10 ways to save money on a tight budget

Christel Deskins

The pandemic has wreaked havoc on our economy at large since the beginning of March and individuals and families are suffering in different ways. © Syda Productions/Shutterstock; Illustration by Bankrate A couple budgets together. According to an April survey from the Pew Research Center, 43 percent of all U.S. adults […]

The pandemic has wreaked havoc on our economy at large since the beginning of March and individuals and families are suffering in different ways.

a group of people sitting at a table using a laptop: A couple budgets together.

© Syda Productions/Shutterstock; Illustration by Bankrate
A couple budgets together.

According to an April survey from the Pew Research Center, 43 percent of all U.S. adults say that they, or someone in their household, has lost a job or taken a pay cut since the outbreak began. Moreover, 52 percent of adults in a low-income bracket reported the same. This has left many American families in a bind: COVID-19 caused many jobs to disappear, but the relentless virus has done nothing to make our bills go away.


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If you’re on a tight budget, finding a way to make your money stretch is crucial. The following tips may help.

1. Make small changes to your budget across all categories

Amy Maliga, a financial educator with Take Charge America, a Phoenix-based nonprofit credit counseling agency, says that making some tweaks to your budget is crucial when you’re trying to get by on less.

For example, if you haven’t already, it’s time to cut the cord and go from paying a monthly cable bill to using streaming services.

“If you plan carefully, you can easily get a few months of free streaming by using the services’ free trial programs,” Maliga says. “Sign up for one trial at a time and be sure to put a reminder in your calendar to cancel before you’re billed.”

Once you’ve made your way through all the free trials, decide on one or two you like the most and start paying for a subscription.

You can also shave dollars off your utility bills by keeping an eye on when and how you use electricity. Run major appliances such as the dishwasher, washer and dryer during off-peak hours – usually early in the morning and later at night. You can skip the dryer altogether and hang your clothes outside to dry.

2. Shop around for insurance rates

Maliga also recommends reviewing your auto insurance to make sure you’ve received the rebate or credit most major insurers have provided.

Also double-check to make sure you’re receiving any discounts you’re entitled to, such as discounts for insuring multiple cars or being a safe driver, she says. Finally, consider raising your deductible, which will lower your premium.

“But be sure you’re able to cover the higher deductible amount in case of a claim,” Maliga says.

Finally, shop around and compare rates for other insurance products you have, such as homeowners insurance or renters insurance.

3. Get a bank bonus

Some banks offer a bonus if you open a new account and meet a few basic requirements like setting up direct deposit or maintaining a minimum balance. At the moment, some of the best bank bonus offers let you earn $500 or more within a span of just a few months.

If you decide to sign up for a bank bonus offer, read the fine print so you know exactly how to earn the bonus and how long you need to keep your account open. Also watch out for minimum balance requirements that might make it difficult to open or maintain your account, as well as account fees that could eat away at your bonus amount.

4. Automate your savings

Colin B. Exelby, president and founder at Celestial Wealth Management, says that if you have the potential to save any money at all right now, your best step is taking yourself out of the equation.

“When trying to build an emergency fund or save for a goal in the next 12 to 18 months, automation is key,” Exelby says.

For example, you can set up your bank account so you are saving a small amount of money each and every week over the course of the calendar year. Just $20 a week for 50 weeks gives you $1,000 to spend worry-free, says Exelby, which you could use for an emergency or spend during the holiday season instead of racking up credit card debt.

5. Use a fintech app

If you want some help managing your money, then a money saving app could help. For example, Digit can help you boost your savings by automatically assessing your accounts and moving money on your behalf, while an app known as Tip Yourself can help you reward yourself for good financial behavior.

Also consider Chime, a banking app that makes it easy for you to save your spare change. Meanwhile, Acorns is another app that helps you save your spare change and invest it for the future.

6. Take stock of food spending

Most of us spend quite a bit on food at the grocery store as well as dining out, yet this is one area where we can cut spending swiftly and dramatically.

According to savings expert Andrea Woroch, chances are good that you will come home from the grocery store with food items you really don’t need and will possibly throw away if they go bad before you’ve had a chance to eat them. However, you can “cut the fat” by creating meal plans and shopping according to your plan each month.

“Look for recipes that use overlapping ingredients so you utilize them in their entirety and less gets wasted,” Woroch says. “And stick to your shopping list or use a basket instead of a cart to reduce those impulse purchases.”

You may also be able to earn cash back on your spending with the right credit card for groceries, but pay attention to your balance in full each month so you never pay a dime in interest. Meanwhile, Woroch recommends looking into earning cash back with a free cash back app like Fetch Rewards. With this app, all you do is upload your grocery receipts, and you’ll earn free gift cards from brands like Walmart and Target.

7. Take advantage of student loan forbearance

Brian Walsh, CFP, senior manager of financial planning at SoFi, a personal finance company, says that new forbearance help from the federal government means you can get a break from student loan payments for a while. Specifically, President Trump directed the U.S. Department of Education to suspend student loan payments, stop collections and waive all interest charged on federal student loans through Dec. 31, 2020.

If you have private student loans, you can also check whether your provider is offering any assistance or the option to skip payments for a while.

8. Watch out for new shopping habits

While most people assumed a quarantine would automatically lead to lower expenses because they could no longer go to restaurants or travel, Walsh says that far too many have replaced that spending with buying more on online shopping sites like Amazon.

To make sure you’re not replacing potential savings with new types of spending, Walsh recommends letting items sit in your online cart while you decide if you really need them.

“The simple act of taking the time to think before you click will prevent impulse purchases,” he says.

It can also help to remove your credit card information from sites where you frequently love to shop. That way, you can no longer “click to buy,” and you’ll have to enter your credit card information manually each time.

9. Refinance your mortgage

If your income has dropped but you still have plenty of money coming in, then now is the ideal time to consider refinancing your mortgage, says Taylor Jessee, CFP, CFA, director of financial planning at Taylor Hoffman.

Mortgage interest rates are at all-time lows, he says, but you should consider lenders that do not charge fees or points to refinance. Also shop around among mortgage lenders to find out which ones can offer you the lowest rates and best terms in the shortest amount of time.

How much can you save by refinancing your mortgage? Imagine you currently have 25 years left on a mortgage with a remaining balance of $250,000 and an interest rate of 4.5 percent. At this rate, your monthly payment would include around $1,390 in principal and interest each month, and you would owe a total of $416,874 from this point forward until your loan was paid off.

If you refinanced into a new 25-year mortgage with a rate of 3.25 percent, your principal and interest payment would go down to around $1,218 per month, and you would only owe $365,487 until your loan was paid off. That’s a savings of around $172 per month, which could help you get by on a tight budget without affecting your home’s payoff timeline.

10. Check your paycheck withholdings

While adjusting your paycheck withholdings may not be a good long-term approach, Jessee says this option is one to consider if you need cash now and you typically get a big tax refund each year.

“You just need to get an IRS form called Form W-4 from your HR or benefits department,” he says.

The more withholdings you put on this form, the less taxes are withheld from your paychecks and the more money you get to take home each week.

However, Jessee says to only make this move with extreme caution since the amounts you have withheld will help determine how much you owe in taxes come tax time.

“If you are having too little tax withheld on your paychecks, then you might end up owing taxes when you file your tax return on April 15,” he says.

Check with your CPA or use the IRS’s withholding calculator to see if this makes sense for you.

Bottom line

The pandemic has made our financial lives increasingly difficult, but there are ways to help your money stretch.

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