Practical Tips for How To Save Money on a Low Income

How to save money on low income
how to save money on a low income
Photo by micheile dot com on Unsplash

I think one of the best tips I've heard for how to save money is budgeting. This is because budgeting has proved to be effective over the years and people constantly introduce new ways and tools to use for budgeting.

I'll tell you right now that budgeting is one of the best practices for a healthy saving habit, but what do you do when your income makes it difficult to budget? When your monthly income is barely enough to cater to your needs? How do you save money and maintain a healthy saving/spending habit when on a low income?

The amount of money you bring home monthly may make saving seem impossible, but there are some money-saving tips you can use to help you manage your money, live fine, and even have enough to treat yourself once or twice a month.


In this blog post, I have 15 practical tips for how to save money on a low income. You can select from these tips, implement them, and have a financially healthy life from now on.

How Much Is Classified as Low Income?

Depending on your location, the amount classified as ‘low income' varies, but the generic description of a low-income earner is someone whose income is less than double of the Federal Poverty Level (FPL).

For instance, if the FPL of an individual in Toronto is $30,000 yearly, any person in the same geographic area having a yearly income of less than $60,000 is classified as a low-income earner.

Why Saving Money on a Low Income Is Almost Impossible.

Imagine barely being able to pay rents and loans; who would think about saving? Rather than learning how to save money, you'll be learning how to multiply your money – no jokes!

Trying to save on a low income while still managing to pay for basic amenities might be a luxury some people can't afford.

It creates a situation where it almost seems like your needs take up 100% or at least 90% of your income. This makes saving not an option.

But, all it takes is objectively viewing your finances and using the right tools and tips to manage your monthly income.

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Photo by Christian Dubovan on Unsplash

How To Save Money on a Low Income

  1. Create a budget plan that aligns with your income

The need for a budget cannot be over-emphasized. There are different budgeting formats that you can follow, but it is usually best to have something customized when it comes to a low income.

Considering the exact income, your needs, and your wants, create a budget that lets you take care of the absolute essentials and gives you leverage to satisfy yourself at least once.

Don’t go buying a Gucci, though (haha).

Most experts advise low-income earners to go for the envelope budgeting system, which is effective if you are sure that you won’t be tempted to open it.

  1. Lower housing cost

A popular financial rule is to make sure that your housing cost is 25% of your monthly income. If your housing is $12,000 yearly which is $1,200 monthly, you want to ensure that the monthly rent is 25% or below your monthly income.

There are several ways you can reduce your housing costs:

Split rent: You can split rent by having a roommate(s) depending on how big the house is.

Low-cost housing: You can move to smaller spaces that cost less and save more on housing costs.

Renting: Did you know that you can list housing space for rent on several online platforms. These platforms will definitely remove a percentage of the rent for commission, but they help you with free advertising.

  1. Automate your savings

From experience, I have learned that it is wise to remove whatever percentage of my income I intend to save FIRST before any other thing. 

This is because when I leave that money within my reach, a need will somehow arise for it. It can become so hard to decide if that need is actually a need or a want, and my mind makes up reasons to justify that want as a need, so I get overwhelmed and end up not saving.

Prioritize saving before spending by creating a habit of always deducting your savings as soon as you get your income. You can use automated saving apps as I do, and these apps make sure that you are not able to withdraw from your savings until the stipulated time. I use cowrywise for my savings, and I can't even edit my deadline, which is helpful but heartbreaking for me.

  1. Practice healthy lifestyle

Practicing a healthy lifestyle has a direct influence on your health. Do away with unhealthy habits like smoking, drinking, and stress eating. It prevents you from health complications that can worsen your finances. 

Eat healthy, exercise, take enough rest, drink a lot of water, and practice affordable healthy living tips.

  1. Reduce eating out

Cook in! You will be amazed how much more enjoyable it is to prepare your meal at home. 

This even helps you tailor your food to your preference and lets you keep track of your calorie intake.

If at all you want to eat out, make sure it is within budget.

  1. Use public transport

Public transportation will save you the cost of fuel and car maintenance. As much as possible, use public transportation. Don't use a cab except for emergencies.

You can also practice healthy walking if the distance is not too long. So, you save your money and your health!

  1. Rent out your car

Your car is more of an enemy to you when you are a low-income earner. Several platforms can pay you to rent out your car.

Turn your car into a money-making machine and earn extra income. Using apps like Turo, you can rent out your car and earn. What's great is that you can make as high as 65% – 85% of the trip fare without doing anything. 

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After your office hours, you can become an Uber driver or Doordash and earn extra income.

  1. Start side gigs

Having a single source of income is not a good financial life. If you are working a 9-5, it will not be enough to get you your dream life.

There are numerous opportunities available that you can leverage to earn you more.

When you earn more, you will be able to save more for life you hope to live.

Start side gigs like freelancing, virtual assistance, tutoring, design, etc. If you can't be physically disposed, there are several online opportunities to make money with literally just your skills.

Learn 10 Easy Ways You Can Make Money Online as a Beginner -2022

  1. Settle debts

This is absolutely important. If you are on a low income, you want to make sure that you avoid debts as much as possible by living frugally. In cases where you already have debts like student loans and debit card debts, you want to make sure that you pay off the high-interest debts. 

  1. Set money goals

Without a goal, it gets easier to lose focus. Set goals for your monthly income and give it a timeline and description.

This helps you know what you're saving for when you'll hit the mark and how much it'll cost.

How to create a practical saving goal

Follow these steps to create a practical saving goal:

  • Record your spendings
  • Create a budget
  • Set your priorities
  • Automate savings
  • Don't touch your savings
  • Have an accountability partner
  • Have a goal
  1. Shop online

A school of thought believes that when you shop online, it actually prevents you from impulse buying. All your items get added up, so you see how much you are spending instead of walking around a grocery store and getting carried away by things you want.

You do not want to drop anything from your cart when you are at checkouts. It’s hard!

Whether you shop online or offline, make sure to set spending limits whenever you are shopping and have a preplanned list that you should stick to.

  1. Use coupons, gift cards, and vouchers

You have no idea how much you can save using this strategy. While asking for coupons at restaurants and shops might be embarrassing, you can use several paid survey sites (link to blog post) to earn redeemable points such as vouchers and gift cards.

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Photo by Perry Merrity II on Unsplash
  1. Save on electricity

Besides housing and transportation, electricity bills are also necessities that can be pretty expensive. There are several ways you can save on your electricity bills:

  • Reduce heating and cooling costs
  • Unplug appliances
  • Switch off bulbs

Related Post: 50+Frugal Energy Saving Tips to Lower your Utility Bill and Save Money

  1. Save on clothes

The truth is that no one wants their financial situation to be visible when they are walking down the street. Regardless, there are places you can shop and clothing hacks that will have you elegantly dressed without breaking the bank.

  • Sell used clothes
  • Buy used clothes
  • Revamp old clothes

Platforms like OfferUp, Craigslist, and eBay allow users to buy and sell several household and clothing items. YouTube videos can also show you how to revamp old clothes.

  1. Use automated budgeting apps

The good news is that there are tons of budgeting apps that you can use with automated features. These features track your spending, create weekly limits, and notify you when you’re close to breaking them. Some of these apps also automatically debit your savings from your income and put it away until you need it while helping you set financial goals and track them.

Here are The Best Budgeting Apps You Should Use In 2022

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Photo by Katie Harp on Unsplash


Final Thoughts- How To Save Money

Since you cannot trade your needs or avoid them, the best way is to reduce its cost by finding alternatives or a way to supplement.

The words ‘saving' and ‘low income' might not seem to align, but the key is to find an alternative to your needs. When you do this consistently, you create extra spaces within your income to accommodate savings. Also, I'm confident that if you follow these tips on how to save money, you'll be smiling at your finances very soon.

While in the beginning, your savings from your income might be 5%, it can rise to as high as 15%-20% within the year. 

How much do you earn yearly? Do you think you can save a part of your income using these tips?


Author: Michael Dinich

Title: Journalist

Expertise: Side Hustles, Passive Income, Investing


Michael Dinich is a journalist, personal finance expert, and a true geek at heart. Michael founded Wealth of Geeks in 2017, and he's the executive producer of the Wealth of Geeks podcast. He's known for his relatable financial advice and passionate discussions about all things geek.