Man looking at notepad calculating budget

How to save money on a tight budget

Saving money on a tight budget is not only possible, it’s imperative.

Here are eight ways to save money when money is tight:

  1. Shop smarter.
  2. Keep the change.
  3. Pay yourself first.
  4. Save with purpose.
  5. Make it automatic.
  6. Stop using credit cards.
  7. Create a budget.
  8. Stay committed.

One unexpected expense can have a huge impact when money is tight. Finding a way to start saving money so that unexpected expenses aren’t so devastating may not be easy.

But shifting your thought patterns can yield long-term results. Being a “saver” as opposed to a “spender” may not be natural to most people, but it can be developed through practice.

Here’s a closer look at eight ways to save money on a tight budget.

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Shop smarter

Man shopping in a grocery store
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Stop buying things without shopping around for the best price. Make a commitment to comparison shop for essentials and look for coupons and sales online or in your local newspaper. Then, buy the lowest-priced items.

Don’t stop there. Take the difference of the amount you paid and the amount you would normally spend on the item and put that money into a savings account. Even if it’s just a few dollars per shopping trip, those small sums will add up.

Keep the change

Keep the change
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It seems old-fashioned, but take the loose change out of your pocket, your purse or your car tray, and save it in a jar. Look for ways to add more money to your jar. For instance, every time you withdraw cash from the ATM, put 10 percent of what you withdraw into your cookie jar savings.

Every month or quarter, count the money you’ve accumulated in your jar and add it to your savings account.

Pay yourself first

Woman looking at bank statement

If your strategy is to wait until everything else is paid and save whatever is left over, reconsider your process.

Consider putting most of your paycheck into your savings account and making a recurring weekly transfer to cover necessary expenses. Then decide whether any excess money should remain in the account to cover any upcoming expenses or be dedicated as extra savings.

Save with purpose

Woman canoeing by a beach
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It may be difficult to put money back simply for general savings, so it’s important to have a clear reason for your savings.

The purpose may be to have an emergency fund, a vacation fund or something else, but knowing the reason you’re saving will make it easier to avoid using the money on something else.

Make it automatic

Automated savings

It’s much easier to save when you don’t have to rely on yourself to transfer funds into your savings account. Have your employer divide your paycheck deposit into a checking account and a savings account.

If you’re self-employed, schedule automatic transfers from your main checking account to your purpose-based savings accounts on a recurring basis.

Stop using credit cards

Stack of credit cards

Rather than using a credit card to fund living expenses that are outside of your income, focus on getting rid of credit card debt and then switch to paying in cash only.

If your extra cash each month is spent on making credit card payments, you’ll never be able to save and get closer to your financial goals.

Create a budget

Two women looking over a budget
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While setting a budget can be tough, it’s the best way to become a disciplined saver. Start by determining your fixed expenses, and then look at your needs for other expenses — food, gas, clothing, entertainment, etc. Determine a number for weekly expenses and challenge yourself to stay within that budget.

Set a specific amount, such as $100 a week, and take that out of the bank in cash at the beginning of the week. Use that money for the week and try not to allow yourself to dip into other funds. Then, try to go down to $90 or $80 per week to see what you really need.

Once you’ve grown accustomed to living on your budget, you’ll open up more money for saving toward various goals.

Stay committed

Two people looking over bank statements

Many experts recommend that you save 20 percent of your earnings each year, but that’s not easy to do.

Often when people commit to an ambitious savings level, something happens in the first few months that will discourage saving — for example, a child needs braces or the roof needs repairs.

But if you deal with the major expense and continue on the savings track, you’re more prepared to deal with future expenses that may arise.

After a year of forcing yourself to save and receiving the self-esteem that comes with it, most people will be committed to the lifestyle of saving and often will find ways to save even more.