How to save money on a low income

Introduction – The Saving Mindset

Like all things worth doing in life, Saving is a habit.

Saving money is probably one of the least favorite habits we want to cultivate, but if you want to save money on a low income, you’ll be able to manage it on a larger scale, when the “big money” comes rolling in.
Saving is for the long-term. You’re essentially paying and investing in yourself- for the future.

I used to have all types of excuses that prevented me from cultivating the saving habit. From not earning enough money to save, to saving so that I can spend my money. I would save money during the month and blow half of it, or more, over a weekend. Some of us have been there, but that’s just the start of the habit, so if that’s you, don’t worry- you’re on your way.

For the rest of us, it’s time to take our medicine.
The first thing to do to start cultivating this habit is to be mindful of your spending. How much- and when, and on what?

Become aware of your spending Habit

Examine your spending motives. When I started, I often found that some of the things I spent on, I didn’t need. I was impulsive and since we’re human and impulsiveness is in our nature, we don’t often notice it until we get it under a microscope.
Learn to check your balances regularly. Look at your savings often and this will give you a confidence booster and ingrain the habit.

Finally, give it time. Cultivating a habit takes time and it’s no different when it comes to saving. It doesn’t matter if you veer off, just get back on track as soon as you become aware of it. That’s how you cultivate a habit.

Do this, and half of any financial challenges you may experience later in life will be taken care of.

Right, let’s get into this!

Document your daily & fixed monthly expenses

This is the most crucial first step if you want to save money. Think about it- how else are you going to know where to start, what you spend your money on, how much you are spending, and how much you can save?

Without recording your expenses, you’re going to be in the dark and unable to set saving goals.
So keep a pocketbook handy or use your cellphone to track your expenses, whenever you spend money. Don’t forget to include your fixed monthly bills like your mortgage or rent, Insurance, etc…

At the end of it all, come up with a lean, daily expense and resolve to stick by it. This is your daily allowance. Now you have a good projection of what you can expect to spend every week.

Move onto the weekend and work out how you spend your weekends, how much money you can save etc.. and just like before- come up with an allowance for the “average” weekend.

Cut down extravagance and minimize your spending. Remember- you’re just interested in the “typical” weekend- not the outliers.
It’s important at this phase to cut down[emphasize] extravagant living. if you like to party… tone it down. If you like a few bottles of Jack Daniels every weekend, maybe cut it down to one or two weekends in a month.

Finally, determine your fixed monthly bills such as your mortgage, rent, insurance, etc…
If you have any other debts- write these down and make a conscious decision to pay these off first.

Identify your basic needs & Eliminate unnecessary expenses

You might be alarmed at the amount of money you spend on things that you don’t really need, or at the expenses that really aren’t necessary.
Now it’s time to separate the things you need from those you want and to set goals for yourself. A lot of the time, we spend money on things that at first may look necessary, but they really aren’t. It’s only when we have information that we can make informed decisions.

So- envision a typical day for you, go over it step-by-step, and work out what you need to spend your money on- using the list you made earlier and your common sense.
This should be a “typical” day- don’t worry about the outliers- the extraordinary days. Your savings will cover that. It’s one of the reasons why you’re doing this.

Look at the gas, your breakfast, lunch, dinner, etc…
The trips you need to make to get where you need to. Throughout all this, try to cut down on anything that is extravagant and that isn’t necessary.

If you can save $1.00 on a less expensive cereal- make a note. If you can save more by filling up your tank instead of topping up with only a few gallons at a time- make a note. If you’ve got a gas guzzler, it might be cheaper getting a regular lift than using your car, or sell it and buy one that’s lower on gas.

The trick is to minimize your daily expenses.

Evaluate your monthly subscriptions

Many of us have monthly expenses that are set-and-forget. You open a Netflix account, then a Hulu account, join an Affiliate Program, subscribe to a magazine… and the money just gets deducted every month to make it much easier for you to continue uninterrupted.

Naturally though, your needs and focus change over time, so now is the right time to re-evaluate all those subscriptions.
Go through each one of them and ask yourself:

  • Is this relevant to where I am currently in life?
  • Do I really need this? Perhaps you watch Hulu much less as often than Netflix? Maybe you don’t need that hobby magazine and you can just as well get the information on the Internet. In that case- get rid!
  • Is there a more affordable alternative?
  • Can I live without this?

If it’s something you need- keep it. Dump the rest.
Remember, you’re building a habit and all these small holes in your pocket, drain your finances and leave you wondering where all your money’s gone.

It’s like death by a thousand cuts!

Create a budget

Now that you’ve laid the groundwork and have a clear idea of your needs and your expenses, you are in a position to create a budget!
Scary word, I know, but Budgeting doesn’t have to be.

A budget is simply a plan to show you how much money you have, and where it will go to. That’s all it is. As you get better and savvier, you will naturally improve your budgeting.

Divide your spending- which should be a lot less toned down thanks to the work you did previously, into “Necessities”, Wants” and “Savings”. Remember to focus on paying off your debts first (if you have any), and on saving money.

That’s it- just write it down and resolve to live according to budget. Review your budget every few months to make sure that you’re spending optimally and according to your needs and a few wants.
Before long, you will be fiscally responsible and savvy! You will have taken a major step towards financial independence and resilience.

There are of course a few additional things that you can do to make sure that you save more and live optimally and according to your needs.

Reduce Housing costs

It might seem like something that will not make much of a dent, seeing as Housing is already expensive, but it’s something worth considering.
There are a few ways to reduce this cost and below are some of these:

  • Perhaps you’re renting and single. In that case, get a roommate to split expenses.
  • Forego a paid parking space
  • If you’re renting an additional storage space, consider a way to bring this down- move to less expensive storage, negotiate with a friend or family member to temporarily provide storage, etc..
  • Move to a new location
  • If you own a house, consider renting space
  • Refinance your mortgage

As I said there are a few things you can do to minimize your expenses in this area. Remember, it all adds up!

Re-evaluate your insurance premiums

You may also want to look at reducing your insurance premiums.

Shop around and see what other companies can offer. Try and consolidate your insurance, so that instead of paying 2 or 3 premiums, you pay 1 bundled sum.
This is often a way to reduce your insurance premium and is especially useful when you have Housing and car insurance.

You may also qualify for a lower premium, depending on what you do. If you’re studying, you may qualify for a discounted premium. Being a AAA member will also help you qualify for a discount on your premium. Some features on a car also determine your premium, such as the paint on the car, the safety features, etc.

Remember, insurance companies won’t tell you all this, because it isn’t in their best interest.


There is no better time to start saving money and reduce your expenses.
With the way the economy is doing, you have all the incentives you need. There are, of course, a lot more ways to save money, but do it step-by-step and you’ll see results very quickly!

If you need professional advice, speak to your financial counselor and they will guide you through eliminating debt and help you set aside a healthy savings fund for any future emergencies.


Hey, I'm Helmuth! I'm a 40-something IT professional, father, and husband. I've been making an income online for a while now and I love to help ordinary people like you discover money-making opportunities online. Please, dive in and get started!

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