Ways to Save Money on a Tight Budget

Ways To Save Money On A Tight Budget

Innovative new ideas that help everyday Australians with their budgets are popping up every year and getting them excited about saving. Even if you live on a tight budget, some simple household money-saving tips can have a significant effect and only require minor adjustments to spending habits and lifestyle choices. This article is your guide to living on a budget and will offer real recommendations to start putting into action today.

Start Small with Some Simple Lifestyle Changes

When you start thinking about how to save money, it can help to figure out what small financial habits you can cut back on or out altogether. Identifying parts of your life where you might be spending money on things you enjoy but don't necessarily need is a great place to start. They can include:

  • Plan out meals for the week. The money saved by making lunch instead of buying takeout during your lunch break can quickly add up.
  • No more coffee to go. If you are a coffee-a-day drinker from your favourite cafe, you can save up to $28 per week by brewing coffee at home instead.
  • Sorting out your subscriptions. You might want to keep your gym membership but might be subscribed to too many streaming services - try picking one over the others or opting for a cheaper plan. To help put this in perspective, if you had the basic (most affordable) plans for Stan, Netflix, Disney+ and YouTube Premium, that would cost $47.97 a month, which totals $575 a year.

But remember that these changes don't have to be drastic, frugal living is all about simplicity; you can still enjoy your favourite coffee spot maybe once a week. We are only getting started, so the key is to figure out what you need, more than you want.

Money Saving Ideas

Set Savings Goals

Creating goals and working towards them is one of the best ways to stay motivated while saving on a tight budget. Especially if your goal is to save for a house deposit, the simple act of writing down the amount you need and reminding yourself of it regularly can be a huge factor in achieving it. 

Many banks nowadays also offer options within their apps to set a savings goal, but you could also try a budgeting app for more personalised budgeting that can also track your expenses, bills etc. Some budgeting apps that are free include:

Try a Savings Challenge

While our finances are serious, saving money on a tight budget doesn't always have to be seen as an uphill slog - you could view it as a challenge that motivates you to keep. There are so many fun money-saving challenges out there for you to try, such as the No-Spend Challenge, which involves going for a set period (days, weeks or even months) where you only spend money on the essentials. Or you can get creative and come up with your own and even get friends and family involved.

Categorise Your Monthly Budget

Now that you've figured out what you need to change to save money and set a savings goal, it helps to break down your budget into categories. One of the most straightforward ways to do this if you are on a tight budget, which can also teach you how to save money, is the 50/30/20 rule. This way of budgeting sees 50% of your income go to essential expenses, 30% towards the things you want and the remaining 20% into a dedicated savings account.

While categorising a percentage-based budget 50/30/20 is a simple way to track where your money is going, it is just the framework and can be customised. If you want, you can adapt the percentages to what works best for you and your situation; for example, 60/30/10 or even 55/30/15, it's up to you.

Money Saving Ideas

Breaking Down the Essentials

Expenses considered essential for living include household expenses such as monthly bills, utilities such as water, gas and internet, petrol and groceries.

Some tips to help save money on the things you need include:

  • If required, save money on bills by switching utility providers for a better deal can give your budget the trim it needs. But there are less complicated ways to cut costs by turning off lights when you leave the room, turning off appliances at the wall and even installing a water-saving showerhead.
  • To help you save money on fuel, petrol stations across Queensland offer discount loyalty programs, for example, the Coles discount at Shell Coles Express stations. There are also free fuel-saver apps you can download, such as Fuel Map Australia, which can locate cheaper fuel prices in and around your area.
  • The average Australian household spends around $150 per week on groceries, even more for homes of five or more people. Next time you go shopping, save money on groceries by paying attention to specials, having a list and sticking to it, and only doing one big shop a week.

Saving for What You Enjoy

While we could go without them if we needed to, it's still possible while living on a budget to enjoy the things in life that you want. These are the fun things in life and can include social outings, new clothes and any entertainment you enjoy, from buying a new book to read to that new couch you've had your eye on for months.

  • Some tips to help save money on the things you want include:  
    Spending time with friends and family is always well-spent, but there are ways to save while eating out. Swap out the fancy restaurants for the local pub that might feature a good value, 'special of the day'. Or try eating in as often as possible and treat the ones you love to that great new recipe you've been trying.
  • When buying new clothes, many great stores offer essential but quality clothing at affordable prices, such as H&M and Uniqlo. You can also try shopping out of season and getting warmer clothes during the summer months, and vice versa, as many outlets routinely put a discount tag on out-of-season clothing.

Setting the Rest Aside for Your Savings

As mentioned before, having a financial goal to work towards is extremely important when on a tight budget, but what you're saving for depends entirely on what's a priority for you and your life. No matter your goal, whether it’s reducing debt, building a new home, saving for something special like a much-needed holiday or for unexpected expenses such as medical bills, this small portion of savings you set aside should always be for the future or emergencies.

Money Saving Ideas

Open a Bonus Interest Savings Account

Bonus interest accounts are savings accounts that can reward you with extra interest when you meet certain conditions and incentivise you to save. While they might differ depending on your financial institution, these types of accounts generally come with two conditions:

  • A minimum deposit (can range from as little as $20 to $2000) is made into the account monthly without any withdrawals.
  • The account's growth is measured from the first day of the month to the last to check if the savings balance has remained above a certain level.

You can receive bonus interest if you meet either of the two conditions. However, because these conditions can vary from bank to bank, check with your financial institution for a bonus rate or consider switching to a savings account with another that offers a higher interest rate to help you save money faster.

Refinance Your Home Loan

Refinancing a home loan is an excellent opportunity for homeowners on a tight budget to save more money. It can save you in the long term if you can reduce your interest rate to pay off your mortgage faster - even by just a little bit. 

For example, for a current loan of $800,000 at a 3.5% interest rate, the monthly repayment is $3,592. However, if you refinance to a lower rate of 2%, the repayment drops to $2,957, saving you $228,000 in interest.

Our Home Loan Comparison Calculator is a great financial tool that can crunch the numbers and help you decide if another loan can get you a better rate. Want access to a wide range of lenders and secure the right loan without all the endless paperwork? MyChoice Home Loans has you covered.

Review Your Insurance

When thinking about how to save money, it never hurts to look around every couple of years for better deals on insurance when or if your circumstances change, such as being on a tight budget. If this is the case, you could:

  • Shop around for car insurance. It could be possible to save on your car insurance by going with a cheaper provider and considering deals and offers, such as discounts for purchasing the policy online.
  • Review your health insurance. There could be multiple ways to reduce insurance premiums, such as dropping any unnecessary cover or simply swapping funds.
  • Review your insurance. This type of insurance includes life, disability or income protection insurance, which can be taken out via your superannuation fund. So, consider whether you are paying for standalone insurance and make the switch to save some money.

Some Interesting Ways to Save Money on a Tight Budget You Might Not Have Thought Of

Frugal living is all about conscious spending and saying no to retail therapy and impulse buying, but most of all, it can make you enjoy saving money. Below are some exciting ways to make the most of living frugally and help you save money on a tight budget.

Try a Side Hustle

Do you have any hobbies or skills like photography or writing, that you are good at that people would be willing to pay for? If you do, you could earn some extra cash on the side. Even if you don't have any monetisable hobbies or skills, you may have many old clothes or unused stuff lying around. It might be time to open up shop and sell on Facebook Marketplace, Gumtree or eBay. If that’s not your fancy, consider these great side hustles anyone can pick up:

  • Dog Sitting 
  • Babysitting 
  • Tutoring 
  • Housekeeping/organising
  • Handyman Services
  • Rideshare
  • Lawn Mowing or Landscaping

Make Your Own Cleaning Products

There is a range of recipes you can find online that tell you how to make your cleaning products, such as detergents, disinfectants and stain removers. Just make sure you are not looking at any recipes that might use harmful chemicals that could cause harm to yourself, your family and the environment. It would be best if you had some baking soda, vinegar, vanilla, table salt, and lemon juice because then you would be on your way.


We hope you’ve taken some useful tips from this guide on ways to save money on a tight budget and looking forward to applying them to your own saving journey. If you're ready to chat to a Mortgage Broker get in touch with a Consultant from our inhouse brokers at MyChoice Home Loans.