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8 Smart Ways to Save Money Fast on a Low Income

Jeremy Flint Updated: September 19, 2023 • 7 min read

Key Points:

  • Creating a budget is the first step towards saving money quickly, especially for those with low incomes.

  • Savings accounts take advantage of compound interest, which helps your money grow faster over time.

  • To boost your savings efforts, consider getting a side job or gig work. Sacrificing a little screen time for a side hustle can significantly increase your income.

Today, the personal savings rate is at its lowest point since 2005. Inflation, lagging salaries, and tightened economic conditions make saving difficult. Saving and budgeting on a low income is even more challenging. Although saving money fast on a low income might seem impossible or too intimidating, the important thing is to start. You can take these 8 smart ways to lead you to a comprehensive savings plan of action you'll thank yourself for in five years – if you start today.

1. Create a Budget

Understanding your current financial position is the first step to saving money quickly. And, for most low-income households, building a budget is the first step to saving money fast. But there's a catch: many don't know how to best budget money on a low income. 

Luckily, tons of resources are available (for free!) that help individuals and households on all income ranges budget quickly, efficiently, and effectively. The best budgeting practices usually start with a comprehensive budget calculator. While there's never a "one-size-fits-all" solution to budgeting, practical calculators often begin with a solid baseline assumption. Typically, you'll break your budget into three core sections:

  1. Needs: "Needs" usually make up 50% of your budget and include non-negotiable expenses, like groceries, mortgage (or rent), utility bills, phone and internet, and car payments. When starting a budget, it's usually best to trim your needs to the essentials. While certain niceties seem necessary, look closely at what can be cut to budget money on a low income.
  2. Wants: Wants, or the "nice-to-have" expenses, should comprise about 30% of your household budget. This category can include streaming services, other entertainment costs, or expenses associated with hobbies. If you're in a pinch, it might be best to cut down on "wants" to devote more cash flow to the final category.
  3. Savings: The final 20% of your budget should be devoted to savings. In this case, if you’re heavily in debt, the savings category can also include additional payments on credit cards, personal loans, or car notes. If not, you’ll want to devote 20% to stacking cash on the side – usually in a quality savings account. 

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2. Open a Savings Account

Of course, finding the best savings account can be complicated. Many factors impact your decision, including interest rates, fees associated with accounts, and whether you prefer an in-person or online savings account experience. Still, opening a savings account is critical to saving money effectively.

Savings accounts are ideal for saving money easily on a low income for two main reasons. 

One, savings accounts take advantage of compound interest power. Compound interest grows your net worth faster by adding monthly interest to your principal to calculate future interest. For example, if your savings account earns 4.5% annually, you'll generate $37.50 on a $10,000 balance the first month. To calculate your own potential savings check out our Simple Saving Growth Calculator.

The next month, interest accrues on the new $10,037.50 balance – so you'll generate slightly more at $37.65. That doesn't sound like a lot, but if you don't touch the account for five years, it'll be worth $12,523.05 – not bad for zero effort. Of course, you can capitalize on compound interest further. Adding just $100 monthly to the account will be worth nearly $20,000 in five years. 

The second benefit to a savings account is that the money is effectively "locked away," compared to the ease of swiping a debit card or going to the ATM. Having the funds secured in a savings account helps maintain a positive savings mentality that the cash in the account is untouchable, except for pre-planned, long-term goals or emergency circumstances. Likewise, seeing your balance grow monthly reinforces the savings mentality that will likely make you want to keep the cash growing. 

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3. Get a Side Job

Side hustles get a bad rap sometimes, mainly because there's definitely a toxic “hustle and grind” mentality pervasive in the side gig conversation. But consider this: Americans spend more than four hours daily on their phone, browsing social media, or otherwise wasting time. That's nearly two months of screen time over a single year. 

If you halved that and spent two hours daily on a side hustle or gig work like rideshare driving, grocery delivery, or dog walking, you could make an extra $7,300 annually at $10 per hour – and that's on the low end of side job income potential! Imagine how much more you could save or how much faster you could pay down debt if you sacrificed a little screen time in favor of a side hustle. 

4. Automate Your Savings Options

We already saw that a savings account helps save money on a low income by creating a savings mentality, reinforced by the money being "untouchable." What if you could make that process easier by thinking less about it? That's where savings automation tools shine. 

If your checking and savings accounts are linked, you can likely send a recurring monthly (or weekly) amount directly to savings. By doing so, you're setting yourself up for success by automating a process and removing the "I forgot" factor or risking the money burning a hole in your figurative pocket before you allocate it to savings.

If your savings account doesn’t have tools that directly enable automated transfer, your workplace’s payroll processor can likely split your paycheck across multiple accounts. In many ways, this is even simpler since you never notice “missing” money. Instead, on payday, your needs and wants spending money goes into your checking account, and your remaining 20% savings budget allocation goes straight to where it belongs – in a savings account, generating interest and building a financial future. 

5. Pay Your Monthly Bills Automatically

If you struggle to remember to stash cash into savings, you might be forgetful when bills come due. In many cases, this is worse than not saving because missed bill payments usually incur late fees or interest that cost a ton over time. Remember, compound interest works both ways – if you consistently miss a credit card payment, interest builds rapidly. You can quickly find yourself in a deep debt hole that's almost impossible to dig out of.

To prevent that situation, explore whether your bills can be automated alongside savings. Check with, for example, your utility provider to see whether they’ll auto-deduct your monthly power and water balance from your checking account. In some cases, including for federal student loan servicers, the billing company will even reduce the interest rate on what you owe. That adds up over time, but the peace of mind from auto-paying your bills can be invaluable. 

Of course, auto-paying your bills isn't a "set it and forget it." You'll still need to closely monitor your balances and check the due dates often to ensure you won't overdraw an account from an automatic bill payment. Still, with calendar reminder tools and similar services, managing automatic payments is simple and worth the minimal effort. 

6. Eliminate Your Debt 

Unfortunately, saving money isn't easy for some low-income households when you're drowning in debt. To that end, cutting out or eliminating debt before embarking on an aggressive savings plan is usually preferred (particularly if your interest rates outweigh your savings account yield, which is generally the case). 

If this applies to you, there are a few options available. You can cut down on the wants category of your budget as much as possible to allocate greater cash flow to paying down debt. Likewise, you can save just enough to have a healthy emergency savings balance, then dedicate the remainder of your 20% savings budget allocation exclusively to debt management.

If you hold multiple debts and you're overwhelmed, consider consolidating your debt. Essentially, debt consolidation companies cut you a check for the total balance of all debt owed - credit card, student loan, car notes, personal loans, and more. Then, you owe the debt consolidating company the full amount they paid to your other lenders. This process simplifies debt payments since you're dealing with a single creditor with fewer dates to remember. And luckily for those with high-interest-rate loans, debt consolidation tools can sometimes give you a better rate for an aggregate loan than you currently have. 

7. Lower Your Housing Costs

Housing tends to be one of the highest expenses, particularly for low-income families. If you can cut down or offset housing costs, you can save much more quickly. Options range from simple to more complex. Easy answers to lowering housing costs include cutting down on utility expenses, like using the air conditioning or heat less, unplugging appliances, and reducing the 30-minute shower habits. 

On the flip side, if you find yourself having a very tough time keeping up with high housing costs, consider renting out a spare room or moving to an area with a lower cost of living. While these are dramatic examples and not ideal, sometimes saving aggressively on a low income requires dramatic action.  

8. Find a Fee-Free Bank

It should go without saying, but if you're paying hefty (or any) fees to your bank for the privilege of having a checking or savings account, find another bank. In today’s age, plenty of fee-free banking solutions are readily available. Take your business elsewhere if you're forking over cash to hold a basic account. 

When you're exploring banks, dig below the surface as well. Banks sometimes advertise a "no fee" structure that hides steep overdrafts or minimum account balance costs by calling them penalties rather than fees. Make sure you’re asking a potential banking partner as many questions as possible, and frame it in terms of scenarios and costs, i.e., if I overdraw accidentally and deposit enough to cover the debt immediately (scenario), what will the bank charge me for the incident (cost)?  


Saving money on a low income can seem a daunting and, sometimes, impossible task. Budgeting and saving on a low income isn’t impossible, though. Whether you want to save money for a house on a low income or build a healthy cash cushion for retirement or a long-awaited vacation, the process starts with effective budgeting practices. But it doesn't end there. Effective saving is a lifetime habit and, like any habit, takes dedicated attention at first but quickly becomes second nature.  



How Much Income Should You Save?

Everyone’s circumstances are different, but a good rule of thumb is the 50/30/20 Rule: 50% of your budget goes to needs, like rent or mortgage payments. 30% goes to your wants, including entertainment or eating out. The final 20% of your income goes to savings. Of course, if you’re serious about saving or paying down debt, you can always consider expanding that ratio temporarily to accelerate your savings.

When Should You Start Saving?

It's never too early to start saving. But it's also never too late to start saving. Ideally, you learned sound financial management as a child, but realistically, many of us are well into our 20s before we start considering saving, investing, or planning for retirement. As the saying goes, the best time to start saving was yesterday. The next best time to start saving is today.

Written by Jeremy Flint

Jeremy is a finance and investment writer who works with stock research platforms, wealth managers, and investment funds to deliver value to clients and customers. He couples his lifelong interest in financial topics with an MBA from the University of California - Davis, and loves breaking down complex topics to educate new and experienced investors alike. He lives in Austin, TX with his wife and young son.