When you have a tight budget, it can be challenging to find extra ways to save money, but it’s always important to allocate at least a small amount for the future, no matter how much income you currently have. Below are six ways you can save money even when working hard to live within a budget:
Change Your TV Service
One of the easiest ways to find money to put into your savings account is to cancel your TV service and switch to a cheaper alternative. Many paid TV service providers raised their prices in 2020. Now it’s very easy to get a wide variety of entertainment options from a streaming service that costs less than $30 a month – although $50 or more may be more likely.
Consider Your Food Bill
Another way to save money is to change how you eat. Perhaps the best thing you can do is stop or significantly reduce dining out. It’s much cheaper to eat leftovers from last night’s dinner than to go out for lunch. The cost of dining out is rising faster than grocery prices. From July 2019 to July 2020, prices for food purchased for home consumption rose by 0.6%, while the cost of dining in restaurants increased by 1.8%.
Reduce Each Category by a Little
When you’re trying to save money, you may have already cut out all the unnecessary items from your budget. The next step might be to save $5 to $10 from each category in your budget and set that amount aside.
Switch to Cash for Your Daily Expenses
While it may not be practical to pay your rent or utility bills in cash, transitioning to cash for other expenses can help you cut spending. Using cash places a stricter limit on your spending and helps you become more aware of your choices. Grocery shopping and entertainment are two major categories to pay cash for. Also, clothing and meals that you eat out infrequently.
Work on Paying Down Your Debt
High-interest debt, like credit cards, can drain your monthly income. You may be surprised by how much money you pay in interest each month if you carry a balance on your credit cards. The average annual percentage rate for credit card accounts estimated to have interest in November 2019 was 16.88%. Taking steps to pay off your credit cards as soon as possible will free up more money in your budget and make it possible for you to do more with your money. If you want to be more comfortable and save, getting rid of your debt is an important step.
Find a Way to Reduce Large Expenses
Take a look at the big-ticket items in your overall budget. Is your car payment too high? Can you find a cheaper place to live that is still nice? Can you move in with roommates to save on rent? These options may be the final steps you take while searching for ways to increase savings, but they can truly help you save a good amount of money on your bills each month. The more you keep the costs of these items low, the easier it will be to stick to your budget.
Frequently Asked Questions (FAQs)
What is an emergency fund and how can I save money for it?
An emergency fund is money that you keep for emergencies only, such as a long-term illness that prevents you from working, or losing your job for any other reason that leaves you without income. Experts recommend setting aside three to six months of living expenses. This might be a long-term project if you’re living on a tight budget, but every little bit saved can help. Make it a habit to set aside at least a small portion of each paycheck into a dedicated account that accrues interest so you have some money as it builds up.
How much
Should I save money each month?
It is recommended that you save at least 20% of your income, but that can be a big challenge if you need every penny to cover your basic expenses. Saving anything, even if it’s a little, is always better than not saving at all.
How can I create a budget to save?
Start with a list of all your bills and expenses. Don’t overlook bills that are due once or twice a year, such as insurance premiums. Calculate everything you spend: the money you put into groceries and entertainment, as well as clothing and fuel for your car. Then subtract that from your income. The difference is the amount you should be aiming to save. You’ll need to cut expenses somewhere if the result is a number less than zero.
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Sources:
Consumer Reports. “Cable TV Prices Are Climbing for 2020.”
Consumer Reports. “Video Streaming Services That Let You Cut Cable TV.”
Netflix. “Choose the Plan That’s Right for You.”
Netflix. “How Can I Watch Netflix on My TV?”
Bureau of Labor Statistics. “Food for Thought: Changes in Consumer Prices for Food at Home and Away From Home.”
Federal Reserve. “Consumer Credit – G.19.”
FINRA. “Start an Emergency Fund.”
TIAA. “How Much Should I Save Each Month?”
Consumer.gov. “Making a Budget.”
Source: https://www.thebalancemoney.com/how-to-save-when-money-is-tight-2386118
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