12 ways to save money on a tight budget

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Being on a tight budget means you’ll need to stretch your money to save. The following tips should help.

1. Make small changes to your budget across all categories

Being on a tight budget means that every spending decision adds up. But you can start saving money by making small changes. For instance making lunch instead of getting carryout or eating out can add up over time. The same with making your own coffee rather than buying it already made. Some other changes include:

  • Turning lights off when you’re not using them.
  • Cutting the cord on cable and opting for cheaper streaming services.
  • Running major appliances such as the dishwasher, washer and dryer during off-peak hours — usually early in the morning and later at night.

2. Shop around for insurance rates

It’s smart to compare prices on auto and homeowners insurance every few years. An accident-free discount or other loyalty discounts may help you save by staying with your current company. But other times you’ll save more by switching or merging both auto and homeowners insurance with the same company.

Also double-check to make sure you’re receiving any discounts you’re entitled to, such as discounts for insuring multiple cars or being a safe driver.

Television or internet providers are other types of services you should compare prices on every few years, too.

3. Get a bank bonus

Some banks offer a bonus for opening a new account and meeting a few basic requirements like setting up direct deposit or maintaining a minimum balance. At the moment, some of the best bank bonus offers let you earn around $500 or more within a span of just a few months.

Read the fine print before signing up for a bonus so you’ll know how to earn the bonus and how long you need to keep your account open. Also watch out for minimum balance requirements that might make it difficult to open or maintain your account, as well as account fees that could eat away at your bonus amount.

4. Automate your savings

It’s easy to forget to save. That’s why automating the process is the best way to save money. Have your employer deposit part of your paycheck into a high-yield savings account. Having this money in a savings account will separate it from money you’re using to pay bills. Assuming you compare rates, it will also be earning a competitive yield.

5. Use a budgeting or fintech app

A money saving app could help you manage your money. For example, Digit automatically examines your accounts and moves money for you to help boost your savings. Also consider Chime, a banking app that makes it easy to save your spare change. Check out Bankrate’s list of some of the best budgeting apps.

You can also sign up for Bankrate’s myMoney tool to categorize your spending transactions, identify ways to cut back and improve your financial health.

6. Take advantage of pretax savings options

Set up automatic contributions to an employee-sponsored retirement plan, such as a 401(k). 401(k) contributions are pretax contributions and will lower your taxable income.

Some companies even match a certain amount of your 401(k) contributions. Contribute at least up to the amount your company matches. This is essentially investing free money.

7. Take stock of food spending

People are starting to dine out more as restaurants increase capacity, and dining out can be expensive. Make a point to shop for your groceries and make your own meals as often as possible to save money.

Food can be one of the most expensive categories of budgeting, but it’s easy to control your spending with some planning and discipline. Find out how you can save money on your groceries.

8. Take advantage of student loan forbearance

Federal student loan payments won’t resume until Sept. 30 at the earliest. During this time, it’s important to make sure this money is being saved or put toward high-interest debt.

You lived without this money before the pandemic if you were paying your loans, so make sure you’re sticking to a tight budget and not spending this money.

9. Watch out for new shopping habits

People are traveling and visiting stores again this summer. Make sure you’re keeping any good saving habits that you used during the pandemic and avoid what’s being called revenge spending.

You may have done more online shopping during the pandemic. Online shopping can make comparing prices easy. Seeing your total bill in your cart before checking out can also help you know exactly how much you’re spending.

10. Refinance your mortgage

Mortgage rates remain near historic lows, with the average 30-year fixed mortgage rate in the low 3 percent range, according to Bankrate data.

Refinancing is an opportunity for some people on a tight budget to save money.

Here’s an example: A person with 25 years left on a mortgage with a balance of $250,000 and an interest rate of 4.5 percent pays around $1,390 in principal and interest each month, owing a total of $416,874 until the loan is paid off. Refinancing into a new 25-year mortgage at 3.25 percent lowers the principal and interest payment to around $1,218 per month, and the homeowner would owe only $365,487, assuming they take the full term to pay off the loan. That’s a savings of around $172 per month, which could help someone get by on a tight budget without affecting the home’s payoff timeline.

11. Find a way to save on rent

If you’re a renter, moving to a smaller place or a different area could lead to significant savings. Perhaps you changed jobs during the pandemic or you don’t have to commute everyday. That could change where you have to live, and could have a significant impact on your budget since housing makes up a large portion of most budgets.

12. Check your paycheck withholdings

A large tax refund isn’t necessarily a good thing. Receiving a tax refund means you overpaid on your taxes. Having that money during the year could help you pay down high-interest debt or build an emergency fund.

Being on a tight budget means you need access to your money and likely can’t wait months to get a tax refund. Check with your CPA or use the IRS withholding calculator to see whether changing your tax withholdings makes sense for you.

What experts say about saving money on a tight budget

Here’s what financial experts say about stretching your money.

Greg McBride, CFA, Bankrate chief financial analyst: “Trying to save when there is little or nothing consistently left over is challenging, so flip that around and do the saving first. Set up a direct deposit from your paycheck into a dedicated savings account and contribute to your employer-sponsored retirement plan via payroll deduction. While saying ‘you won’t miss what you don’t see’ sounds cliché, it’s true. Anybody I’ve ever counseled to do this that followed through came back and sang the praises of how well it works.”

Malik S. Lee, certified financial planner, managing principal and founder of Felton & Peel Wealth Management: “I think there are two things you must do to save while on a tight budget. One, you need to stay on budget and eliminate impulse purchases. Two, you need to utilize pretax employee benefits. Saving to vehicles like 401(k)s and HSAs pretax via your paycheck allow you to hit your savings goals while keeping more in your pocket versus saving after-tax.”

Malcolm Ethridge, certified financial planner, executive vice president and fiduciary financial advisor with CIC Wealth Management: “People who rent an apartment or house, they may not know it’s possible to negotiate their next lease when the landlord makes an offer to renew. This is especially true for those who rent from an individual or a smaller property manager. With so many apartment vacancies right now due to the pandemic, landlords are more flexible than they’ve ever been when it comes to keeping current tenants happy. It’s also a good idea to try and lock in a longer lease now if they plan to be there for a while. And the landlord will likely be even more flexible on rate if they know they have you locked in for 24 or 36 months instead of 12.”

Written by
Matthew Goldberg
Consumer banking reporter
Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance.
Edited by
Senior editorial director