12 Tips On How To Budget Money On Low Income In 2023

Looking for ways to save money fast on low income? Find here best ways on how to budget money on low income in 2023. With these tips make the most of your income and stay financially secure.

Japanese-American author and entrepreneur Robert Kiyosaki famously write: “Before you can transform your wallet from poor to rich, you’ve got to transform your spirit from poor to rich.” Indeed, the author of the global bestseller, ‘Rich Dad, Poor Dad’ rightly implies that it’s also possible for people with smaller incomes to prosper and get rich.

Unfortunately, this valuable piece of advice oft goes unheeded for a simple reason. We falsely assume that having less income doesn’t leave enough money to save and invest.

Understandably, most of us ran into financial doldrums for a better part of 2020 due to the economic fallout of the Covid-19 pandemic. Quite a few of us had to abandon investment plans while digging into our savings to pay for basic necessities.

However, 2023 does present a fresher opportunity for everyone, including those earning less income, to resume savings and investments to make money grow as a security for the future.

How-To-Budget-Money-On-Low-Income

How To Budget Money On Low Income

In this article, I will discuss 12 amazing yet simple ways that you could use to save money despite a small income. Try some of these ways of saving and investing your money for the future.

1. Save Your Coins

Save Your Coins

Every year, Americans throw away more than $62 million worth of small coins, finds a 2017 report by Covanta, a cleaning company. This figure would definitely be higher in 2023.

People throw away these coins for one main reason: they don’t wish to carry the change in their pockets or purses. Throwing away coins is wanton waste of money.

And you might be one of those who inadvertently tosses away coins at empty spaces and drainages or trashcans merely to avoid carrying them along.

Stashing away these coins in a jar or good old Piggy bank is the best way to save with less income. Over a few weeks or months, these coins will add up to a considerable amount of money, even before you realize it.

It’s possible to deposit these coins at your bank. All you need to do is sort them according to value and roll them up before handing them over to the bank cashier or teller. Once you’ve seen how much precious money you could save with this simple tweak, you’ll most likely never again throw away a coin.

Refer: 6 Best Places where you can Change Coins for Cash

2. Start a Side Gig

Start a Side Gig

The year 2020 saw an exponential increase in the number of people working online. That’s because of the necessity for social distancing due to the Covid-19 pandemic. And in 2023, the trend will continue.

As an increasing number of businesses move their various processes online, there’s ample scope for everyone to find a superb side gig from home to earn an extra income. You too could select one that matches your qualifications and skills.

In fact, quite a few online side gigs don’t even require much educational qualifications or special skills, such as blogging, data entry work, and transcriptions.

Working extra for a few hours a day during your spare time would provide adequate income to save in 2023. Most of these side gigs have flexible work hours.

This means you can work during hours that suit your convenience. Save this extra income from the side gig and invest it wisely.

You might be surprised, but 49 percent of all Americans, especially the younger ones, have at least one side gig. Others have two or more. With some effort, you’ll be able to find a suitable side gig that matches your interest.

3. Use Budgeting Apps

Use Budgeting Apps

Budgeting apps that are available free of cost for smartphones are helping me save a lot of money. I can confidently testify to this from my personal experience.

Left to myself, it was impossible to control spending. I would often overspend on food, transport, groceries, and entertainment. But a budgeting app recommended by a colleague put an effective stop to these frivolous expenses and helped reign in my finances.

You can set limits under various heads such as food, transport, dining out, entertainment, utilities, and other categories on budgeting apps.

When you’re about to reach this limit, the app sends an automatic alert, which allows you to check your spending. This makes it possible to eliminate all unwanted expenses and get complete control over spending and your overall finances. 

4. Create Spending Blackout Days

A blackout period is a number of days or weeks during which you can’t access certain things. Apply this principle to your spending patterns. Decide you won’t spend a cent for a week or ten days, fortnight, or even a month.

Instead, use all the stuff you’ve hoarded or stored at home over a span of time. And to ensure that you don’t spend during these blackout days, shop for essentials only that would be adequate to last during that period.

Anyone that keeps tabs on their daily spending would know there’re lots of expenses, however small, that we cannot account for. We can prevent these kinds of expenses by stopping spending for a few days.

It also brings a lot of financial discipline. You could start practicing for blackout days by not spending for a day. Gradually increase your no-spending period to three days, a week, and a fortnight. The amount of savings will come as a pleasant surprise.

5. Cancel Unwanted Subscriptions

Unwanted Subscriptions

On average, an American individual spends $237 to $349 per month on various subscriptions such as Amazon Prime, Netflix, newspapers and magazines, cable TV packages, and others. For households, this amount can go as high as $500 per month.

Depending on which figures you wish to believe, most Americans use only about 40 percent of the services they subscribe to. This means the amount of money you pay for the balance 60 percent is sheer waste.

In 2023, take stock of all your subscriptions to find out how many are really worth paying for, depending on your usage. And whatever’s unnecessary or something that you seldom use, cancel the subscription immediately. 

Now, this might be a bit tricky. Often, we opt for something known as an ‘auto renew’ facility by providing our credit card details. Usually, the subscription renewal amount gets deducted a week to 10 days before the actual expiry.

And we usually ignore the emails that alert us about auto-renewals. If you’re canceling subscriptions, do that well before the auto-renew debt comes in.

6. Find Areas to Save

Find Areas to Save

The majority of people like us have a particular lifestyle to maintain. And we don’t really appreciate any disruptions in our set lifestyles due to any reason. At the same time, there’re several areas in our life where we incur unnecessary expenses.

These could be anything, right from buying a lottery ticket frequently to get rich instantly. Or ordering food from restaurants very often to avoid cooking. Countless people buy large insurance plans hoping to cover disasters or problems that may never arise. 

Taking a complete and honest inventory of our expenses will expose a lot of areas where saving is possible without compromising on lifestyle or comfort.

This would take time because identifying areas where we tend to overspend isn’t a one-off and overnight exercise. It requires a thorough study of our spending patterns and identifying expenses that aren’t really necessary.

Getting rid of spending that wouldn’t affect our lifestyle significantly is one of the best ways to save money in 2023.

7. Invest Perks, Bonuses, Incentives & Raise

Invest Perks, Bonuses,

I genuinely doubt whether anyone got bonuses, incentives, and raises in 2020 as businesses, small and large, were reeling under the financial fallout of the Covid-19 pandemic.

However, I’m speculating that employers would give some sort of perks or salary hikes in 2023 as businesses limp back to near normalcy.

Should you be one of those fortunate ones to get some extra money from a regular job in 2023, don’t rush to spend it on things that you couldn’t do in 2020. Instead, invest this amount.

Regardless of how small or large your perks, bonuses, incentives, and raises are during 2023, it’s always possible to invest them in various plans to make money grow.

Browse the Internet for various savings and investment plans that would suit your budget. Enlisting the services of a qualified financial advisor might not be possible for all. Yet, you can use a Robo-Advisor if affordable or take some advice from your banker.

8. Use Investment Apps

Investment Apps

This tip is for everyone that believes that investing in stock markets requires a lot of money or that it’s a privilege of the wealthy. That’s absolutely incorrect. Nowadays, we have superb apps that allow you to start on an investment journey with as low as $5.

What can you buy with such a small sum of money? Quite a lot actually. You can buy something known as ‘fractional shares.’

This means you’re buying a fraction of one share or one unit of an Exchange Traded Fund (ETF), Mutual Fund, or some commodity. All the fractions that you buy eventually add up to a whole share or unit.

Some of these investment apps give you a free share from some companies listed on the stock exchange for free. Provided you sign-up with them and invest a specific amount of money for your first trade.

Using such apps helps save and invest small amounts of money over a period of time and adds up to something really large. This is the best way to start investing amounts that you won’t really miss from your income.

9. Rework Your Income Tax Withholding

Reworking your Income Tax withholdings is an exercise you should do if you’re serious about saving money in 2023. Millions of Americans claim too many or too few withholdings from their employers.

Claiming too many witholdings means you might end up paying a large amount of income tax. And claiming too less translates as paying more money in advance to the Internal Revenue Service or lending to the US government without interest. Both these scenarios work to your disadvantage.

Get a tax advisor or IRS official to explain how much tax witholdings you should actually have. This means you’ll neither be saddled with a large income tax due nor would you have spent the money beforehand to claim returns later.

Obviously, we all need to pay the right amount of taxes. But proper withholdings mean you get to use the money for investment and making it grow.

And when the tax season does knock on your door, the amount you owe or have to claim as returns wouldn’t be very significant to send your finances into a tailspin.

10. Create an Emergency Fund

Emergency Fund

An emergency fund helps overcome any shortage of money while preventing the need to borrow or overspend on a credit card. Furthermore, an emergency fund is also an excellent way to force yourself to set aside a small portion of your monthly income.

Put the money in short-term savings plans or invest them in a manner where it’s possible to withdraw it quickly, should the need arise.

In normal circumstances, you won’t have to use money from the emergency fund. This means your forced savings and investments continue to grow over a period of time.

The only way to create an emergency fund is to commit yourself to stash away a fixed amount of money every week or every month from your regular income. There’s an old axiom that you could use to do this. “Income minus savings equals expenses.” 

11. Pay Bills on Time

Pay Bills on Time

Honestly speaking, this figure doesn’t surprise me. About 42 percent of all Americans had to delay paying their bills during 2020 due to the economic fallout of the Covid-19 pandemic, a report by Businesswire.com says.

I suspect the figure could be higher and somewhat in the region of 50 percent if one considers that over 57.4 million Americans had filed for unemployment benefits by August 2020.

While delays in payments due to financial hardships during the peak of the pandemic could be somewhat justifiable, they do come at a cost.

Every time you delay a bill payment, the organization- whether it’s a utility provider or a credit card issuer- will charge you a penalty. This works up to a fairly considerable amount over a period of years.

While all of us strive to pay bills on time, hectic schedules and, sometimes, paucity of funds forces us to delay payments. Consequently, we’re forced into coughing up a considerable amount of money.

Instead, paying bills on time could help save this money and invest it in some gainful plan.

12. Shopping at Thrift Stores

Thrift Stores

Shopping at thrift stores isn’t exactly something that everyone wants to do. Yet, if you’re very serious about saving money in 2023 and investing it for a better future, buying at thrift stores can help a lot.

It’s a myth that thrift stores in America sell stuff that nobody wants and cannot be used anymore. Instead, most thrift stores nowadays sell things from top brands at less than half the price of new ones. 

Research indicates 15 percent of Americans buy at thrift stores at least once a year. And this number is growing. While thrift stores offer economically priced stuff, you can get more discounts too, by using these simple tricks.

Actually, buying at thrift stores works in two ways: while you can get superb stuff at very affordable and attractive rates, you’ll also be helping some charities raise much-needed money for their activities that help the underprivileged.

Wrap Up

Before concluding, it’s also important to remember that maintaining excellent health is one of the keys to saving money in 2023.

The year 2020 saw us spending on stuff that most of us never found necessary to buy earlier, such as face masks, hand sanitizers, and other cleansers that could keep away the Covid-19 contagion.

And 2023 is going to be somewhat similar. Therefore, do not compromise on your family and your health while saving money with less income in 2023. After all, the old adage “Health is wealth” holds good till date.