How To Live Fabulously On A Tight Budget (And Save Money)

How to live on a budget, a tight budget, and actually enjoy it?

Some people say living on a low income budget sucks. I say you’re not doing it properly then.

I don’t mean that to be harsh but as a frugalista I get fed up of people belittling budgets and saving money.

Of course you can learn how to live a fabulous life on a budget, you just need a little help.

If you have a low income then your budget is less than someone who earns more.

When you go into debt, you are spending your future earnings because that is what you will have to use to pay your debt back.

If that is you, then you know you need to change. You cannot keep spending future money, you need to learn how to live on a budget.

I want to help you know how to live a fabulous life on a budget! Who wants to just live, when you can live fabulously?

How to live on a tight budget, fabulously!

The secret sauce to living well on a tight budget and enjoying it is how you feel about your situation.
1. Be grateful for what you have, ignore what others have and focus on your life.
2. Don’t concern yourself with what other people think, they are not living your life.
3. Spend only the money you have and not a penny more.

how to create and live on a tight budget

First things first, the purpose of a budget is so you know your bills are being paid and how much money you have to spend on things like groceries and fuel.

Budgeting is the same whether you are budgeting with a low income or a high one. You need to allocate the money you have to your spending categories.

If the math doesn’t add up then you need to tweak until it does. The more extreme your budget the more tweaking you’ll likely need to do.

Allocate money to all your regular bills first, make sure irregular bills are covered by allocating money into separate sinking funds for them.

The last part of budgeting is to set spending limits for your flexible spending categories. These include groceries, fuel, entertainment, fun, beauty treatments and the inevitable misc spending.

What is the 50 20 30 budget rule? 

The 50 20 30 rule was made popular by Senator Elizabeth Warren who was keen to simplify financial planning for everyone regardless of income.

It basically means that 50% of your money will go to fixed expenses, 20% is reserved for savings and repaying debt. The remaining 30% is for you to spend however you please.

Personally, I don’t like this method because the categories are skewed in my humble opinion. If you’ve got debts, spending 30% of your income on wants and unnecessary things is not sensible.

You should be aiming to be debt free so more money needs to be in that 20% category. You still need some fun money but not 30%.

For more detailed help in creating your budget please read this post:

How To Budget Your Money When You Don’t Know How

(This post contains affiliate links. If you click on a link and make a purchase, I may make a small commission at no extra cost to you. As an Amazon Associate I earn from qualifying purchases.You can read more here)

How to enjoy living on a tight budget

The number one thing that can change your budget and your life is you.

Your money mindset – how you view your financial situation and your ability to budget your money.

Having the right mindset about your money, how you spend it, how far it goes and what you achieve with it makes for a great experience.

Focus on what you do have, not what others have got. When you look around you I know you will see others with more and you’re going to want that too.

But you are not them.

stop living for money – I want does not get

(This is a saying parents often repeat to their children – so annoying to hear as a child, so easy to say as a parent!)

When I was younger I desperately wanted to be thin.

All around me were pictures of models and famous people who looked fabulous because they were thin.

Did I become thin because of seeing everyone else’s thinness? Nope! I comfort ate, yo-yo dieted and never got to be a size zero.

Hankering after what you think others have – thinness or oodles of spending money – doesn’t help you actually achieve them.

When it comes to budget living you need to follow your own money path. You need to learn how to be smart with money.

Learn the art of saying no. Practice it daily.

Focusing on the positives within your life will change your mindset. Changing your mindset is hard, you don’t just click your fingers and BOOM! you’re there.

You will need to work at it.

You might like to read this: 11 Simple Things That Rich People Do (And So Can You)

Now we’ve got you working on getting your mindset in the right place, what practical steps can you take to learn how to live on a budget and truly enjoy it?

smiling girl in blue jeans and yellow jumper say on sofa with receipts in hand and working a laptop to signify how to live on a budget and save money
Living well on a budget tips can still be fun

25 Practical tips For living On A tight Budget

1. Create Life Goals

I am a great believer in goals. Short term goals, financial goals, life goals.

Your financial goals are what you want to achieve now, next year or further down the line. Maybe you want to be debt free, to clear credit card debt, to give up your job, to have an exotic holiday?

One of my first big goals was to be mortgage free. It took us 10 years, so not a short term goal.

But knowing that every penny I saved meant being mortgage free that much sooner was very motivating. It kept me focused.

Having real, tangible goals helps you focus your spending and saving. Keep them real and at the forefront of your mind.

When you’ve got your goals mapped out, reducing your budget and making the small daily changes to live on less is easier.

Your goals are your reason for your budget.

2. Prioritize Your Spending

If you are going to both learn how to live on a budget and save money (that’s two things) then understanding your spending and making good financial decisions is key.

You need to know what you are spending your hard earned money on and prioritize where it goes.

No point spending $500 on groceries every month because you love food if that equates to 30% of your entire income.

To understand what you are spending your money on you need to track your spending. Writing down everything you spend is an eye opener. It can also be laborious I know.

open diary with notes about start to save money today with euro notes on top to signify how to live on a budget
Budget living: make saving money a priority

3. Save before you spend

Achieving your savings goals is much easier when you move your money into a separate savings account as soon as you are paid.

It’s way too tempting to check your balance and think you have more money than you really do so you loosen the grip on your spending a little and suddenly you’ve spent your savings for the month.

Set up an automated payment into your savings account from your checking account the day after you’re paid (always the day after as very, very occasionally employers pay late).

Related posts:

What’s The Point Of Having A Savings Account These Days?

Why You Should Have Two Emergency Cash Accounts

4. Make your finances a game

If you want to live fabulously on a budget you need to enjoy everything that your money does and does not do for you.

When my husband and I were living on one low income, we had very, very little spare money. And we lived like that for a long time.

Turning all our everyday financial decisions into a game helped us to learn how to enjoy living well on a budget for however long it was going to last.

Cutting my grocery bill was a challenge I relished, switching off lights (constantly) didn’t annoy me, it made me happy because I knew it was a way to save money, albeit only a little bit.

Of course I got annoyed with hubby/kids who left them on in the first place!

ways to save money and make it a game

  • Challenge yourself to find new ways to cut your grocery spending
  • See how wearing an extra layer can help with having your heating on less
  • Change your heating controls so it’s on for 20 minutes less each day
  • Make a point of trying to find ways to save a penny or two
  • See how far you can go without breaking a dollar bill/pound note
  • Start focusing on no spend days and see how many you can achieve every month
  • Challenge yourself to have a homemade Christmas – all gifts to be made by you, nothing bought
  • Find new ways to do things for free or very, very cheap

5. Get rid of debt

Debt costs you money every month in interest payments and lost saving opportunities. When you are looking at how to live on a budget, paying out for debt repayments is not helpful.

You want every penny of your paycheck to be working towards your goals, your savings and be available to cover your expenses. $300 in debt payments is a big hole in your budget.

Your short term goals need to be to pay off debt as fast as possible, otherwise you’ll be living on a tight budget for way longer that you want to.

6. Spend less By learning new skills

Don’t outsource skills or jobs that you could do yourself.

With a bit of time and research you can take on all those jobs your grandparents used to, and more:

  • Cut your own hair (YouTube different styles)
  • Car oil change (use YouTube for tutorials)
  • Gardening
  • Window cleaning

For more inspiration on why learning some of your grandparents skills will help you with budget living and saving money, have a read of these posts:

12 Traditional Frugal Living Tips To Supercharge Your Savings

15 Best Frugal Living Tips From The Great Depression To Use Today

7. Stop Impulsive Purchases

These are never in your budget, yet very easy to do.

Buying impulsively when you are out and about because you’ve seen something that suddenly you must have is how you spend too much.

Moving away from impulse buying could be as simple as just not buying when you see something nice. Realistically though, you will need to change other things to reduce this spending.

Don’t go shopping as a form of leisure. Be strict with yourself and invoke a 72 hour pause or the 30 day saving rule.

If you see something you really like that wasn’t already a planned purchase, wait a minimum of 72 hours or 30 days.

Remember your goals – does this new thing fit with your goals or stop you from achieving them this month?

If it is still a want, and you have the money within your budget, then go buy it.

Be conscious of your spending decisions.

womans hands counting coins with notepad and calculator to signify how to live on a tight budget
Keep a note of what you spend and what you save

8. Have fun money as an essential thing

I believe everyone needs a little fun money in their lives. Even if it’s only $20. Fun money is your money to do with what you will, no guilt tripping.

Without fun money you are much more likely to resent living on a tight budget and end up spending too much money that you don’t have.

9. work on Reducing utility expenses

Paying for gas and electricity are musts, but you don’t need to pay over the odds.

Dependent on where you live you may be able to switch to a cheaper supplier or haggle with your existing one.

More than switching suppliers though is your ability and your power to reduce these expenses.

Not to zero, granted, but you could shave $10 a month or more by focusing on using less energy every day. You can:

  • switch lights off
  • turn your thermostat down
  • take a shorter shower
  • have a cold shower (I love them!)
  • use your crockpot more, your main oven less
  • unplug gadgets not in use
  • wear an extra layer or two

These living on a budget tips may not seem like big money savers. On their own they aren’t, but collectively they could save you $120 a year and they are also eco friendly.

These are productive steps you can take to reduce your bills and do your bit for the environment.

By doing so you are also building your new mindset. The mindset that will help you learn how to budget and save money every day.

For more help on reducing your utility bills and being more eco friendly check out these posts:

How To Save Electricity Doing Absolutely Nothing

How To Keep Your House Warm In Winter And Save Money

10 Ways To Save Money On Your Water Bill

How To Go Green When You Live A Thrifty Lifestyle

10. Cut streaming services

I’m going to go against the grain here and say I like cable and even when we had to learn how to live on an extreme budget, cable was one of the expenses we kept.

However, it was the basic package on a deal I negotiated hard to get and it was our ONLY source of entertainment all month.

It’s not just cable that costs you money to watch TV, there are numerous streaming services now, all offering different films and box sets.

It might be nice to have the choice but cutting down to the bare minimum will save you money.

If you can watch TV for free (or don’t watch TV) then get rid of them all, if not then choose one package, negotiate with the provider to get a better deal and dump the rest.

11. use money saving apps

When you buy something you want to know you’ve got it for the best price. Money saving apps can help you know you’ve got the best price and earned some cash back at the same time.

For savings on groceries use Ibotta and Fetch.

For general shopping use IBotta, Dosh, Quidco, Topcashback and Honey.

And of course, always check to see if there is a discount code or coupon you can use, online or in store.

12. Don’t use coupons as a first step

I’m not a big advocate of couponing when you are trying to lower your grocery budget.

Once you’ve achieved a reduction then by all means add couponing in (I have done).

But when starting out you want your focus to be on buying the right foods for the right meals for you. Coupons can easily send you off on a tangent of spending more to save more.

bowls of food on plain table - how to live on a tight budget
Your grocery bill is ripe for reducing

13. make Big savings On Groceries

There is too much choice in the grocery stores now which actually makes it difficult to only spend a small amount on food.

You need to focus on specific areas in order to have a tight grocery budget. With so much choice it can be difficult to choose wisely and stick to your spending plan.

Focus on whole foods, not processed. Healthy foods can be cheap.

What should I eat on a very tight budget? I hear you ask. Whole grains, beans and pulses are healthy and cheap. Seasonal vegetables and fruit can all be part of your food plan.

These posts will give you an excellent basis for your grocery budget:

55 Of The Best Cheap Foods To Buy When You’re Broke

Budget Grocery List: The Best Cheapest Foods For Tight Budgets

14. Budget Meals

The price of homemade meals can vary enormously, just as restaurant food can.

Plan your meals based on ingredient cost and set a bar for the maximum you will pay for one meal.

When I was feeding a family of 4 my bar was set at £1 for the protein/meat element of a single meal.

For the 2 of us now my bar is £1.50-£2 but I do like to sneak in a few £1 protein meals to reduce our overall food cost.

Be creative with your meals, pad your meat out with extra veg, beans or pulses to reduce the cost.

Don’t be a slave to recipe amounts, especially on meat. If a recipe says 200g of protein per person, I always reduce it by half.

For great cheap and easy budget recipes check these posts:

55 Cheap And Easy Meals You Are Going To Love

10 Frugal Meals For When You Feel So Broke

plates of food on white background to signify how to live a fabulous life on a budget
Planning your meals can be a big help in learning how to live on a tight budget

15. Meal Planning

Meal planning is the best way to reduce your grocery bill and ensure you don’t waste any food. The. Best.

Some people aren’t keen on meal planning on the basis that they don’t always ‘feel’ like eating the planned meal.

You can deal with those thoughts 2 ways.

  1. Focus on the premise that food is fuel, ignore what you feel like having and have the planned meal or
  2. Stick to the weekly meal plan but switch up the days and have a meal planned for another day.

If meal planning is something you have never done or it feels a little overwhelming right now then the $5 meal plan is your savior.

For just $5 a month you not only get a weekly meal plan, you get a grocery list of all the ingredients you will need to make those meals, plus the recipe instructions.

That’s less than $1.20 a week to know you never need to grab a takeaway on your way home or visit the grocery store because you don’t know what to make for dinner.

No stress about planning meals and you save money by not wasting food and not eating out multiple times a week.

Use the 14 day FREE trial to prove it works for you.

Try $5 Meal Plan Today!
$5 a month makes meal planning a breeze

16. Don’t Waste Food

According to statistics, we waste up to 30% of the food we buy. Right there is your potential to cut 30% from your grocery budget immediately.

Don’t waste food!

Is that easier said than done? Maybe, but keeping that 30% in your mind will help you reduce waste for sure. Meal planning and sticking to it is a great start.

I’ve written in detail how you can reduce food waste in this post. I’ve created a free food waste audit that you can download.

I encourage you to complete it for 2 weeks. You could find it quite eye opening!

dollar bills planted in soil  to signify how to live on a budget and save money
Growing your own food also saves money

17. go generic

Don’t buy premium brands just because. Generic and value brands cost much less than premium and taste just fine in their own right.

I know that sometimes they taste different, but as I always said to my kids, different doesn’t mean bad, it just means different. And often that difference is better.

Have you seen how many times generic and value brands beat the premium versions in a blind taste test?

Premium brands cost more partly because the manufacturer needs to recoup all the advertising money they have spent trying to tell us their product is best!

Generic medicines are the same. In the UK generic paracetamol can be as little as 0.03p per tablet, whereas the branded version is 0.11p per tablet, That’s almost 400% more in price!

18. Reduce Your Clothing Budget

Clothes are a prime area for reducing spending on to help you in your quest to learn how to live on a budget and save money successfully.

I bet right now you have enough clothes in your wardrobe to not have to buy another item for at least 2 years.

Cut your monthly expenditure on clothes right down and save that money instead.

I’m not saying don’t buy any clothes for 2 years but if you did, think of the money you would save in that time.

Makes you think doesn’t it?

19. Pinch a Penny

If you can pinch a penny and squeeze an extra dime out of every dollar then it all adds up.

  • Saved a few cents by buying a dented can of tomatoes? Celebrate.
  • Saved a dollar by buying your bread in a different store because it was cheaper? Celebrate.

Celebrate every penny pinched and dime saved, because they are what will help you learn how to live comfortably on a budget.

Big expenses can be cut once or twice but it’s the sum of all the little things you do every day that will help you win with a tight budget.

And getting a sense of achievement out of every penny saved means you’ll enjoy every day.

20. Find Free Entertainment

You can pay a lot of money for entertainment. Yet look around a little and you’ll also find plenty of fun and free entertainment.

  • Walk in the park
  • Movie night
  • Free events in your community
  • Museums
  • Have friends round to dinner
  • Fun at the beach

You certainly don’t need to forsake entertainment to live on a budget, just find the free alternatives or create your own.

womans hands holding folded money notes in one hand and coins in another above a desk with calculator and paper on it
Cash is a great help in learning how to live on a budget

21. Use Cash To Reduce Spending

I know you can get rewards and cash back if you use your credit cards for all your spending. And I know these rewards can add up quite nicely.

But to help your mindset, to help you learn how to live on a budget and be successful, I would encourage you to use cash for 2 months.

Cash for all those times when you would otherwise use your credit card.

I know from personal experience that I spend more money using credit cards than when I stick to cash.

Using cash makes you think harder about spending it, You have to hand it over to the cashier.

Your credit card isn’t real money in the moment, it’s just a bit of plastic. Only later when you get the bill does it become all too real, all too late.

For more help in getting started on using cash check out these posts:

Why You Should Use a Cash Envelope System to Manage Your Money

The Best Cash Envelope Wallet To Help You Love Cash Budgeting

22. Create Your Survival Budgeting system

A survival budget is the tightest of budgets. It’s the budget you turn to when the sh*t hits the fan.

If you were suddenly faced with living on one income when you are used to two, a new spending budget would be essential.

Creating a survival budget will show you what you could and would give up if you HAD to. When your back is to the wall and the money isn’t there.

Having a survival budget provides reassurance for tough times.

But it also shows you that your normal budget, the one you are living on right now, is not so tight.

Your normal budget does have flexibility and extra in it, unlike your survival budget.

There is money for fun, clothes and entertainment when you plan it right.

This is what our survival and normal budgets looked like a few years ago:

table of 2 different budgets - how to budget and save money

We no longer have a mortgage so our budgets are different

I strongly encourage you to create your own survival budget, have a read of my post on how to do it. There is a free template you can download to help you create your own.

How To Survive, Thrive And Save Money On A Tight Budget


23. Find ways to bring in extra income

When you are trying to live on a tight budget, combining money saving ideas with making more money can make a real difference to your financial situation.

And because you are all about stretching your money as far as it can go, you don’t need to earn thousands or spend every waking moment working to earn some extra dosh.

Earning extra money is perfect for ring fencing it toward one of your financial goals.

For quick and short term ways to make some extra money read my post on how to make 300 dollars fast, I’ve included 30 different, legit, ways to make money.

More Ideas To Earn Extra Money

There are many work from home jobs that pay a good income when you commit to learning a new skill. These posts have some great ideas on money making hobbies and flexible work from home jobs:

The Best Work From Home Jobs When You Need Flexibility

41 Awesome Hobbies That Can Make You Money Right Now

24. Buy used

A brand new car loses almost 10% of it’s value as you drive it off the forecourt. It’s the same for tools, clothes and toys.

When you can pick up quality, second-hand items for up to 90% off their new price, why wouldn’t you buy them this way?

Some people might say, they like new things. But the moment you put on a new top, it’s no longer new. Used items are still new to you. And they cost significantly less.

My entire work wardrobe was made up of second-hand suits and blouses, I didn’t want to pay out big money just to go to work. Yet I needed to be suited and booted. So I bought used.

When you are in the market for a new item, do your research to find it used and marvel at the savings you make. Sites like Ebay, Craiglist, and Gumtree are good starting points.

Get to know your local thrift stores/charity shops for new to you quality clothing.

25. Homemade gifts

One of my best tips to learn how to enjoy life on a budget is to make your own homemade gifts for Christmas and birthdays.

Christmas gifts can easily send you into an overspending spree yet people always appreciate the effort you put into the gifts you make so much more.

You don’t need to be crafty to crank out gorgeous looking gifts. If you did then I would have a problem because I am probably the least crafty person you will every know!

Gain inspiration from these posts:

24 Simple (And Easy) Homemade Gifts Perfect For Christmas

10 Simple And Beautiful Homemade Food Gifts For Christmas

Your questions about how to live on a budget and save money

Hopefully I’ve covered most of the questions that have popped into your head but maybe you are wondering about these questions too.

How do you start living on a budget?

To start living on a budget, it’s best to take things a week at a time. Break down your budget and the money you have left after bills are paid into weekly amounts.

The cash envelope system is the perfect way to start living on a budget. You should also check out my post on budgeting tips for beginners for reassurance on your first steps.

How do you live on a tight budget?

Sometimes our financial situation forces us to live on a strict budget and we do it. Losing an income overnight or finding out you need to pay unexpected expenses immediately means we make ends meet. Try living on your survival budget for a month or two. After achieving that, living a strict budget will feel easy!

How can I save a little money every month?

The easiest way to save a little money is to pay it in a separate savings account as soon as you are paid. And don’t touch it!

How to Live On A Budget

Creating your financial and life goals, prioritizing your spending and really focusing on reducing costs are key to being successful in living a fabulous life on a budget.

Mastering these 25 practical steps will help you love living within your means and help you save money for those fantastic goals of yours.

Come and follow me on Pinterest for more money saving hints and frugal tips!

pinterest image for living on a budget
pinterest image for living on a budget

Last Updated on 14th February 2022 by Emma

About Emma

I'm here to help you become confident in making the best money decisions for you and your family. Frugal living has changed my life, let me help you change yours.

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