Best Tips For How To Save Money [Updated!]

Saving money isn’t so much about not spending it, but rather it’s about intentionally spending your money on things that bring you value. How to save money was a foreign concept to me until I hit rock bottom and realized how much I was wasting.

This article will teach you several ways to optimize your income and reduce your monthly expenses – without giving up your life in the process.

How Can I Save Money With A Low Income?

A while back, I wrote a related article about how to get out of debt while living paycheck to paycheck. While that article focused on debt reduction, some of the strategies remain the same.

Developing smart money habits enables you to keep a successful budget. One of the best money-saving tips is spending intentionally – not when you “feel like it.” A good example is dining out once or twice a month as opposed to several times every week (I was guilty of this).

You can also work a side job to increase your income. Sometimes your debt problem may be an income problem. Mitigate your money issues by exploring additional avenues of revenue. There are many jobs you can do from home in your spare time, such as data entry, making crafts, and freelance writing.

Pay Yourself First

What if I told you the best way to save money was to make sure you pay yourself first before you pay your bills? Let me explain.

If money comes out of your paycheck each payday and goes into a savings account before you ever see it, you can condition yourself to live off the remaining. Instead of trusting yourself to save money at the end of the month, ensure you actually save something by hiding it from yourself at the beginning of the month.

Use a separate savings account to take full advantage of this strategy. My wife and I use 6 savings accounts to manage our money!

Earned Income Tax Credit

Depending on how low your income is, may qualify you for an Earned Income Tax Credit also known as an EITC. By using these credits to your advantage (by saving them and not spending them), you can catapult yourself towards your financial goals. Your tax refund may then be several hundred dollars or as high as a few thousand dollars.

Follow this PDF to see if you can qualify for an Earned Income Tax Credit:

eitc

Pay Your Future Self First

In a similar vein as paying your present self first, supercharge your future by saving for retirement on the front end.

Check with your employer to find out if they offer a 401K. By enrolling in your employer-sponsored retirement plan, some companies will match your retirement contributions up to a specific percentage. This is an excellent way to start saving money for your retirement while leveraging your company benefits.

How You Can Really Start To Save Money

Look at your monthly expenses, including credit card debt, food, a personal or car loan, electric bill, and cell phone bill. You can decrease your monthly bills by turning your thermostat up or down a few degrees, cutting out most nonessentials at the grocery store (create a shopping list!), switching to a different cell phone plan, and taking advantage of free entertainment.

Make Debt Your Enemy

Focus on paying off as much of your debt as possible. Make it a passion – an obsession. You are making other people rich by paying the extremely high-interest credit card charges.

Leveraging Credit Cards

If you are unable to pay off your credit cards immediately, it may make sense to transfer your balance to a credit card with a lower interest rate such as 0%. However, depending on your current situation, this may not be the best option. If you can’t pay off the balance before the 0% introductory rate expires, the interest rate will skyrocket.

In addition to ballooning interest rates, some credit cards will charge you a transfer fee if you move balances. Make sure you do the math to see if you’re actually going to save anything before you make the move.

Either way, if you have a problem with spending – cut up those credit cards and refuse to be a slave to debt.

If you have established a solid budget and are disciplined enough to use credit cards, there are several ways to leverage credit cards in order to make them work for you. As long as you can pay off your balance in full each month, look for cards that offer cash back. Cashback is a great incentive if you’re able to control your spending.

Pro tip: When you receive the cashback check in the mail – don’t spend it! Use it to pay off additional debt or put it into an investment fund.

Cash Is King

Use cash as opposed to credit whenever possible, to avoid paying interest. Even though I am disciplined with credit cards, I still find myself spending more with credit than when I use cash.

There’s just something about seeing that last $20 in your wallet that needs to last all week.

How You Can Save $1,000 Fast

You can save money fast by tracking your progress. When you set savings goals, putting money away for your future or a fully funded emergency fund becomes easier. Use a notebook or cell phone app to write down your daily purchases and expenses.

Your spending should fit the savings goals you established. Once you see everything in writing, you will be able to determine which costs you can decrease. You will also be consistently reminded of your goal. This means you will be less likely to spend additional money.

Give Yourself A Timeline

You need to determine your timeline for saving $1,000. Wanting to save money quickly is not enough. Decide if you want to save this amount in a week, a month, three months, etc. Meeting an abstract goal is nearly impossible. Make a positive statement, such as I will save $1,000 within the next month. You can figure out how much you need to save every day to meet your goal by dividing the desired amount by 30.

How Much Should I Save Each Month?

You should be saving as much as possible every month while still living life at the same time. In reality, you could save money every single day. We all spend money on things that don’t value and it’s up to us to stop these habits.

There is no specific amount I can tell you that you need to save. How much you can save is dependent on your expenses and income. However, there are particular rules you can use to guide your savings.

Look at how much you earn each month after taxes. Half of this amount (50%) should pay for your necessities. This includes housing, monthly bills, and food, including your loans and credit cards.

Another 30 percent can be spent on the things you want the most. This may include entertainment, clothing, or traveling. A want is something you desire, not something essential for your life.

The final 20 percent should go directly into your savings. Your savings can be an individual retirement account, an emergency savings, or for a downpayment to purchase a home. If your income does not permit these percentages, you can change them according to your specific situation.

If your needs require more than half of your income, you may need to decrease your wants to 10 or 15 percent. Even if you are unable to save 20 percent of your income, five or 10 percent will increase your savings every month. The more money you can save monthly, the sooner you will reach your goals.

What Is The 50 20 30 Budget Rule?

As described in the previous section, one of the best ways to set savings goals is with the 50/30/20 rule. The rule states 50 percent of your income should be used to cover your monthly necessities, including your mortgage or rent. Another 30 percent is for purchasing what you desire, like dining out or a new pair of shoes. The last 20 percent is for your savings account. This rule was created by Senator Elizabeth Warren when she was teaching classes as a bankruptcy professor.

For a more detailed step by step guide on how to implement the 50/30/20 rule, check out my related post here.

How Can I Live Cheaply?

You can live a lot less expensively when you simply spend less. You do not need to keep up with the proverbial Jones’s. There is no need to purchase anything expensive or luxurious to keep up with someone else or impress someone.

Seriously – nobody cares if your earrings are genuine diamonds or if your sneakers are a brand name. Purchasing a large home for a small family is not the key to happiness. You will be spending a lot more time and money on maintenance and cleaning.

Avoid Being “House Poor”

A large home will increase your expenses due to higher property taxes and insurance rates. This can make living cheaply nearly impossible. The point is – less can be more. When you have a smaller home and a cheaper car, you will not have to work as hard to pay your bills. You can put more money away for your future, decrease your level of stress, and live a more carefree and enjoyable life.

For a quick win – an excellent place to begin is by planning your meals.

Plan For Success

Planning what you need to purchase at the grocery store for each meal will prevent you from buying things you do not need. You can even set a price for each meal based on the number of people you are feeding. You can splurge on special occasions like birthdays or holidays, but keep your budget in mind for the majority of your meals.

When you know exactly what you need to buy, you will save time, money, and lower your stress levels. I wrote an article about how I save money each month with Kroger’s Click List.

More Money = More Time Doing What You Love

By changing your financial habits, you will find you have extra time to spend with your friends or family or participating in enjoyable activities such as reading or playing sports.

Buying Used – For The Win!

The best savings tips for living cheaply are usually simple. If your budget is exceptionally tight, save money by buying used items instead of new items. Look into used products at every opportunity. A good example is a new refrigerator. You can save a lot of money by purchasing a reconditioned unit instead of a brand new model.

Again, you’re the only one who will know you saved a ton of money by buying used.

Look into used cars, furniture, appliances, and electronics. Numerous reconditioned products come with some kind of warranty. If you are unable to find a good quality used product, to save money, consider purchasing something basic instead of including all of the bells and whistles. Basic products generally last longer because there are fewer features to break.

You can also purchase used products from online advertisements, garage sales, and thrift shops.

Many online stores and people have no idea what something is worth when they put it up for sale. This is an excellent opportunity to purchase something far below the actual worth. By doing this you can not only save money, but also engage in retail arbitrage for extra money!

When you decrease what you are paying for your purchases, you also lower your living expenses. Practice your negotiation skills before looking at all of the online listings. This will enable you to get an excellent price on a large variety of used merchandise.

Retail Arbitrage As A Side Hustle

If you have some extra cash, find clearance items for sale at rock bottom prices. You can resell these items online to make a nice profit. Your best option is the big-ticket items. You can earn hundreds of dollars fast just by reselling them. Your profit for lower priced items will be much smaller. If you need something for a relatively short time, consider renting.

Did you know you can rent a wedding dress instead of buying one? It’s true! Learn more in my article over here.

For instance, if you have someone coming to visit, you will be spending a fraction of the price to rent a bed to accommodate a visitor for a few days than to purchase a new bed.

Renting As A Frugal Hack?

One of the best examples is recreational vehicles. You may want to purchase your car, but if you do not use it frequently, you may regret the purchase and upkeep costs. You can rent jet skis, boats, kayaks, and all kinds of sporting equipment.

If you have a pilot’s license, consider renting a plane for a long weekend. If you are attending college, renting textbooks is a lot cheaper than purchasing them new. You can save a substantial amount of money by renting.

Look online for local rental stores offering power tools, construction equipment, storage units, party and wedding supplies, moving trucks, and more. When you want to watch a big game on television, you can save a tremendous amount of money by renting a large screen TV for the weekend.

Whether renting or purchasing is the better option will depend on what you need, how long you intend to use it, and the current rental rates. Taking the time to conduct a little research will pay off.

Save Money By Bartering

In the past, people saved a lot of money by bartering. Bartering is when you exchange something you have or your services to acquire something you want or need. If you need to have your lawn mowed, you may be able to watch the landscaper’s kids for a few hours to cover the service cost.

The idea is to locate someone who can offer what you need in exchange for your services. Bartering is a winning situation for both parties without having to exchange money. Think about the skills you can offer – your time and talents are worth more than you may think.

You may be able to bake delicious cakes, fix plumbing issues, help students with math, English, or science, provide transportation, or alter or mend clothing. Figure out what you are best at, then barter your skills. You may have a couple of lamps in your basement you never use but need a new coffee table. Your neighbor may have an extra coffee table and need lamps. You can always find something to barter with if you use your ingenuity.

Sometimes You Just Don’t Make Enough Money

If you have made all the cuts you can and you are still unable to pay your bills, you may need to downsize or increase your income.

There are two simple ways to increase your income:

• Ask for a raise or work overtime
• Work more than one job or side hustle

Side hustling is starting a business you can run during your spare time. Depending on what you choose, your side hustle may result in a lucrative income that will replace your current job as a full-time business.

If you are interested in growth potential, one of the most popular choices is becoming a virtual assistant. You can perform specific tasks for a wide variety of businesses. The term “virtual,” means you can work from your home as opposed to an office. If you have some of the following skills, you can become a virtual assistant:

• Editing and proofreading documents
• Screening emails
• Booking hotels and flights
• Customer service
• Creating and sending invoices
• Researching leads
• Processing online orders
• Bookkeeping skills
• Calendar management
• Transcribing voicemails
• Compiling reports

Leverage Your Skills To Save Money

There are a lot of projects at home you can do yourself as opposed to paying someone else. You can create an effective savings plan only by using your skills to save money.

Hiring someone to complete home renovation projects is extremely expensive. Yes, you do need professionals for specific tasks such as electrical or HVAC, but there is still a lot you can do yourself to decrease your expenses. You can find instructions for almost anything you want to do online.

YouTube offers an excellent selection of tutorials for numerous home improvements and repairs. One of the best ways to live cheaper is to spend less money around the home. You can also look for companies offering gift cards for specific purchases. You may be able to find what you need at just as good of a price, and earn a gift card. The next time you need to make a purchase, you can save money by using your gift card.

Get Serious About Saving Money

You can easily find these types of offers just by performing an online search. There are certain sites you can join for free to earn gift cards when your purchases total a specific amount. You can conduct your research during your free time. I’m a fan of using Rakuten to earn cashback whenever I need to buy something online.

Learn To Cook

You may be surprised how much money you can save simply by making your meals at home. You can enjoy delicious meals for much less than eating out at a restaurant. Even fast food can be expensive, especially if you indulge often.

Pack your lunch for work instead of going out or ordering in. When you are going to be away for home for a relatively long time, pack drinks, lunch, or snacks. You can save a lot of money on your vacations by packing the majority of your meals and snacks.

Avoid Fancy Resorts And Hotels

The next time you take a vacation, stay in an extended stay motel. You can pack enough food for your breakfast, lunch, and snacks. You will have the facilities to prepare your favorite meals.

You can go out to dinner at the local restaurants for something more unique. You will save money by drinking water instead of expensive soft drinks, fruit juices, and fancy beverages. Replace costly bottled water with tap water. If you do not like the taste of your water, you can purchase an inexpensive water purifier for your faucet.

Negotiate For Better Deals

You may not realize you can negotiate the rates for many of your expenses. Two excellent examples are your cell phone and cable television plans. I finally cut the cord and wrote a great post about how to cut the cord and still watch great television shows.

If you’re dead set on keeping cable, call the customer service department to find out if there are currently any promotions or exclusive deals available. If you call every once in a while, eventually, you may find something good. The rates and plans for numerous companies are always changing. Once you have been with a company for a long time, the current rates may be better than what you are paying. Take advantage of the best possible rates.

You can negotiate rates through a budgeting app. This includes many of your bills, such as the internet, medical expenses, cable, and phone. Work with your credit card providers to negotiate better rates. Cancel your subscriptions for magazines or anything you no longer use. The savings of everything combined will enable you to live cheaply.

Wrapping It Up

In reality, many of us make more money than we realize. The problem is we spend more money than we realize as well. Focus on being intentional with your money and spending only on things that bring value to your life.

There are many different ways to save money, it just depends on what you are willing to give up at this point of your life. Remember, personal finance is personal. It is not one size fits all. Commit to reducing your financial stress and make a plan to live the life you deserve.

You got this!

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