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Having a tight budget shouldn’t keep you from reaching your savings goals. No matter what your financial situation is, there are ways to save money on a tight budget.
I have worked tirelessly to develop a savings system that works for any budget, but especially a tight budget.
For years I had a tight budget. After I followed the system below, I was able to save money and pay down debt.
This system has helped me to pay down over $70,000 of debt, build a robust savings fund, and make my financial dreams a reality.
Save money on a tight budget with the following tips.
Create a Budget
The first tip I can give you is to create a budget. If you don’t know where your money is going, you can’t save. I recommend creating a zero based budget.
Under a zero based budget you budget every dollar to zero. By budgeting to zero you can make every dollar work for you.
Once you have created a budget, you can assess if you can remove expenses from your budget such as recurring subscriptions you aren’t using, excessive dining out costs, miscellaneous spending such as snack expenses, and entertainment costs.
After you trim the fat from your budget you can then see if you can maximize your income. You can increase income by asking for a raise, getting another job, selling unused items online, or by starting a side hustle.
Make a List of Your Needs and Wants
In life you have needs and wants.
Needs consist of food, basic clothing, shelter, and basic transportation.
Make a list of your needs and wants. When you are living on a tight budget, you need to prioritize needs over wants.
There are so many ways to get the things you want for free. For example, I ask for experiences as gifts for my birthday and holidays.
Every year I am given an annual membership to a local botanical garden. With this membership I am able to pack a family picnic and go enjoy the beautiful outdoors in a serene setting.
I also look for free family activities through local newspapers. There are always family friendly festivals and events in my city thrown by local companies and the public library.
If there is something that I want I create a sinking fund for it. A sinking fund is an expense line I put into my budget so that I can ratably save for this expense over a period of time in a high yield savings fund.
By creating sinking funds I have been able to afford trips abroad and other high ticket items.
Shop Seasonally, Use Coupons, and Reward Cards
Another thing that I do to save money is I shop weekly ads. The items on sale in a weekly ad are usually seasonal items that you can get a deal on. You can save a good amount of money on everyday expenses this way.
I use this tactic for my grocery budget and for items that I need such as winter coats and swimsuits. I recently needed a new pair of walking shoes and was able to get a great pair at Academy that were 50% off!
Coupons are another item that I use.
The coupons that come in the Sunday paper aren’t usually coupons that I use, as I try to limit our processed food intake as much as possible.
The coupons that I use are downloaded straight from the manufacturers website. Also, there are coupons available through the online app for grocery stores that I shop at. Sprouts is a great grocery store that offers tons of digital coupons through their online app.
Reward cards are another great way to save money. Stores such as Safeway require reward cards to take advantage of their weekly specials. Sign up for the reward card to get these deals. Reward cards are also used to save money on gasoline.
Look at the fine print for your rewards cards to make sure you are getting all the discounts allowed. I had a rewards card once that saved me money at sister companies. This helped me to get a gym membership for super cheap!
Don’t Pay Interest
Interest is something that can work for you, the S&P 500 returned 15.76% in 2020, or can work against you, think student loan debt.
You do not want to use your current income to pay interest on past debt. It is a huge waste of money and a way to deplete your savings completely.
I recommend focusing on paying down your debt as fast as possible using a strategy such as the debt snowball method.
The debt snowball method is where you pay down your smallest to largest debts. The momentum created by paying down small debts quickly keeps you motivated to pay down all of your debts.
When I was aggressively paying down our debt, I managed to incrementally increase our debt pay down amount to equal 50% of our income.
Once I paid down our debt, I maintained that money mindset when I started to save. After all of my commercial debt was paid off I couldn’t believe how much money I was saving in interest!
By paying off all of interest accruing debt, you will be able to save more money to reach your financial goals.
Before Buying New Assets (like a car) Assess Their Useful Life
When you start thinking about buying a big purchase item, such as a car, look into the useful life of that asset.
You may own a car that performs great past 100,000 miles. Toyotas are one of those brands.
Taking care of the things that you own will in turn help you to save money. By taking care of these things you will add more time to their useful life.
Once I bought a used truck in cash, I decided to take excellent care of it so that I wouldn’t have to have another car payment for as long as possible.
When I traded in this truck for a family friendly vehicle, I couldn’t believe how well it had retained its value. The little things I did to take care of it, such as keep the inside clean and outside nice and neat, added up when I needed it to.
Cook Your Own Food
Cooking my own food has been one of the best ways that I have saved money over the years.
When my budget was at its tightest, I would eat on $25/week.
I cooked oatmeal for breakfast, ate soup with hummus and crackers for lunch, would eat a handful of almonds and a banana as a snack, and I would eat tacos with chips and salsa for dinner. I would batch cook this menu so that I could buy all of my ingredients in bulk to save money.
During this time I was a vegan, as meatless meals are significantly cheaper.
After having done this for a decade, I now hardly ever go out to eat. The only foods we purchase out are pizza and breakfast goodies such as muffins and coffee. We also only eat out a couple of times a month.
When you start cooking at home, do it once or twice a week in batches, meal plan beforehand, and make a grocery list only for items you need.
I also like to do monthly batch cooking for items such as muffins. You can double a recipe and then freeze the muffins to take out and reheat throughout the month. I also do this with sweet potatoes.
Change Your Belief System
I used to believe that I deserved a reward every time I did good, or had a bad day. I pretty much gave myself a reward whenever I wanted.
Changing this belief system was my gateway to making better financial decisions.
Don’t give into rewarding yourself without budgeting for it. You can reward yourself if you create a sinking fund for this in your budget.
Want a special treat after a bad day? Budget for it!
Don’t change your belief system all at once. Make tiny changes over time. This is the best way to make sure you save money on a tight budget.
Changing things dramatically, or stopping things cold turkey, is one of the hardest ways to make new habits stick.
Changing how you view spending your money will help you save money!
You got this!
Saving money on a tight budget is possible for anyone. Creating a budget so that you can eliminate unnecessary expenses is the first step in this journey.
Need a budget? I have you covered! I have created tons of budgets that have helped so many people create a financial picture for themselves so that they can reach their financial goals.
Want to do a No Spend Challenge to jumpstart your savings journey? Check out my post on how to do a successful No Spend Challenge here!
Just remember, you got this! Make small changes over time and you too will be able to save money on a tight budget.