Effective Smart Spending Tips

Everybody wants to improve their financial health, but adopting better financial habits can seem daunting, especially for low-income people. However, good money habits start with small steps that everybody can implement to help with short- and long-term financial goals.

Below are some small smart spending habits that will help you save a lot in the long term if you consistently implement them in everyday spending.

Create a Budget

This is the first and most effective thing you should do to start your smart spending journey. A budget helps you outline your total income after tax and identify all your expenses.

It also helps you allocate enough money to every expense, reducing wastage and leaving enough to save.

There are different budgeting methods, but ensure the method you choose aligns with your spending habits and goals, helps you achieve your saving goals, and improves your debt repayment strategy.

  • 50/30/20- This straightforward budgeting technique requires you to set aside 50% of your income after tax for basic expenses, 30% for discretionary expenses, and 20% for debt repayment and saving.
  • Zero-based budgeting- In this technique, you allocate every dollar to an expense or savings, leaving you with a $0 balance. It requires you to have all your expenses laid out and is ideal if you have a fixed monthly income.
  • Pay yourself first- This is another simple budgeting technique different from the rest. While the others prioritize recurring expenses, this technique requires you to pay yourself first by depositing the first expense into your savings or debt-repayment account. You can then use the rest of the money as you please.
  • Envelope system- This technique resembles zero-based budgeting in that you allocate every dollar to an expense. However, with this method, you must have an envelope dedicated to every expense, which you fill with the specific amount.

You can do that physically with cash or electronically using budgeting apps. Once you exhaust money in a category, you cannot take money from other categories or spend it on that category until your next allocation, so you must calculate your expenses accurately.

Assess Current Spending Habits

Assessing your expenditure helps you identify what you spend your money on the most and where you might be spending unnecessary money. It also helps you identify recurring expenditures like subscriptions that you need to cancel.

Finally, it helps you ascertain the exact money you spend on every expenditure, making it easy to make an accurate budget.

You can track your spending by keeping all your receipts, looking at your bank or credit card company notifications, or writing down your daily expenses.

Set Realistic Financial Goals

Short and long-term financial goals give you something to work for and look forward to, which helps you maintain your discipline. However, setting very high goals could make it look unrealistic to achieve, lowering your motivation to save.

When setting your goals, write them down in terms of priority and timeline. It would help if you broke down the goals into smaller ones that are easier and faster to maintain.

For example, if you want to save a certain amount or buy a new appliance, break the total amount into weekly or monthly targets.

Pay Off Your Debts

Attaining your financial goals can be challenging if you have debts to pay. However, paying them off first makes it easier in the future because it helps you save hundreds or thousands of dollars in interest.

There are different debt repayment strategies you can use depending on your current debts, their repayment terms, and interest rates.

Therefore, write down all your debts using their name or account to determine the best method. You should then indicate the debt type, balance, minimum monthly payments, interest rates, and payment terms.

  • Debt snowball- This technique requires you to pay all your debt monthly minimums, then focus the balance on paying off the debts with the lowest balances. This method is ideal if you need help remaining motivated to pay off debts.
  • Debt avalanche- This method calls for you to make monthly minimum payments to all debts, then direct the remaining amount to pay off the debts with the highest interests first.
  • Debt consolidation- This involves combining all your small debts into one big one by taking out another lower-interest loan or a balance transfer credit card to pay your existing debts. That allows you only to make one monthly payment, which helps lower your interest in the long run.

Get a Side Hustle

A side hustle is an excellent way to supplement your primary income. There are numerous side hustle options, especially with the Internet offering numerous remote working opportunities.

You don’t have to look for a major side hustle because you can even monetize your hobbies or skills to offer services or sell hand-made things.

Reduce Your Expenses

Expenses could look small at the moment but become hefty over time. Therefore, you should look for every way to reduce your spending and direct the extra money to your savings.

  • Avoid impulse purchasing by always having a shopping list
  • Look for sales, discounts, coupons, or offers
  • Sign up to brands’ loyalty programs for points or cash backs
  • Cancel unnecessary or unused subscriptions
  • Unplug your appliances when not in use
  • Meal prep and buy in-season vegetables and fruits
  • Buy things in bulk
  • Ditch bottled water
  • Learn basic DIY skills
  • Pack your lunch and drinks to work or school
  • Go thrift shopping
  • Use cash or a prepaid credit card

Have a Separate Savings Account

Saving can be easy, but having your savings in the same account as the rest of your money can see you not making meaningful progress. Therefore, create a separate savings account and lock it.

That way, you will always deposit your allocated savings and need a way to spend the money. To ensure you never miss a saving day, you can link the account to your primary bank account to automate the process.

Have An Emergency Fund

In addition to your savings account, you should create an emergency fund to cover you in case of sudden job loss, illness, or car or home repairs. Experts recommend having over three months’ expenses so emergencies don’t force you to take out new debts.


Smart spending and achieving financial independence are possible regardless of your income. All you need is discipline and patience practicing the above seemingly small tips.