More than half of Americans are currently living paycheck to paycheck, and when funds are tight, it can be easy to get distraught and feel like the situation is permanent. But even in tough financial times, there are strategies you can employ every day to save money.
You’ve probably heard the cliche advice to skip your morning cup of coffee from Starbucks or eat only ramen noodles until things get better, but there are plenty of other ways to master your budget without entirely sacrificing little joys.
[Related: Tips to Avoid Living Paycheck to Paycheck]
Best ways to save money on a tight budget
When you find yourself in a situation where your budget is tight, it’s important to first figure out how you got there, says Vanessa N. Martinez, CEO and founder at Em-Powered Network, a website dedicated to helping women maximize their personal and financial well-being.
For instance, have you suffered a layoff or other sudden loss of income, or moved to a new place and seen your cost of living rise significantly? Or perhaps you’ve been living paycheck to paycheck for a while or are suffering from lifestyle creep.
[Related: Tips to Avoid Living Paycheck to Paycheck]
“One is situational and the other is more behavioral,” Martinez says.
If your experience is behavioral, you’ll need to institute lifestyle changes to ensure you are avoiding overspending and sticking to a budget. But if it’s situational, use one of the following strategies to either save on your current expenses or generate some extra income.
1. Pay all your bills on time
When money is tight, paying a bill late or not paying it at all might be your instinct so you can redirect that money to other purchases.
However, late fees and interest can end up costing you more in the long run, so paying your bills on time is critical.
“Many, many people pay interest and late fees on routine bills, says Kyle Enright, president of lending at Achieve Loans.
“To avoid that and keep that money in your pocket, set up a system. It could be an online or paper calendar, an app or a basket on the kitchen counter. Open all mail when you receive it, deposit cash and checks as soon as you get them. Then pay all bills upon receipt — or set up a reminder system to pay on a certain date,” he adds.
2. Reduce utility and insurance bills
If your bills are overwhelming your budget, you might be able to find ways to reduce them.
For one, you can make sure your house is energy efficient and you are saving on water and gas wherever possible.
“Reduce water and utility bills by checking water leakages, switching to LED lightbulbs, turning off lights when not needed, etc.,” says Lei Han, certified public accountant and associate professor at Niagara University.
But you also might be able to shop around and find better rates on things like insurance premiums — or even negotiate with utility companies for a better price.
“Review policies to make sure you are getting any discounts for which you’re eligible, Enright says. “Check auto insurance deductibles … Go online and compare rates on both auto and home insurance. If you do find a better price for comparable coverage, ask your current insurer if they will match that price.”
3. Ask for lower interest rates
Negotiating doesn’t have to stop at utility or insurance bills. Customers who pay their bills on time or are improving their credit scores can have leverage to negotiate credit card interest rates as well.
“If you have been diligent with paying down your credit cards (you have no late payments and you pay more than the minimum), consider asking for a lower interest rate. Credit card companies are more willing to work with you than you may think, especially if you are a good customer,” says Raya Reaves, founder and financial coach at City Girl Savings.
4. Trim subscriptions
Subscriptions — whether for a streaming service, meal prep box or anything else — can be tricky. They seem like an inexpensive purchase when you pay for them monthly but they can add up quickly, especially if you aren’t actually using them to their full effect.
“Do an audit of all of your current subscriptions and see which ones you can cancel. Even small amounts add up over time,” Reaves says.
5. Carpool or use public transit
“If you drive, consider carpooling to save on gas. If you don’t drive, consider walking or biking over public transit, or public transit instead of Ubers,” Martinez says.
Gas costs and/or car payments can eat up a lot of your budget, and it might be more prudent to temporarily or permanently redirect those funds to other spending categories.
6. Use the envelope method or track spending
When it comes to your spending, it is also increasingly important to know exactly where your money is going when funds are tight. That way, you can make more informed decisions about where you might need to cut back or can find some cash to spare.
You have a couple options for better visualizing how much you spend in certain categories and making sure it matches your monthly budget.
First, you can carefully track your spending in various categories by saving receipts for a few weeks, Enright says, and there might also be some mobile apps that can automate this process.
When it comes to holding yourself accountable to an established budget, one tried and true strategy is the envelope method, also known as cash stuffing.
“To implement, cash your paycheck and allocate the money into the categories of your budget (so yes, you need a budget). Put the money for each category into an envelope. This ensures you only have that much to spend on the expense category (groceries, gas, etc.),” Enright says.
When you run out of money in one envelope — say, entertainment spending — you know you are going over your monthly budget.
7. Be conscious about unnecessary purchases
When it comes to reducing unnecessary purchases to save money, it’s important to remember that you need to leave room for joy in your life while also being conscious about emotional spending and where you might overindulge, experts say.
“Yes, deciding to do without the stop for the expensive latte and go with what you can make at home or the office may sound a bit cliche. But the principle behind it is not cliche. Developing that type of habit, where you ask yourself if you really need — or just want — something, leads to the discipline that produces real savings throughout life,” Enright says.
To make sure you are avoiding unnecessary spending, you can also consider making it more difficult to make a purchase by not saving your credit card numbers on online shopping portals or by setting up transaction notifications for purchases over a certain amount.
8. Leverage credit card rewards
In addition to finding places to cut back on spending, you also might be able to find a little extra money without making any big changes. For instance, your credit card rewards can be a great way to get a return on spending you’re already doing.
[Read: Best Rewards Credit Cards.]
“Instead of using your credit card rewards and points to buy something you want, use it for something you need. Not having to pay your own money for gas can free up quite a bit of money in your budget. Those funds can be saved without worry,” Reaves says.
You can also shop via cash back portals to earn a bit in return on your purchases, Han says.
9. Sell old stuff
When money is tight make sure you aren’t already sitting on any potential extra cash.
“Devote 15 to 30 minutes a day to cleaning out drawers, closets, cabinets, attic, and the basement and garage. Once done, continue devoting the daily time (as needed) to selling unneeded items online. Over the course of a year, most people can make at least several hundred dollars,” Enright says.
10. Reduce 401(k) contributions
Saving for retirement should definitely be a financial priority, but it doesn’t come before being able to eat or pay your rent. If you need to temporarily reduce your retirement savings, it can help you get through a tight time.
Martinez suggests reducing your contributions to your 401(k) for a particular period, then reevaluating.
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Ways to Save Money on a Tight Budget originally appeared on usnews.com
