18 Ways To Save Money On A Tight Budget

Finding ways to budget and save money seems harder every year for Americans. Bankrate’s Annual Emergency Savings Report revealed that 59 percent of Americans were uncomfortable with their level of emergency savings. Skyrocketing costs was the big culprit holding people back from saving more, as 63 percent said inflation caused them to save less for unexpected expenses.

There is no “one size fits all” solution to increase your savings while living on a tight budget. In most cases, it takes dedicated effort and a combination of approaches. If you’re wondering how to save money, these 18 tips provide actionable strategies to trim costs and grow your savings, even on a limited income.

1. Focus on small changes in various budget categories 

Being on a tight budget means every spending decision adds up, but you can start saving money by making small changes. For example, the money saved by making lunch instead of buying carryout or eating out can easily add up. 

Some other potential changes include:

• Turn lights off when you’re not using them.
• Cancel a streaming service (or two). Some streaming services still have shared or family plans so you can split the cost between multiple people.
• Use apps to help you save on gas. GasBuddy, Gas Guru and Google Maps can help you save at the pump by locating the best prices near you.
• Avoid impulse purchases. One way to do this is to implement the 30-day savings rule. Whenever you’re tempted to make an impulse purchase, wait 30 days before deciding. Use the time to evaluate whether you need the item and if it’s worth sacrificing your savings goals.

2. Keep a budget

To take advantage of the right savings opportunities, you first need to understand where your money is going. Knowing how to budget money can help you plan your spending and assess what money you have to spend.

Looking back at your previous month’s spending can help you decide how much you can budget for the next month in different categories. Making a budget can reveal areas where you didn’t realize you were spending a lot of money.

A budget might also help you catch recurring expenses for services you’re not using. Consider canceling a monthly gym membership if you never go or other subscriptions you no longer use.

One way to budget is to use the 50/30/20 rule, which means allocating 50 percent of your income to essential expenses. The remaining half — known as discretionary income — goes to things you want (30 percent) and savings or debt repayment (20 percent).

Many people use budgeting apps to simplify spending tracking. Most budgeting apps have a free basic plan, so you can try them out before deciding on a paid monthly or annual version.

3. Take stock of food spending

Food can be one of the most expensive categories in your budget, but preparing food (and coffee) at home is one way to reduce spending. You can also refocus on the choices you make at the grocery store.

One way to save money on groceries is to make a meal plan before you shop so that you don’t spend money on food you don’t need. Use your phone’s calculator to add up the total as you shop to keep you from going over your budget.

Buying items in bulk, opting for generic brands over name brands and joining your grocery store’s loyalty program are all realistic ways to save money. 

4. Use cash-back apps

Cash-back apps help users save money by offering rewards for everyday purchases. For instance, Ibotta allows users to earn cash back on groceries by adding offers to their lists and then uploading their receipts after shopping.

Rakuten provides cash back for online shopping at thousands of popular retailers, with payments issued via check or PayPal. Upside is great for cash back on gas and convenience store purchases, while Dosh focuses on cash back for shopping and travel-related purchases.

5. Get a bank bonus

Some banks offer a bonus for opening a new account and meeting a few requirements like setting up direct deposit or maintaining a minimum balance. Some of the best bank bonus offers let you earn a few hundred dollars or more within a few months.

Read the fine print before signing up for an account to earn a bonus. While some bank bonuses require, say, a few hundred dollars in deposits to earn the bonus, others require many thousands. Watch out for requirements that might make it difficult to open or maintain your account, as well as any account fees that could eat away at your bonus amount.

6. Avoid bank fees

Bank fees can quietly eat into your balance if you’re not careful. The average overdraft fee in the U.S. was $27.08 as of 2024, according to Bankrate’s Checking Account Survey, and using an out-of-network ATM cost $4.77 per transaction.

You could save money by being mindful of common bank charges. Keep your hard-earned money from going toward unnecessary fees with the following small financial adjustments:

• Set up mobile bank alerts: Many mobile banking apps allow you to receive alerts when your account balance is low or when an upcoming payment is scheduled. This helps you avoid unexpected overdraft fees.
• Stick to in-network ATMs: Use your bank’s mobile app or website to find nearby in-network ATMs or opt for cash back at grocery stores to avoid ATM fees altogether. Alternatively, opt for a bank that offers reimbursement for ATM fees, like Ally Bank.
• Watch out for other fees: Monthly maintenance, money transfer and minimum balance fees can add up. Consider switching to a no-fee checking account, many of which are available at online banks.

7. Earn interest on your checking account

Look for an interest checking account (also known as an interest-bearing checking account) that doesn’t have any minimum balance requirements or monthly service fees. For a competitive yield, you might have to have a minimum direct deposit, make a certain number of debit card transactions or meet other requirements.

8. Automate your savings into a high-yield savings account

It’s easy to forget to save. That’s why automating the process is the best way to save money.

“Trying to save when there is little or nothing consistently left over is challenging, so flip that around and do the saving first,” says Greg McBride, CFA, Bankrate’s chief financial analyst.

McBride recommends setting up a direct paycheck deposit into a high-yield savings account. “While saying ‘you won’t miss what you don’t see’ sounds cliché, it’s true,” says McBride. “Anybody I’ve ever counseled to do this that followed through came back and sang the praises of how well it works.”

Many savings accounts and mobile banking apps have automatic savings features.

9. 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. Double-check that you’re receiving any discounts you’re entitled to, such as discounts for insuring multiple cars or being a safe driver.

Sometimes, however, you’ll save more by switching or merging auto and homeowners insurance with the same company.

10. Find cheaper ways to travel

If you’re planning a trip, establish a budget ahead of time to avoid splurging.

You may be able to save money on air travel, for example, by booking a red-eye flight or flying with a budget airline.

You can also save by staying at a budget-oriented hotel or an Airbnb, picking up some groceries instead of eating out for every meal and using a credit card that doesn’t charge foreign transaction fees.

11. Save on housing

Since housing expenses are often the largest category in a household’s budget, finding ways to save on your home can have a massive impact on your finances.

If you rent and are unable to downsize to a smaller place or move to a less-costly area, you could try negotiating your rent or lease term to save money.

“People who rent an apartment or house may not know it’s possible to negotiate their next lease when the landlord makes an offer to renew,” says Malcolm Ethridge, CFP®, Managing Partner at Capital Area Planning Group. “This is especially true for those who rent from an individual or a smaller property manager.”

Ethridge points out that it’s a good idea to try and lock in a longer lease if you plan to be there for a while. “The landlord will likely be even more flexible on rates if they know they have you locked in for 24 or 36 months instead of 12,” he explains.

If you own a home, refinancing your mortgage could help you save thousands of dollars over the life of your loan. This strategy might be worth considering if you can reduce your mortgage interest rate by 0.5 percent or more. 

Don’t forget to weigh additional costs, like closing costs and origination fees, when weighing your options. You can use Bankrate’s mortgage refinance calculator to see how much you could save.

12. Check your paycheck withholdings

Getting a tax refund each year may feel like found money, but the truth is, you’re overpaying the amount you owe in state or federal taxes. That money could be put to better use during the year, by paying down high-interest debt, building an emergency fund or adding to a rainy day fund. Consider adjusting your withholdings if you tend to get a big tax refund at the end of the year.

13. Use those three-payday months to save more

Generally, for those who receive a paycheck every two weeks, there are two months of the year where you’ll receive a third paycheck in a month. Because you’re likely used to living on two paychecks a month, consider allocating some of the money from the third paycheck toward paying off high-interest credit card debt and growing an emergency fund.

14. Take advantage of pre-tax savings options

Set up automatic contributions to your employer-sponsored retirement plan, such as a 401(k), which uses pre-tax dollars to fund your retirement and can lower your taxable income. What’s more, some employers offer to match employee 401(k) contributions, providing essentially free money to help build your retirement savings. Employer-match programs typically require workers to contribute a minimum amount to qualify.

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

15. Reduce your energy bill

You can lower your utility bills by making a few energy-efficient changes. According to the U.S. Department of Energy, reducing your energy consumption with energy-efficient upgrades could save you $200 to $400 each year. Here are a few ideas:

• Switch to LED light bulbs: LEDs use 75 percent less energy than incandescent bulbs.
• Unplug electronics: Devices like TVs and microwaves consume energy even when turned off. Unplug them when not in use.
• Adjust your thermostat: Lowering the temperature by just a few degrees in winter could reduce your heating costs by up to 10 percent.
• Seal leaks: Add spray foam or weather stripping around drafty windows, doors and fireplaces to stop warm air from leaking in during the summer or cold air from entering during the winter.

16. Cancel unnecessary subscriptions

With a multitude of streaming platforms, e-commerce companies and even food-based businesses turning toward subscription models, monthly charges can add up fast. Streaming services alone cost U.S. households an average of about $42 each month.

To combat these costs, take stock of your subscriptions and decide which ones you need. When possible, consider sharing accounts with family members or roommates to reduce costs. Some services offer premium plans that allow multiple households to use one account, letting you split the cost. Similarly, you can bundle certain streaming services. For example, bundling Disney+, Hulu and ESPN+ can save you $15 per month compared to paying for these three services separately. Finally, consider using a credit card that offers entertainment rewards.

Audit any other subscriptions, like gym memberships or meal prep services, and cancel anything you don’t actually use. You can also opt for lower-cost alternatives, like working out at home or using a free meal-planning app. 

17. Set up automatic bill payments

Late fees can add up quickly, especially if you’re juggling multiple bills. According to the Consumer Financial Protection Bureau, U.S. households collectively spend over $14 billion each year on credit card late fees alone.

By setting up automatic payments, or auto-pay, you can avoid late fees and may even qualify for discounts. For instance, some student loan servicers offer a 0.25 percent interest rate reduction when you enroll in autopay. Car insurance, internet and cell phone companies may also offer monthly discounts for auto-pay.

To avoid overdrawing your account, monitor your balance regularly or use an account that doesn’t charge overdraft fees.

18. Tackle your debts

Paying off high-interest debt, such as credit cards, can free up more of your income for savings. According to a 2024 Bankrate Credit Card Debt Report, 36 percent of U.S. consumers have more credit card debt than emergency savings.

Consider using the snowball or avalanche method to pay down debts. If you’ve got a good credit score, look into doing a balance transfer to a credit card that won’t charge you interest for a period of time. 

By strategically paying off your debts, you may reduce the amount of interest you pay over time and free up more cash to put toward savings.

The bottom line

By learning how to budget and save money, you can make minor changes that accumulate over time. Even small adjustments to your daily habits can significantly improve your financial situation. 

Take a few minutes to automate your savings into a high-yield savings account to ensure saving becomes a priority. User-friendly tools like budgeting and cash-back apps can also help motivate you to stay on track as you begin to see the financial rewards of all your efforts.