1. MAKE A BUDGET — AND STICK TO IT
It's tough to barely cover bills month after month, but if you make a budget and look for little ways to save some money, a little advance planning pays off big time — it can mean the difference between living comfortably and looking for change between the cushions to buy your next meal.
The first step to managing your money is to know how it's coming in, and where it's going. Use an accounting tool, whether it's paper and pencil or an online program like Mint, to keep tab of your income and expenses. Total all your expenses for the month and compare that to how much you earn every month. If current expenses exceed income, then you need to figure out where to cut.
2. WHEN IT COMES TO SAVING, EVERY PENNY COUNTS
There's always going to be something to spend on, whether it's your faltering car engine or a costly toothache. Living on a small income can make it hard to save for a roof repair or a retirement fund, but it can be done.
- Ask your bank to automatically transfer funds each month — even as little as $10 — from your checking to your savings account.
- Put all your loose change into a piggy bank, then transfer it into your savings account. A nickel a day, plus $10 from your checking-account transfer, adds up to $140 a year — and over a lifetime can total many thousands of dollars.
3. SEEK MORE MODEST HOUSING
Too many of us have larger (or more expensive) homes than we actually need. Consider downsizing to the least costly home that will meet your family's needs. If you own a home, check with your lender whether you can refinance your mortgage at a lower rate. Mortgage interest rates are at historic lows, so refinancing could save you years of payments and a good deal of money that you can stash away into savings. Or, consider renting out a room in your home or finding a roommate to reduce costs.
4. REDUCE YOUR CAR USE
When you're on a tight budget, you're attuned to minimizing your driving as much as possible in order to cut gas costs. The best way? Combine multiple shopping trips into one. Of course, you save even more on gas and auto maintenance if you can ditch the car and walk, bike, rollerblade, or even skateboard to the store or work.
5. MAKE USE OF AVAILABLE BENEFITS
Low and moderate-income workers can qualify every year for an Earned Income Credit on their tax returns, which can refund up to $496 for an individual and $5,450 for a family of four. You can find out if you're eligible by using the IRS's EITC Assistant website.
And don't forget to make use of health care benefits — an unexpected medical emergency can be costly, so make use of Medicaid, or hospital financial assistance, if you qualify. Also, remember that the Affordable Care Act offers government subsidies that can offset all or part of the cost of private health insurance. HealthCare.gov is a good place to start.
There are plenty of other useful programs that provide help with a variety of things, such as utility bills or advancing your job skills. Start at the Benefits.gov website to see what you could be eligible for.
6. FIND A SIDE GIG
As many people with tight budgets know, one paycheck is rarely enough. Even if you already have a full-time job, a little extra income can come in handy to pay off debt, cover bills, and save for emergencies. And there are plenty of money-making ideas that won't detract from your 9-to-5 job, such as selling items on eBay or renting out your extra room on Airbnb. If you have desirable skills, freelance or consult on the side. Many side jobs have little to no start-up costs and can be done during your down time.
7. BE SAVVY ABOUT HEALTH CARE COSTS
People on tight budgets use these methods to lower medical costs:
- Find the lowest-cost place to purchase prescription drugs. Call and do a price check at ethnic supermarkets and discount centers, and look online at mail-order pharmacies.
- Ask your physician to consider prescribing generic drugs. Generics can cost several hundred dollars less to purchase annually than brand-name drugs — and they're thoroughly regulated by the FDA.
- If you've got a minor ailment (like the flu or an achy muscle) check out low-cost retail clinics in your area. CVS, Walgreen's, and Walmart often offer these.
8. NEVER PAY FULL PRICE IF YOU DON'T HAVE TO
People with limited incomes usually can't afford to pay full price. And you should get in the habit of never doing so, either. If you're shopping retail, wait until the end of a season to buy items once they're priced half off or more. And save your receipts: Most stores will refund the difference if your purchased item's price declines within 30 days of purchase.
9. POOL RESOURCES
Carpooling, sharing baby-sitting duties, and cooking pot-luck dinners are examples of ways to reduce costs by pooling resources. Can other family members live in your home and pitch in for rent? Can older kids make a few extra bucks by mowing lawns on the weekend that can be used to pay for school lunches? Communal living not only brings us closer, but also reduces expenses and creates a sense of common purpose.