How to save money fast on a low income: 5 steps to accumulating money

how to save money on a low income

In this post we find out how to save money fast on a low income. You'll discover multiple ways to begin accumulating money, and a simple 5 step process to make things much easier.

Saving money can be hard at the best of times, but when you're on a low income it can feel almost impossible. Living paycheck-to-paycheck really isn't fun, and you could end up in serious financial trouble if you're hit with a big bill, or if you loose your job.

According to research, more than 61% of people wouldn't have enough money saved to cover a $1000 emergency. Most of these people said that they would result to borrowing money if such an emergency was to happen.

This means that most people would put themselves into debt, and wind up paying even more money in the long run, due to interest on loans and credit cards.

So what's the answer? 

You have two options:

  1. Save more. This should be possible, even on a low income!
  2. Earn more. If your living expenses outweigh your earnings, this will be the only option.

We'll look at both of these options, and show you the best ways to begin accumulating money one step at a time.

How to save money on a low income

It may surprise you, but saving money can be just as hard for people earning higher incomes. You see, it's not always the amount of money that you earn that prevents you saving, it's more often a case of bad spending habits.

You'd be surprised at how many people I know who earn higher incomes but still have this problem. Some earn over $400,000 per year, and then they go and blow $380,000 of it on a bunch of random crap.

Some of these people even live paycheck-to-paycheck because they rent a huge house in the hills, drive around in a Ferrari, and take multiple expensive vacations throughout the year, just so they can post pictures and show off to their Facebook friends.

On the other hand, I also know plenty of people who only earn $50,000 per year, but they're able to save $30,000 of it. This means they're better off than people earning 10 or even 20 times the amount they earn. So let's get to tip number 1 to find out how you can also save money like this.

1. Live like you're broke

So many people have been able to save enough money to make themselves rich, simply by living frugally. By this I mean cutting out any expenses that aren't entirely necessary.

This may mean moving out of your 3 bed rented apartment, into a one or two bed apartment in order to cut down the amount you spend on rent. Or maybe even buying cheap clothes that don't have expensive brand names all over them.

Here's a list of the top ways to live frugally without looking like a complete cheapskate:

  • saving money fast on low incomeEat cheaper. The average American household spends about $3,000 per year dining out, so stop eating out immediately. Restaurants need to make a profit, so they will charge more than 3 times what the same meal would cost if you prepared it yourself at home!
  • Downsize your home. By downsizing your home you could save on multiple things including rent or mortgage payments, and the amount of gas and electric you use.
  • Line dry your clothes. Dryers use a ton of energy, and this can add up to hundreds of dollars per year. Wait for nice weather to do your washing so you can hang it on the line to dry, or use a clothes horse to dry it indoors.
  • Save on your shopping. Prepared meals, processed foods, and lean meats can add a lot to your shopping bill. Look for supermarkets own brands foods, and no frills labels. Buy tinned beans, rice, and things that won't go bad in a few days.
  • Buy used. Whether you need a new computer, phone, sofa, or pushbike, anything you need can be bought second hand. Anything that's bought brand new will instantly depreciate in value, so always buy used to avoid loosing money.
  • Buy your kids used clothes. save money on lower incomesIf you have kids then you'll know how quick they outgrow clothes. This is why there are loads of clothes bundles that you can buy very cheap on eBay, or Facebook marketplace. These clothes are often as good as new, I know because I've bought lots of clothes bundles for my kids, so why buy new?
  • Use a pushbike. Using a bike instead of driving everywhere can save you a lot of money. If you live close to your workplace then use it to get to work, and you could even use it to get to the shops. When I stopped using my car for unnecessary trips I saved over $500 per year!
  • Don't keep pets. The first-year cost of owning a dog is $1,270, and for a cat it's $1,070. They then cost around $500 each additional year! If you're already struggling to get by, having a pet simply isn't an option.

Everyone can save money with the tips suggested above, but these aren't the only ways that you can save. So let's get to tip number 2, to find out the next method.

2. Stop expensive habits


Shopping can get expensive at the best of times, but when it's habitual you're setting yourself up for financial problems.

I know many families who go into town every weekend to walk around the shops, and they never leave without making a purchase.

One of these families are pretty close to me, and I can tell you that they probably waste thousands of dollars per year on absolute rubbish.

I often ask what they need some of these items for, and they'll reply with – "Nothing yet, but I might need it one day it." Or, "It was cheap so I bought it."

This is a terrible habit, and if you do this then you could save hundreds, maybe even thousands of dollars per year if you stop.

How to stop

Window shop

Studies show that shopping releases dopamine that gives you a feeling of happiness and well being. But it's also been shown that the dopamine hit doesn't come from buying the item, it actually comes from the anticipation of buying it.

So if you enjoy looking at nice items, either at the shops, or on the internet, start by window shopping instead of going straight ahead and buying the item. This will give you all of the same enjoyment as shopping, you'll still get the dopamine hit, and you'll save money at the same time.

Take the cash instead

save money fast on a low income

Before buying something, ask yourself how you'll feel when you get back home, and if you would rather just have the cash instead.

Sometimes we can get so fixated on buying an item, that we forget how much it is really costing us. For example, if you're earning $100 per day, and an item costs you $200, remind yourself that you're about to throw away 2 days work! is it really worth it?


It's easy to see how much you're wasting on smoking, just look at the price of a pack, they're ridiculously expensive. And what do you get from it? Absolutely nothing; except maybe a disease!

If you smoke then work on giving up as soon as possible, you'll quickly see the financial benefits, as well as improved health.


Alcohol is a massive industry. The average American spends about 1 percent of their gross annual income on alcohol. That works out to about $565 a year.

That sounds like a lot, but when you think of this over a longer time period you'll be really shocked. So on average you're spending a whopping $22,600 over a 40-year period.

If you invested this money instead of spending it on alcohol, at 7% interest a single years worth of alcohol at $565 would turn into $9,215.95 if left to grow for 40 years! Doesn't this sound more appealing? More on investing later!

Throwing away good things

General items

Throwing away things you don't need anymore is basically throwing away money, as people will always buy them. This could be anything from old clothes, toys, phones, or tools.

Whenever I take my grass cuttings to the local recycling centre I see so many perfectly good items simply thrown in the skips. All you need to do is list them on eBay or Facebook marketplace, and you can easily turn the item into cash.


Cooking more than you need is a big reason for food waste. If you find yourself doing this then put it in the fridge and eat it later, or even the day after.

Another reason for food waste is buying food that doesn't keep for long. If you know your vegetables will only last 4 days before they start to smell funny, then be sure to only buy the amount you can eat in 4 days. If you do buy too many then freeze them so they'll keep longer, or just buy frozen veg in the first place.


Don't throw receipts out! Remember how important they are at tax time. If you can claim expenses on your receipts then keep them all safe in a drawer, and remember to claim for them.

Failing to do this, or loosing receipts could cost you hundreds, or even thousands of dollars, so stop throwing them out, or leaving them in random places where you'll forget about them.

3. Make the most of earning interest

By putting all of the above tips into action you should be able to start accumulating some money. When you start to see your bank balance grow, don't just let it sit there, put it to work for you.

There are many ways that your money can go to work for you, so that it will grow and increase over time. Here's two of my favourites.

  1. High interest bank accounts
  2. Investing

High interest bank accounts

High interest bank accounts aren't all that great, and the best rates you'll be looking at are about 2.5%. You'll want to keep some money in the bank at all times, so although the rates aren't the best, you might as well make the most of the interest you can get.


There are multiple ways that you can invest your money, and some of the highest rates are found in real estate, and the stock market.

I wrote a whole post on making big money in the stock market HERE, and you can start investing with many investment brokers for just $500.

You'll be looking at 6-8% interest when you invest in a good index fund, with dividends paid quarterly. And when you reinvest the dividends you earn, your investments will grow even faster.

This is probably the best place that your money can be invested, and there's potential to make a lot of money if you invest for the long term.

Invest in a 401K

A 401k is basically a retirement savings plan that you and your employer can pay into. It gives you a chance to get a little free money from your employer, while contributing part of your salary or wages tax free.

Your employer will offer to match the amount you're paying into the plan, but only up to a certain percentage.

So for example – If you're earning $100,000 per year, your employer may offer to match you up to 2%. This means that if you pay in $2000 (2% of 100,000), your employer will match that, and also contribute $2000 to your plan. You can pay in more than this, but if your employer has only offered 2%, they will stop at that.

You won't be taxed on your contributions until you withdraw the money at retirement. This means more money will be saved, and by compounding over time, your investment will grow faster.

Unfortunately you will be taxed at 25% when you withdraw the money at retirement (59.5 years old or over). There's also a limit set by the IRS, meaning you cannot contribute more than $19,000 per year to your 401K.

4. Get out of debt

If you want to save money fast, it's important to clear any debt as soon as possible. Debt will really hold you back, so once it's paid off, never use loans again unless it's absolutely essential.

Start by concentrating on paying off the debts that are costing you the most. These will be high

save money debt

interest rate personal loans, credit cards, and higher purchase loans.

Use the tips covered in steps one and two above to help you clear the debt, you can also call each company to try and negotiate a lower interest rate.

Where to start

  • Find out how much you owe. Most people with large amounts of debt don't even know exactly how much they owe. This usually leads to them only making the minimum payment on each loan every month, meaning it takes even longer to clear. It's important to get exact numbers so you know what you're working towards, and pay off as much as possible each month.
  • Find out what works for you. There are various methods you can use to speed things up. If you can't afford to pay more than the minimum on every loan, try the debt snowball method. This involves making the minimum payment on all of your debts, but increasing the amount on the loan with the lowest balance. When the lowest debt is paid off, move onto the second lowest, and so on.
5. Start a side hustle

If you're on a very low income then you may still find that you're struggling to save enough money, especially if you have a lot of debt. In this case the only option is to earn more.

There are so many ways that you can increase you income, from negotiating your salary, to starting your own micro-business.

If you find that you have some spare time after work, you can easily make some extra cash, and there are 21 ways that you can start with in THIS POST.

Another great way to make extra money is by starting an online business. Check out THIS POST for 10 top ideas you can use to start making money online today.

Start saving money now!

Saving money on a low income will not be easy, but given time money will begin to accumulate in your bank. It's really all about prioritizing your spending, and putting your "needs" before your "wants."

When money does begin to accumulate, it's important to resist the temptation to start spending again. Many people are what I like to call spendaholics. This means that if there is money available, it has to be spent, and they'll always find something to spend it on.

If you're a spendaholic, a good way to break this terrible habit is by moving your money into a separate account. Take it straight out of your bank account and put it into a savings account, or invest it into a good index fund. This way your money will grow, and it will be out of sight, and hopefully out of mind.

I hope this post has given you lots of new saving ideas, and I'm sure that if you start implementing these strategies that you'll soon begin to see results.

Good luck with saving lots of money!