Have you been struggling financially during the pandemic? 50.3 million Americans were living in poverty in January 2020 before Covid-19 hit the nation. A year on and this figure is expected to have risen by between five to 12 million more, due to the impact of the pandemic.
If your income or earning potential has been affected by the current economic situation, then it may feel impossible to put money aside into savings during this tough time.
Follow these top 10 ways to save money on a tight budget to kickstart your personal finance plan and improve your living situation.
Eliminate unnecessary spending
The first of our money-saving ideas is to eliminate all of your bad personal finance habits. Are you prone to picking up a latte on the way to work? Or hopping out at lunchtime to grab a bagel?
Before you know it, you’re wasting $50 a week on unnecessary spending which is eating into your budget.
If you’re on a low income, then stick to strict money-saving tips such as always taking a packed lunch out with you, using a reusable water bottle and making your coffee at home to take along for the ride.
Cutting your major expenses
As well as identifying unnecessary expenses, you can maximize the opportunity to save by reviewing the largest outgoing payments in your monthly budget. These are usually:
- Mortgage payment
- Car loans
Naturally, you’ll need a roof over your head and possibly transportation to get you from A to B; but there are always ways to reduce these costs, if only temporarily.
If you’re paying a fortune in rent, consider whether it would be better to move to a smaller and cheaper place? You might decide to rent with roommates to save money or even move back in with family for a short while if possible.
If you own a property, then consider renting out a room to bring you an additional stream of income which you can add to your savings.
For car owners, if you live in a household with two or more vehicles, could you consider selling one to bring in some cash and cut down on your monthly payments?
Explore the option of carpooling, taking public transport or cycling which are all kinder on the wallet, and the environment too!
Working on your debt
Top money-saving tips should always explore what to do with the extra dollars you’ve made once you’ve freed up some money in your budget.
In this case, you can use these extra dollars to knock down any debt you have accumulated.
You may have debt spread out across various credit cards, auto loans, student loans or personal loan products.
Where possible, try to move all of your debt onto a 0% balance transfer product, where you’ll pay zero interest for a fixed period of a few months or more.
If you’re not able to do this, then just identify which of your credit providers is charging the greatest level of interest and work on clearing this debt first.
Although it can be tricky to eliminate debt when you’re on a tight budget, by focusing on this goal, you’re freeing up future cashflow which you can add to your savings pot.
Declutter your possessions
If you’re guilty of hoarding, then this will be one of the easiest top 10 ways to save money on a tight budget in our list.
From old record collections to vintage fashion garments, by decluttering your possessions you can then advertise on eBay or Facebook Marketplace to find a new home for them, whilst making a few bucks in the process.
If you have any craft or DIY skills, then you might consider upcycling some of your old furniture to gain a higher price.
It can be worth checking out local garage sales or thrift stores for low-priced items which you can easily upgrade and flip for a tidy profit.
Reduce your monthly subscriptions
How much are you spending on monthly subscriptions? They may not seem like much individually, but they quickly add up.
The subscription economy has been enjoying a boom during the Covid-19 pandemic, which is the perfect setting for this type of business model. The market is estimated to be worth $240 billion globally by 2022, and it’s easy to see why.
As we’re less able to visit entertainment venues, Americans have been relying on streaming services for games, videos and music to keep occupied at home.
Some have enjoyed the arrival of regular letterbox subscription parcels containing everything from recipe kits through to coffee, alcohol and art supplies.
If you’re on a budget though, these signups of $5 here and $20 there can quickly make a dent in your budget.
Look for recurring payments in your bank statements and work out which subscriptions you could cancel. Try making simple swaps such as listening to free podcasts or watching YouTube instead of paying for Netflix or Hulu.
Freelancing on the side
If you have spare time outside of your regular work or college studies, then put those hours to good use by making a little extra cash to put by for a rainy day! Two million Americans have started freelancing during the pandemic – that’s 36% more than usual, and you could be one of them!
Depending on your individual skills and experience, you could begin by taking on some freelance projects as a graphic designer, copy designer, proofreader, web programmer or transcriber.
All you’ll need to get started is an internet connection, a laptop and a profile on a popular freelance platform such as Upwork or Fiverr.
If online work isn’t your bag, how about becoming an Uber or Lyft driver, fulfilling food deliveries or starting your own side gig as a handyman or gardener?
Take advantage of free exercise
How much are you spending on a gym membership? The average cost is a whopping $58 per month,
but this varies dramatically depending on where you’re based, with gyms in NYC costing as much as $134.50 a month for membership.
However affordable or expensive your gym may be, any price is too high if you’re not using it regularly enough. Instead of shelling out for this unnecessary cost, why not look into ways you can keep fit and trim without costing a penny?
So long as you have a pair of sneakers, you can go running, follow bodyweight workouts on YouTube or practise some yoga from the comfort of your home.
Whether you want to train for a half marathon or perfect a 5-minute plank, there’s no reason this should cost you a cent.
Pay yourself first
Do you ever experience that ‘now you see it, now you don’t’ moment on payday as the money arrives into your account and then quickly vanishes as you pay your bills? If this scenario is
familiar to you, then don’t forget that one of the payments to make should be to yourself.
By setting aside your savings as soon as they come in, you’ll be less likely to spend the money needlessly.
To make this less of a decision, you can set up the payment to be automated so you don’t have to go through the mental struggle of whether you can afford to save this month.
Could ditching meat be the answer to your budgeting challenge?
Veganuary has been popular since its launch in 2014 and has inspired many former carnivores to switch to plant-based eating for at least the month of January.
This is done in a bid to become healthier, lose weight and adopt a more ethical approach to eating.
One lesser-known advantage of becoming vegan is that you can save money by removing the cost of meat, eggs, seafood and dairy products from your grocery bill.
Whilst some vegan substitutes may be expensive, there are plenty of ways to save money, including:
- Shopping for organic fruit and veg at farmers markets
- Growing your own at home
- Buying bulk rice, pasta and beans from your grocers or wholesaler.
It’s easy to be vegan on a budget, and you can use the money you would have spent on meat to bulk up your savings account.
Add categories to your budget
As we reach the end of our list, the final of our 10 ways to save money on a tight budget is to create spending categories. These might include:
- Utility bills
- Miscellaneous costs, personal to your individual circumstances.
Try to make cuts from each category, whether that be giving up cookies from your grocery bill to turning your thermostat down to save a bit extra on your heating.
Getting started on your 10 ways to save money on a tight budget
Now that you have plenty of money-saving tips and ideas, it’s time to draw up a plan and put
some of these hacks into action. As well as these top 10 ways to save money on
a tight budget, The Finance Hub offers an extensive collection of personal finance and budgeting articles. Check out our blog today.