How To Start Saving When Money Is Tight

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If you’re not in the habit of saving money regularly, you might find the thought of it a bit overwhelming. This is especially true if you are living paycheck-to-paycheck as it is.

However, saving money is possible for almost every person. Consider the story of Ronald Read, a Vermont gas station attendant, mechanic, and janitor who never made what most would call a plush income.

When Read died at age 92, he had amassed a net worth of more than $8 million. How? By implementing a regular saving and investing plan into his modest budget.

Read was a blue-chip stock fan who found it hard to part with a buck — at least with a buck that could be spent on himself. He didn’t mind giving to others and funded college degrees for his two stepchildren.

When he died in 2014, Read left the majority of his fortune to local charities. The moral of the story is that even those with a smaller income can likely save at least some money. Here’s how.

How To Start Saving Money (Even on a Tight Budget)

Let’s be honest: Saving money on a tight budget is going to take a bit more finesse than it does for those with loads of disposable income. But there are steps that you can take to make saving more money possible no matter what your budget is.

1. Create and Adhere to a Budget

I know: It’s the dreaded “B” word. I used to have a strong aversion to budgeting too. The thought of living on a budget made me feel as if I had a dictator standing over me, telling me what I could and could not do with my money.

However, once I started managing my money with a budget, I learned that I actually had more control — not less — over my money.

Once I started budgeting (and using a budget’s best friend: spend tracking), I could see at a glance where my money needed to go (via my budget) and where it was actually going (via spend tracking).

Taking these two steps helped me eliminate what I like to call the “black hole of spending.” That’s the money that seems to disappear from your bank account each month unaccounted for.


The Black Hole of Spending

Here’s what I mean. When I first started budgeting I designated $600 a month for groceries, $150 a month for gas and another $100 a month for eating out and entertainment.

But I found I was continually going over budget in these categories each month. Why? Because I wasn’t tracking my spending.

Once I started tracking my spending, I could see how close I was to meeting (or exceeding) my budget numbers. From there, I could control my spending in a given area in order to be sure I met my goals in more important budget areas such as savings.

After I added spend tracking into my budgeting plan (I use a simple Excel spreadsheet), I found that I was actually spending closer to $900 a month on groceries, $250 a month on gas and $175 a month on entertainment and eating out.

Since I wasn’t adhering to my own plan, I ended up going over budget each month and as such, I had zero money left over for savings.

And that leads me to the next step.

2. Make Saving Non-Negotiable

You will find it easier to save money if you treat your budgeted amount for savings as a bill. Pay yourself at the beginning of the month or every payday, just like you would with any other bill.

It’s so easy to put savings on the back burner for “if” you have any money left over. The problem with this type of savings “plan” is that you’ll likely never have any money left over.

Extra money sitting around in a checking account often seems to find its way into the retail world, whether it be extra trips for takeout dinners or random purchases at your local big box store.


The antidote is to treat your savings like you would any other creditor. Imagine someone from your bank coming to your door, demanding money for his client: your savings account.

Imagine getting letters in the mail demanding payment with the threat of sending your “bill” to a collection agency. Send collection letters to yourself on behalf of your savings account if you need extra motivation.

You would never let a car payment, house payment or rent go unpaid; the threat of collection letters or a bad credit score help motivate you to keep your payments timely.

Have that same attitude with your saving. Treat it like a bill, and pay yourself first — even if it’s just 1%-2% of your income each payday. (Try a zero-based budgeting plan to help).

As money expert Clark Howard says, just start. Put something in savings each payday even if it’s just $5. As you get into the habit of saving and learn that you still have money to do other stuff, you can increase your regular savings amount.

3. Reduce Unnecessary Expenses To Increase Savings

If you’re finding that putting even a little bit into your savings account each payday is difficult, you may need to reduce expenses. Assess your budget and see which expenses can be reduced or eliminated.

Reducing unnecessary expenses in order to boost your savings may seem painful at first. But I promise it will be worth the sacrifice once you see your savings account balance sitting at four or five digits.

Here are a couple of other tips for increasing that balance.

4. Put “Found” Money Into Savings

“Found” money is money you didn’t plan on having in the first place, so there’s no reason you can’t put some (or all) of it into your savings account. Here are some examples of “found” money.

  • Monetary birthday or holiday gifts
  • Tax return money
  • Property tax refund money
  • Money you found lying around the house
  • Money you get from selling an item you no longer want or need
  • Extra income from bonuses or working overtime at your job

I know it can be tempting to spend “found” money on something fun. But putting this type of unexpected money into savings puts you on a faster track to a plush balance in your savings account.


Make yourself a deal: Commit to putting a certain percentage of all “found” money into your savings account. For instance, put no less than 50% of all “found” money into savings.

Use the rest for paying off debt or something else that will help improve your overall financial situation. If you feel you just really need to “blow” some of that money, set a small percentage aside for doing so and save the rest.

5. Increase Your Income To Save Money Faster

Another way to save more money on a tight budget is to earn more income. For instance, you could get a part-time job at a local store or restaurant. Or you could start your own small business.

Other options include selling stuff you no longer need or doing some “retail arbitrage”: getting a great item for free or cheap and then selling it for a profit.

Another thought: Work some extra hours at work, then ask for a raise.

Or do the reverse of increasing your income and try to reduce your expenses.

Find a way to lower your house payment or rent. Go on a strict spending ban for a month or two and try spending money only when you absolutely have to.

Work to get lower rates on other regular expenses. As you lower your monthly expenses, you can take the extra money and transfer it to your savings account.

Final Thoughts

I’m a firm believer that almost anybody can find a way to save more money. Is doing so going to take some effort on your part? Some sacrifice? A change in your lifestyle?

Yes, probably. But anything worth having is worth putting in the work and the discipline needed to achieve that goal.


Try this: Imagine your life a year from now after you’ve put some of these suggestions into action. You’ve got $5,000 or $10,000 in your savings account instead of $100.

You’ve got money to cover an unexpected job loss, an expense you hadn’t planned on or a nice cushion toward saving for a big goal such as purchasing your first house.

Money certainly isn’t everything, but it sure does make life easier. You can take that — and your new money-saving plan — to the bank.

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