How to Build Up Your Savings on a Low Income

ABBA said it best way back in 1976: “I work all night, I work all day to pay the bills I have to pay. Ain’t it sad? And still, there never seems to be a single penny left for me.” 

This instant hit clearly resonated with listeners across the globe, and for good reason: starting to save money on a low income is a daunting prospect. When you’re living paycheck to paycheck it can feel like there are so many other priorities to take care of before saving money for the future—but if you start small and set a solid foundation, it’s not as painful as you think. 

Follow these tips and tricks, and you may be surprised at just how quickly you can build up your savings on any income. 

Get Your Budget in Order with Zip

You really can’t avoid the b-word: budgeting. If you don’t have a budget, now is the right time to put one together that works best for your lifestyle. You can follow our budgeting guide for steps on how to craft (and stick with) the perfect budget for your unique circumstances.

We’ve said it before and we’ll say it again: use Zip to make your expenses that much more manageable by splitting any payment (think shopping expenses or bills) into four. Paying off a purchase or bill over time will allow you some more space to breathe when it comes to handing over your card, and the chance to actually put that cash into your savings. 

Track Your Spending and Adjust Your Expenses

Creating a budget gives you a real-time view into your spending: you can clearly see what areas of your life you are spending too much in, and pivot as needed. Start with the bigger money-sucking items in your life like housing, food, entertainment, and shopping, and consider these tips:

• While you should be very cautious when it comes to adjusting your housing expenses, this is an opportunity to consider downsizing to a smaller space or moving in with roommates.  
• We all say that we will eat in more, but it can be hard to stick to that open-ended goal. Try meal planning for the next week or two before you go grocery shopping so you have a plan to follow. Or you can use Zip when you eat out or purchase your groceries to spread the cost out over time. 
• We all need some entertainment in our lives—but can you have your fun in a more affordable way? While we love a good Bravo reality show as much as the next person, consider cancelling your cable bill and opting for a cheaper streaming service instead. While you’re at it, take a look at your phone plan options and see if there is a more affordable package available. 
• There are many amazing bargain stores where you can shop for all your essentials. Whether you’re looking for discounted groceries, new home items, or clothing, there are a number of retailers that offer competitive pricing compared to their full-price counterparts—Grocery Outlet, TJ Maxx, Home Goods, Nordstrom Rack, and LTD Commodities to name a few. Never pay full price again!

Take Advantage of Free and Found Money 

If your employer offers 401K matching, that is essentially free money going directly towards your savings. Make sure to maximize the full amount that they are willing to match. If your employer does not match your 401K contributions, there are still other ways to collect “found” money, which is essentially money that falls into your lap and that you didn’t initially plan on having. 

This could be cash that was gifted to you on your birthday, or dollars accrued from the cashback options that your credit card offers. This is also a good time to take stock of whether your credit card offers benefits tied to the areas of your life where you are spending the most. When you gather free and found money, you can put it directly into your savings account as an unexpected bonus to the savings you are regularly socking away.

Tackle Your Existing Debt

To allow yourself the freedom to save more, you’ll also need to tackle your existing debt head-on. While it can be tempting to turn a blind eye to any expenses that are not linked to your immediate day-to-day needs, paying off your debt will help you avoid money-draining fees and interest charges. 

There are two ways to go about paying off your debt: start with the loan with the highest interest rate, or knock out the loan with the smallest remaining balance first. When it comes to saving quickly, we recommend the first option of paying off loans with the highest interest rates first. 

Set Tangible Savings Goals

It’s important to determine exactly what you are saving for. Is it your retirement fund? Is it to buy a house? Is it for an emergency fund (a very smart thing to do)? Clarifying what you’re saving for is massively helpful in recognizing your progress and staying motivated. 

It’s ok to start small when it comes to saving. Even putting 1% of your paycheck into a savings account each payday will allow you to reach your goals to grow more quickly than you might think. You can even set up a feature with your bank to automatically transfer that amount weekly, bi-weekly, or monthly so your savings can stack up in the background as you live your life. 

Consider a Side Hustle

We can’t tell you to “just make more money!” because that is a completely unhelpful (and unrealistic) solution. What you can evaluate though, is if you have the time and ability to start a side hustle to make some extra money. 

This could mean picking up a part-time job, starting your own small business, or simply re-selling your used items on platforms like Poshmark, Mercari, and Facebook Marketplace for a little extra cash. Spring cleaning can happen year-round!

While there is no one-size-fits-all solution to saving money quickly, using these tips and tricks will help you get on the right path to setting aside a hefty amount of change for any of your short or long-term financial goals.