When money is tight and you’re just trying to make ends meet, the idea of saving money can start to feel a little out of reach. After paying your rent, utility bills, and all your other necessary monthly expenses, you may run into some difficulty when it comes to making substantial contributions to your savings.
While you likely won’t be able to change your financial situation overnight, doing your best to incorporate some personal budgeting tips and tricks into your lifestyle may help clear the path to your ultimate savings goal. You may still run into bumps along the way, and certain time periods may be more successful than others, but with patience, persistence, and the right plan in place, you can start to find ways of gradually building up your savings.
To aid you along this journey, we’ve put together a list of six budgeting tips for beginners to help you find ways to save money on a tight budget.
1. Create a Budget
No list of budgeting tips for beginners would be complete without pointing out the importance of having a balanced budget in place. This budget could be monthly, bi-weekly, or whatever works for your specific financial situation. There are plenty of budget examples out there for you to explore. Without one, it may become hard to get a clear idea of where your money is going.
The main objective of a balanced budget is to help you regulate how much you spend and to zero in on the areas of your spending that could be reduced or eliminated altogether. You might think of a budget as being restrictive in nature, but by gaining these insights and some level of control over your money, you may ultimately contribute to your overall financial freedom.
For instance, if you plan on creating a monthly budget planner, start this process by listing out all of your expenses and income for the month. This could be things like your rent, utility bills, grocery money, and payments on your debt, such as a line of credit or credit card. To get a better idea of how much money you typically spend in a month, go over your bank statements for the last six months and average out how much you’ve spent. There are also plenty of free personal finance apps that can help you put together a balanced budget.
Either way, once you have these numbers in front of you, you can start to get a better idea of what you’re spending money on and start to find ways to save money on a tight budget.
2. Create a Financial Safety Net
When money is tight, a single bump in the road can throw your entire budget off. In many cases, these bumps come in the form of an unexpected emergency. This is where an emergency fund comes in.
An emergency savings fund is designed to help you deal with emergency expenses that come out of nowhere. This could include things like emergency car repairs, a trip to the emergency room, or an unexpected but essential home repair.
The money that you put into this account shouldn’t be used for things like shopping, vacations, or even long-term savings plans. It should just be there for times of emergency.
Putting together an emergency fund is one of the most essential personal budgeting tips for beginners, so make sure to include it as a part of your budget. If you don’t and if money is tight, you risk the danger of an emergency throwing all the money that you’ve been painstakingly saving down the drain.
You can read more elsewhere on our blog to find out how to start your emergency fund.
Personal Line of Credit
While it’s important to have an emergency fund at the ready, putting one together can be a long process. If you run into an emergency expense in the meantime, a line of credit may act as a safety net in times of emergency.
A line of credit will allow you to draw funds from the credit you have available to you, and as you continue to pay down your balance, you can continue to borrow money on a revolving basis. This may be a useful tool to have at your disposal as you build a healthy emergency fund.
3. Cut Back on Subscriptions
Subscription services can be a bit of a double-edged sword. On one hand, they’re an efficient and cost-effective way of getting services and content that would likely cost you more money to get through traditional means. For example, why rent three movies a month for a total of twelve dollars when you can get a subscription for a streaming service for around the same price?
Their benefits can also be their eventual downside. Subscription services like Spotify, Netflix, Amazon Prime, and many more get buy-in from users because of their relatively low cost and convenience. But this can lead to the temptation to subscribe to a large number of them. And the more these services stack up, the more you’ll be spending on things you don’t particularly need.
So, spend some time going through all of the services you’ve subscribed to, and ask yourself, which ones do you really need? Is it necessary to have three movie streaming platforms if one is really enough? Do you need to pay for two music streaming services if they largely offer the same thing? Try to limit how much you spend on recurring expenses such as these.
4. Take Control of Your Food Budget
A great way to save money is to really crack down on your food budget. One of the most impactful things you can do when it comes to saving money on food is to either significantly reduce the amount of times you eat out, or cut it out completely. While it might be convenient to get takeout for dinner or go to the nearest food court for lunch, these seemingly small expenses can start to stack up quickly. Generally, it’ll cost much less to buy groceries, make dinner at home, and have the leftovers for lunch the next day.
This process can be easier said than done for people who don’t know their way around the grocery store, or the kitchen for that matter. But with the right plan, your lack of experience may not be as big of a deal as you might think.
Start this process by sketching out a meal plan for the week. Gear the budget meals you plan on making around grocery store flyers and sale items, and try to buy things in larger quantities. Just make sure nothing goes to waste! If you need some inspiration, there are plenty of online resources that can give you some direction when it comes to putting together healthy meals on a budget.
5. Regularly Review Your Budget
When you start putting a balanced budget together, keep in mind that this is going to be an ongoing process. This isn’t the type of thing where you set it and then put everything on autopilot. Your budget is an active document that needs to be assessed and updated monthly, or as needed.
The first piece of this is to make sure that your budget is accomplishing its goal. This means that it should help you to save money, but it shouldn’t shackle you to the point of unhappiness.
Next, you’ll want to take stock of any major changes in your life that will affect your budget. For example, if something has happened that will affect your income – maybe you’ve lost your job or gotten a promotion – this will likely affect certain areas of your budget.
Or maybe a pipe in your house bursts and you need to take care of some water damage as soon as possible. In this instance, if you don’t have an emergency savings fund at the ready, you may need to tap into your line of credit or credit card to help with the repairs. You might need to divert some of the money you had designated towards your savings and use it to pay off your line of credit instead.
Either way, changes to your expenses can happen and when they do, those changes will need to be reflected in your budget.
6. Cut Back on Transportation
Another major area in your life where there could be areas of opportunity to find ways to save money on a tight budget is transportation. The most obvious way to cut back on transportation costs is to take public transportation instead of driving, or to even walk or bike if it’s feasible. There are plenty of variables at play here and you may not be able to avoid driving in every scenario, but do your best to cut back. If you can’t avoid driving, see if you can carpool with co-workers to get to work or set up a carpool system with other parents to get your kids to and from school.
Use These Personal Budgeting Tips to Cut Costs
Dealing with a tight budget can be tough, and when you’re just trying to make ends meet, the idea of saving money may seem like a daunting prospect. But with hard work, patience, and the right budget tips for beginners in hand, you may still be able to find ways to save money on a tight budget.
Once you’ve gotten in the groove of things and are able to successfully keep up with the healthy financial practices we’ve listed, you start to have an easier time taking care of your essential expenses.
If you do end up running into an emergency expense along the way and need some help with covering costs, do some research to learn more about how a line of credit works to see if it’s right for you.
Posted in: Budgeting