Last updated in September 2020
There are several ways to save money on a tight budget. Saving money is not easy when you just barely have enough to live. If your living expenses are the same as or exceed your income, you can easily become trapped in a debt spiral.
Even if you have things under control right now, savings are important. They can cover you during future emergencies and enable you to spend on things that are meaningful to you, such as a holiday. The good news is that you can still save even if you do not have much to start with.
Table of Contents
10 ways to save money on a tight budget
1. Stop wasting resources
The easiest step to save money on a tight budget is to stop wasting your resources. Simple things such as turning off the light, lowering the heating, and ensuring taps are properly closed can help you save in the long term.
- Resources also include petrol. By making sure you do not drive unnecessarily you can keep fuel cost to a minimum. Learn how you can make your fuel stretch further.
- Equally, you can easily avoid food waste. A meal plan may help you with this.
- Lastly, if are in a situation where you can afford a little upfront investment, you can buy reusable items to replace disposables.
2. Make or assess your budget
If you do not have a budget, you will not know what you are currently spending your money on. There may be open leaks and money may be flowing out of your hands like tap water. A budget is the first step to stop these leaks. Make yourself a budget today.
If you already have a budget, it may be time for an assessment. Do you really need everything that is on there? Cut you cut down on certain categories? Some expenses may be fixed, such as your rent, but others may be more flexible. For example, you may be able to switch energy providers.
3. Switch to free leisure activities
People spend a lot of money on entertainment and hobbies. Going to the cinema, visiting the shopping mall or the pub are popular ways to pass time. And there is nothing wrong with that. But if you are looking for ways to save money on a tight budget, cutting down in these areas is one of the easiest ways to save.
Not being able to spend money does not mean that you are boring. Plenty of activities can be undertaken for free. You could get a library membership, go for a walk in the park or even to the beach. There may be free meet-ups if you live in a big city. Museums are also a good option to get out and do something for free.
Why not start a new hobby? Try reading, drawing, web design, etc. There are many low-cost hobbies that you can explore.
4. Ways to save money on a tight budget – cook your own meals
A good home-cooked meal beats eating out every day. Cooking for yourself means you will save a ton of money. It may be hard to change your habits of eating out and takeaway meals, but it will be worth it.
Cooking is also healthier than eating out. So you may find yourself losing weight as a side effect. If you are happy with your current weight or want to gain weight, you can also do so. Cooking at home offers a range of options and the dishes you can cook are limitless. Plus, it is easy to get started.
You can still eat out though, especially if you know the tricks to spend less on a good meal.
5. Take advantage of cashback
Cashback means you will get back a proportion of the money you spent on something. This can range from cashback on groceries to cashback on buying electronics, insurances, holidays, etc.
6. Buy second hand
Buying second hand can save you a ton of money. Many second-hand items are still as good as new but can be bought at less than half the original price. Whenever you need something, it may be worth visiting your local charity and thrift shops.
Another way to buy second-hand items is eBay. Here, you can find almost anything but you need to be aware that not everything is a bargain.
7. Set-up sinking funds
A sinking fund is a savings pot separate from your main account that serves a specific purpose. For example, if you plan to go an a holiday, you may name your pot ‘holiday savings’ and pay in £50 every month until your holiday.
Having separate funds for different savings goals makes it easier to save. You can see your savings build up over time and will be less tempted to spend. You are also less likely to confuse that money with spending money.
Before you start making sinking funds, you should set-up an emergency fund. An emergency fund is there to cover your living expenses in case an emergency happens.
8. Live more frugally
Living frugally makes saving money a piece of cake.
9. Ways to save money on a tight budget – pay off debt
If you have debt, the repayments can take a huge chunk of your salary. Additionally, you are losing money due to the interest on your debt. Depending on the interest rate, this can be a huge waste of money.
It is important to repay your debt as soon as you can. Once you are debt free, saving money will be a lot easier.
10. Start a side hustle
10 ways to save money on a tight budget summary
There are several ways to save money on a tight budget. If you would like to start saving, you could:
- Stop wasting resources
- Make or assess your budget
- Switch to free leisure activities
- Cook your own meals
- Take advantage of cashback
- Buy second hand
- Set-up sinking funds
- Live more frugally
- Pay off debt
- Start a side hustle
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