17 Simple Ways to Save Money on a Tight Budget

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Have you ever felt like you can’t get ahead with your finances? When you’re living paycheck to paycheck, it is nearly impossible to save. But the good news is, no matter your income, it is, in fact, possible to get ahead. The key is figuring out how to adjust your spending habits to work within your income. To get you started, I am excited to share with you 17 simple ways to save money on a tight budget.

1. Set Short-Term & Long-Term Goals

While there are so many mechanical things you can do to save money on a tight budget, the most important thing you can do is tie your efforts to your financial goals.

Having financial goals in mind can help you stay focused on your day-to-day efforts with your finances. Because, over time, small daily habits can add up to something much bigger.

There are so many different financial goals you can set for yourself. Maybe you want to be able to go on a vacation next year (a short-term goal). Perhaps you want to build a six-month emergency fund (a medium-term target). Or maybe you want to be someday able to retire (a long-term goal).

Whatever your goals, setting specific, attainable targets can help you stay on track.

Are you looking for some actionable financial goals? Check out some of my favorite long-term financial goals! 

2. Track Your Spending

Next, it’s impossible to save money if you don’t know how much you are spending. Tracking your spending is a financial game-changer.

So many people think they have a rough sense of their financial situation based on the amount in their bank account.

But here’s something I’ve learned through my finances. The balance in your bank account isn’t that meaningful, because it captures a moment in time, and doesn’t allow you to do any sort of financial planning—more on that in a minute.

Whatever your approach, I want you to start tracking every dollar that you spend. And while that may sound like a lot of work, it is possible to do in less than two minutes per day. 

3. Use a Zero-Based Budget

You may be saying that tracking your finances in just a couple of minutes per day sounds impossible. But it’s not. How? Using a zero-based budget.

What’s a zero-based budget, you ask? It is a system where you take the money that you have and then assign every dollar in your accounts a job. In essence, you are allocating all of your dollars to a list of tasks it must complete.

Why is this so powerful? Zero-based budgeting allows you to assign your income to YOUR financial priorities. So, over time, you’ll be able to start putting your money towards your goals. And, a zero-based budgeting tool allows you to track ALL of your spending against the categories that you set up.

My favorite zero-based budgeting tool, which I also use to track every dollar of my spending, is You Need a Budget (YNAB).

4. Set Up Sinking Funds

Next, I want to talk about a concept called sinking funds. I mentioned earlier that the balance in your checking account is useless because it doesn’t tell you anything about what is going to happen.

Let’s use the example of an insurance bill. My homeowner’s insurance is about $600/year. With my insurance company, I get a discount if I pay annually. But here’s the problem. If I relied just on the balance in my checking account, I’d get my $600 insurance bill and choke. I’d be surprised and struggle to figure out how to pay it.

Sinking funds can take away this surprise factor. All a sinking fund means is that you set aside money every month towards a dedicated purpose. When you incur that expense, it’s no big deal, because you will have already set aside money for that purpose. 

In the case of my insurance bill, if I set aside $50 every month, by the time my bill comes, it’s no problem. 

Sinking funds are the best way to plan for significant expenses like annual subscriptions, holiday gifts, etc. I also use YNAB to track my sinking funds – it works great for this purpose. 

5. Automate Your Savings

The first four ways to save money on a tight budget are all about general financial principles that can help you save money. While they apply very broadly, they can be game-changers for your finances, and that’s why I recommend you start there.

But I also want to dive into some specific money-saving ideas.

The first action item is I want you to automate your savings. When you get paid, I want you to set up your checking account, so a small amount of money is moved automatically to your savings. 

Again, when you get a handle on your finances, your checking account balance becomes less critical. But if you see money in your checking account, you may be tempted to overspend. 

That’s why I want you to move money to savings every month. Even if it’s just $20, or $50, or $100, it is progress. Over time, work to increase the amount that you transfer to savings.

Automating your finances is one of the best things you can do to keep yourself on track. Check out After School Finance’s guide to automating your finances to learn more!

6. Automate Your Investments

Next, similar to automating your savings, you’ll also want to think about how you can automate your investments.

Investing is one of the best creators of wealth. Over time, your investments grow, and the money you’ve made starts to make you more money.

When you’re living on a tight budget, it can seem difficult to set money aside for investments.

One of my favorite ways to get started is with an app called Acorns. The app allows you to invest your spare change. While it isn’t much, over time, it adds up. 

Check out this guide on How to Invest with Little Money to get started with Acorns!

Acorns Disclosure

After School Finance (“Affiliate”) is an affiliate of Acorns Advisers, LLC ’s website (“Acorns”). The Affiliate will receive compensation from Acorns if you enter into an advisory relationship or into a paying subscription for advisory services. You will not be charged any fee or incur any additional costs for being referred to Acorns by the Affiliate. The Affiliate may promote and/or may advertise Acorns’s investment adviser services and may offer independent analysis and reviews of Acorns’ services. Acorns and the Affiliate are not under common ownership or otherwise related entities. Additional information about Acorns is contained in its brochure.

7. Refinance Your Mortgage

Next, with interest rates near record lows, you may want to consider refinancing your mortgage. 

Let’s assume that you have a mortgage that you took out for $200,000 a few years ago, and you’ve now paid that mortgage down to $170,000. When you took out the initial loan, you did a 30-year mortgage at 4.00% interest. This works out to a payment of $955/month. 

Now, let’s assume that you refinance that mortgage into a new 30-year mortgage, with a loan balance of $170,000 and an interest rate of 3.25%. Refinancing would cut your mortgage payment to $740/month. In other words, you would have cut your mortgage payment by $215/month.

While there are pros and cons associated with the refinancing example I’ve outlined above (namely loan closing costs and starting over on a 30-year loan), refinancing is worth considering. 

I recently refinanced my 30-year mortgage into a 20-year mortgage and was able to cut my mortgage interest substantially! Learn if refinancing is right for you, as this is one great way you can boost your free cash flow!

Housing is likely your most significant expense, so it’s a great place to start. 

8. Shop Around Insurance & Pay Annually

Next, another considerable expense is insurance. If you can cut your insurance expenses (without sacrificing coverage), it is worth considering.

That’s why many experts suggest shopping around for insurance. While this isn’t a wrong move, stick with a highly rated insurer. Otherwise, any immediate savings may come back to bite you in the long run.

Also, as I mentioned above, I pay my insurance annually. My insurance company cuts me a break for doing so. If you can be disciplined enough to set aside money for your insurance every month, it’s worth asking your insurance company if they offer discounts if you make larger, infrequent payments. 

9. Cut Transportation Expenses

Next, transportation also tends to be one of the most significant expenses for many people.

Particularly, if you have a car payment, it can eat into your monthly cash flow. Think about ways you can cut your transportation expenses. For example, buying a used car instead of a new car can help you save a ton of money!

10. Negotiate Your Bills

Some expenses in life are hard to avoid. Things like cell phone bills, internet bills, etc. have become just a fact of life.

But being stuck with these bills doesn’t mean there’s nothing you can do about them. As it turns out, it is possible to negotiate lower rates on these sorts of services.

I recently discovered a service that helps to negotiate these bills. It’s an app called Truebill, and they’ll help ensure you’re never paying too much for these sorts of bills.

11. Cut Cable TV & Unused Subscriptions

Next, ever thought about how much you spend on cable TV? Chances are, it’s a lot. If you’re trying to save money on a tight budget, canceling cable TV is one of the easiest ways to save money. 

There are so many great solutions out there like Netflix, Hulu, and more. And, if you don’t want to give up cable TV, consider a streaming TV service instead. While they can be pricey, chances are they cost a lot less than cable.

Also, think about whether you have regular subscriptions you’ve forgotten and for which you continue to pay. Truebill can help you track your subscriptions so that you make sure you’re not paying for things you no longer need or use. 

12. Work on Your Grocery Bills

I am the first to admit that I spend quite a bit of money on groceries. However, there are lots of ways to save money on grocery bills.

One of my favorite ways is an app called Ibotta. Ibotta allows you to earn cashback just for uploading your grocery receipt! You can read my full review of Ibotta here!

Other ideas to save on groceries include:

• Cut back on how much meat you buy – it is shockingly expensive
• Use reusable towels instead of paper towels; when I started paying attention to how much paper towels cost, I was stunned
• Go to the store with a list and stick to it
• Eat before you go to the store, so you’re less tempted to buy more when you’re hungry

13. Check Your Eating & Drinking Out Budget

Next, it’s no surprise that eating out or going out for drinks gets expensive. While I am by no means an advocate of cutting out the things you enjoy, think about how you can work eating out/having drinks into your budget.  

If it’s an area that’s important to you, great! But you may need to find other ways to cut back if this is an important area of spending for you.

Again, use your budget to prioritize!

14. Cut Utility Use

One of my favorite ways to save money on a tight budget is by figuring out how to cut my utility bills. My electric bill is my costliest utility bill, but one way I’ve found to scale it back is by using Arcadia. Arcadia does two things simultaneously. First, it allows me to buy clean energy from renewable sources, and second, Arcadia is always looking for a better rate on my electricity! You can check out this ASF review of Arcadia to learn more.

There are lots of other ways to save money on your utility use, though many of these ideas require upfront investments. Some ideas that I’ve implemented in my own home include:

• Installing energy-efficient appliances
• Using a smart thermostat (like this one) and setting a higher temperature in the summer and a lower temperature in the winter
• Installing LED lightbulbs that use very little energy
• Closing the blinds to keep the heat out in the summer

While there are countless home energy hacks, each one adds up to help you save money over the long run!

15. Use a Cash Back Credit Card

Next, I like to get paid for spending money. The way I do that is by using a credit card that rewards me in some way for spending money.

With credit cards, I pay my bill in full every month, and that’s why these rewards are so valuable. If you think a credit card will cause you to spend more, or you don’t think you’ll pay your bill in full every month, don’t use them.

But when used responsibly, using a credit card can effectively discount everything you buy. Check out my three favorite credit cards for every wallet to find one that’s right for you.

16. Don’t Use Credit Cards to Solve for Shortfalls

Like I said above, don’t use credit cards if you can’t afford to pay the bill in full every month. This also means making sure you’re not using a credit card to cover shortfalls in income.

It is so easy to use a credit card, that getting into trouble doesn’t take a lot of effort. 

This one is simple:  if you’re tempted to overspend and use a credit card to cover the shortfall, don’t. Use cash if credit cards are too big of a temptation. 

17. Find Ways to Boost Your Cash Flow

Finally, learning how to save money on a tight budget often revolves around cutting your expenses. But for my last tip, I want to focus on the other side of the equation:  your income.

One great way to help you along your financial journey is to pick up a side hustle. There are so many ways to make extra cash, and anything extra you make can go back into your pocket to help you reach your financial goals. Here’s my favorite list of side hustles to help spark your creativity.

Over time, this extra cash will add up!

Bonus Tip:  Pay Off Your Debt

Finally, one other way to boost your cash flow is to pay off debt. While not all debt is bad, all different types of debt eat into the amount of free cash that you have at your disposal each month. If you have a loan payment that is $300/month, once you pay that off, you will have an extra $300/month to use as you see fit. Paying off debt is a great way to increase your cash flow and make it easier to save money on a tight budget. 

17 Simple Ways to Save Money on a Tight Budget

While scaling back your spending isn’t always easy, hopefully, these 17 ways to save money on a tight budget give you some ideas to get started!

1. Set Short-Term & Long-Term Goals

2. Track Your Spending

3. Use a Zero-Based Budget

4. Set Up Sinking Funds

5. Automate Your Savings

6. Automate Your Investments

7. Refinance Your Mortgage

8. Shop Around Insurance & Pay Annually

9. Cut Transportation Expenses

10. Negotiate Your Bills

11. Cut Cable TV & Unused Subscriptions

12. Work on Your Grocery Bills

13. Check Your Eating & Drinking Out Budget

14. Cut Utility Use

15. Use a Cash Back Credit Card

16. Don’t Use Credit Cards to Solve for Shortfalls

17. Find Ways to Boost Your Cash Flow

Bonus Tip. Pay Off Your Debt

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