How to Save when Money is Tight

Not having any savings in the bank is an even bigger danger for people with lower incomes and poor cash flow than it is for those more fortunate. Unfortunately, with little income and poor cash flow, it is most difficult to save money.

There are two ways to generate money to put into savings: you can earn more or you can spend less. Earning more is obvious, though not always easy: get a second job, freelance, do odd jobs. The key is not to spend more simply because you are making more. There is a temptation to spend the difference. You must not. You are living on your current income now, you can live on that even if you have more money in your life.

Sometimes this isn’t possible, though. If you’re already working 60 hours a week or you have small children at home, working more may not be an option. Telling you to spend less when you’re already living on very little seems almost cruel, but it is the ONLY way you will get to a more secure financial place.

Eat less meat. Serve rice and beans, soup and salad, tuna sandwiches, anything cheap for a few weeks and put the difference in the bank.

Skip a few trips out and stay home. You may be able to save a tank of gas and put it in the bank.

Bank all bonuses, tax refunds, gifts, etc.

Speaking of tax refunds, if you’re getting one you need to change your tax forms. Get more money in each paycheck and again, don’t spend it.