wants’ are things you don’t need. For example, fancy clothes, new shoes, or anything that isn’t essential like food & housing. You will find that after waiting a couple days the rush of those wants tends to fade away. By doing this, you could potentially save yourself from ending up with $500 worth of new clothes. Ouch.
4. “The Reserve” account
This is a strategy that I use that I don’t hear too many talk about but is a great way to avoid overdraft fees. Let’s face it, when you’re struggling to save, banks will charge enormous amounts of overdraft fees. These overdraft fees can make it 10 times harder to save money, especially when you are struggling to save money on a tight budget.
So what is this reserve account, you ask?
Most banks do have ways you can set up something called overdraft protection. So, what happens is you have a second checking, sinking fund, or savings account that is linked to your primary spending checking account.
In the event you spent a little too much on Amazon, this reserve account will automatically transfer to your spending account to cover you. This way, we can avoid those nasty and pesky overdraft fees! I personally use the PNC Virtual Wallet Account below:
I’ve been using this for some time now and I keep this account at only $50 but you can choose whatever works for you.
Now, here is a little warning, many banks allow you to use a line of credit or a credit card as overdraft protection. Do not do this. I repeat, DO NOT DO THIS. If you are struggling to save, tapping into a line of credit can be downright dangerous.
Despite this preventing overdraft fees, you are still going to be charged for interest and a lot of banks charge a ‘transfer’ fee. Not to mention, you are now accumulating debt. I want to help you save money, not get into more debt.
5. Automate your savings
This is a surefire way to trick yourself to save money on a tight budget. You’ve got to set it and forget it. At least that is how I like to think of it. You see, the problem with a lot of people is that they simply are spending their hard earned money before they even get a chance to save any of it.
Pay yourself first
Believe me, I know how tempting and easy it is to buy that new pair of clothes or spend that late night out with the crowd blowing money at the bar. I, unfortunately, had a couple times where I was the “buy a round” guy. Before you know it, your bar tab is $100. Ouch!
So, my friends, you need to set up a small automated savings plan with your bank. All banks have a way where you can set up automatic transfers into a savings account. Since we are discussing tight budgets, I’d recommend you start with something small.
Let’s say $10 a week. If you’re saying that is too much, ask yourself what you currently spend money on when you are out and about.
That $10 is about how much it’ll cost you to buy a Chipotle burrito. Skip the delicious burrito and automate that $10 towards your savings.
By doing this every week, you’d save $40 in one months and a nice $480 in 1 year. As you are finding more ways to free up cash, you can accelerate this to larger amounts.
More importantly, this will help you establish some amazing savings habits. There is a famous quote that goes, “Saving money is buying yourself a day you do not have to work in the future.”
6. Buy used items
So not only can you shop around to save some cash, but you can also shop online and buy used items. When shopping at Ross or Marshalls is not enough, you can use great places like Facebook Marketplace, Offer Up, or Poshmark to buy used items. This is an awesome way to save money on a tight budget.
My girlfriend is an avid Facebook Marketplace shopper. Is it a problem? Not yet. However, she has found some amazing deals. For example, we’ve gotten a lot of household appliances for $10-$15 or nice pairs of shoes for $5.
To be exact, she got some nice Steve Madden shoes for only $5! I am pretty sure they retail for $50 or more. I can confidently say, you can save hundreds of dollars with this strategy.
For me, I recently bought some Nike Air Max 270’s that retail for $110-$150, for $60. Just by getting them used and in good condition, I was able to save a good chunk of money.
When browsing these sites, you’d be amazed at what you can find. Now, this should not be to buy items you do not need. The goal is to help you save on items you need or were already going to buy.
Let’s say you need a new toaster. Go onto the marketplace first and I bet you will find a great deal from someone who is looking to get rid of theirs. Another great way to save on these sites is to negotiate for a lower price.
My girlfriend never pays the price that is listed and trust me, I am impressed. So with that, I am confident you can do the same. If you see an item for $30, ask if they’ll take $20. You will find that you can meet in the middle at $25 versus paying the full price.
8. Get a roommate
So, this is a big one. To this point, we’ve discussed ways to save money that will trim perhaps $5-$100 a month in your budget. On a tight budget, we are definitely trying to save money anywhere and everywhere we can. So those small amounts do matter.
However, if you are making these small cuts and still feeling the pinch in your budget, then it is time to review your bigger budget expenses. Perhaps the biggest monthly expense we all have (including myself) is housing.
This falls into the categories of rent or the monthly mortgage. A solid way to cut down this expense by quite a bit is to find yourself a roommate. Most Americans are spending nearly 40% of their money on housing in their budget.
Let’s say you are paying $1,200 per month for housing. By simply finding a roommate and splitting this expense, you will free up $600 in your monthly housing expense. This equates to a $7,200 savings per year. A great book called “Set for Life” by Scott Trench dubs this ‘lifestyle design’. This is where you are hacking the largest expenses in your budget.
In this case, you are hacking your housing expense to free up $600. With making this change, this is a lifestyle change. You are now able to have an extra $600 to put towards your other financial goals.
Although, we are looking for all ways to save money on a tight budget. You have much more financial options when you free up $600 in housing a month versus freeing up $50 a month in coffee.
9. Move back home with your parents
Did that headline sting? I hope not! Listen, this is probably the most unpopular and most uncomfortable strategy I would recommend. However, with that being said, if you are struggling to make ends meet and the other strategies haven’t worked, it may be time to consider moving back home with your parents. Of course, this won’t work for everyone and every situation is unique.
As the previous strategy mentioned, your housing expense is probably your largest expense you are paying a month. By eliminating this expense entirely, you would save anywhere from $10,000-$20,000 a year depending on what your rent is.
Before you say, “Eric, how could I do such a thing?!”…
I moved back home with my Mom when I was 24. I was living in Miami and making way too many financial mistakes. Times got tough, I swallowed my pride, and headed back home with Momma. When I did this, I immediately became better with my money and saw some serious savings.
Now, this is not a long term solution. I am sure you don’t want to live at home with Mom and Dad forever. So, when you move home it is very important that you save money with a goal and end date in mind of when you will head back out on your own.
I would recommend that you immediately start saving towards a 6-month emergency fund. This way when you head back out on your own you create some financial stability.
Start small & start now
There you have it, my friends. Nine ways even you can save money on a tight budget. Listen, it is not gonna be easy and you are going to have to make sacrifices. However, with those sacrifices, you are going to be well on your way to saving some money and building some nice financial stability in your life.
With that being said, I challenge you to choose one of these strategies and start today.. No, like right now. Take $10 and start a ‘Reserve Account’. Set up a $5 weekly transfer to your savings account. Cancel your cable bill and switch to a cheaper streaming service.
The reason most people fail at saving in their budget is they simply fail to act. They simply fail to take 10 minutes to review where they can save. So, go and put these small steps into action. By not taking any action, you are guaranteed to stay in the same place you are now.
However, by making small changes, you can build up a small emergency fund to prevent you from going further into debt. You can free up an extra $50-$100 by cancelling your cable bill and put that money towards retirement savings.
Start now. Your future self will thank you.
