It may not seem like it's possible, but you can retire early on a frugal income. You just need to be more purposeful with your budget.

A lot of people like the idea of early retirement. Sacrifice for a few years, set aside money, and retire when you want. You get to spend the rest of your life doing what fulfills you, or doing work you actually want to do.

But what if you have a smaller income? For many people, it can feel like only those with a “high” income can retire early. However, it is possible to retire early on a smaller income. However, you might have to make changes in your life, and it becomes very important to make the most of every dollar.

What is a “frugal income”?

First of all, it’s important to note that frugal means different things to everyone. Whether you income is frugal depends, in large part, on the cost of living where you are, as well as your other expenses.

For the most part, though, a frugal income is about making sure that you don’t spend more than you make. When you have a small income, this can feel more difficult since a larger percentage of your salary is going toward necessities, leaving less for wants or saving.

However, even if you feel like you’re struggling, it might be possible to retire early if you take the steps to shore up your finances and sacrifice some of your wants.

How to live frugally

If you want to retire early, but don’t consider yourself rich, living frugally is one of the keys to working toward that goal. Here are some of the steps to take to help you maximize your dollars:

Create a realistic budget

Your budget should realistically address your needs. Start by reviewing your past spending. Be honest. Do you sometimes spend on things you don’t need—or even want?

Put together a budget that focuses mainly on needs and saving for the future while allowing a small amount to go toward some of your wants. Make sure you stay within your means.

Know your priorities

Understand what really matters to you. Before you spend money, think about whether it will help you reach your future goals, or whether it offers you some benefit today.

It’s not wrong to spend money on the occasional want or frivolous purchase. Just make sure it fits your priorities and that it adds value to your life.

Comparison shop

No matter what you plan to purchase, find the best price. Shop for sales, use coupons and rebates, and make sure that you’re paying as little as possible so you can bank the savings.

Use credit cards wisely to earn rewards

One of the best ways to save money is to take advantage of credit card rewards programs. Many cards offer cash back, and you can use that to offset your everyday expenses.

We recommend the Chase Freedom Unlimited® , which offers an unlimited 1.5% cash back on all other purchases and an additional 1.5% on all purchases (up to $20,000 spent in the first year).

This strategy only works if you use your cards to buy planned budget items. Don’t overspend just for the rewards—you’ll only end up in debt. Instead, spend within your budget, pay off your balance each month, and reap the rewards.

Sign up for rebate sites

In addition to using rewards cards, sign up for rebate sites. The money you earn won’t significantly impact your retirement savings, but using these sites will contribute to your frugal menality. And that’s what will help in the long run. Websites like Swagbucks, Ebates, and Ibotta can help you reduce the cost of your items.

Just make sure you use them for items already in your budget. In my case, I’ve gotten more than $1,000 in Amazon gift cards for my use of Swagbucks. I use these cards to make planned purchases on Amazon for free, reducing my overall expenses.

Keep your emergency fund in a high-yield account

You can get a little bit of a boost to your emergency fund by storing it in a high-yield savings account. You’ll get a better return in the end, helping you be better prepared for unexpected expenses. When you have an emergency fund, you’re less likely to go into debt for surprise costs.

Get a side-hustle

While these tips can help you live frugally, it’s important to understand that there’s only so much you can cut out. At some point, you might need to earn more money.

If you have the time, consider starting a side gig. A side gig can bring in more money that you can put toward your early retirement goal.

How to retire early when you live frugally

When it comes to early retirement, the point of living frugally is to free up money so you can invest it. Without investments, what you save won’t grow fast enough to allow you to retire early. Even a high-yield savings account won’t do the trick. Instead, you need to make your investments work for you.

Here are some things you can do to get the most out of investing—and grow your wealth so that you can retire early:

Start as early as possible

The earlier you start, the longer compound returns have to work in your favor. Begin investing as soon as you can so you can start building wealth.

Use different types of investment accounts

It’s a good idea to open a tax-advantaged retirement account for the future, especially if you have an employer that offers contribution matching. However, if you plan to retire early, you can’t access a retirement plan before age 59 ½ without incurring a penalty. So, consider open a taxable investing account as well, so that you know you’ll have access to funds early.

Make it automatic

With your work retirement plan, it’s to have money taken from your paycheck and put into your retirement account. For other accounts, you need to set up an automatic transfer each month. Have money automatically moved into an investment account and create a plan that automatically buys shares when you can.

Invest windfalls

If you get a bonus, an inheritance, or a tax refund, make sure you invest at least some of it. Put it into your account so that it can grow and help you reach your early retirement goal.

Increase your contributions over time

Even if you can’t put in very much to begin with right now, you should start investing. However, you can’t keep things at the same level and expect to meet your goals. As your income grows, boost your contributions. Each time you get a raise or promotion, change your paycheck withholding for your retirement plan, and increase your automatic transfers to your taxable investing account.

Following this regimen can help you put each dollar to work more efficiently, helping you retire early, even if you feel like you have small income.

Where to invest your money overview

Investment AccountBest For
BettermentFirst-time investors
EmpowerOverall financial management
StashThose who don't want to spend a lot on investments
Blooom401(k) management

Where to invest your money

In addition to a workplace retirement plan, there are some places that have low barriers to entry and that can help you start building your wealth. Some tools that can help you make the most of your investments include:


Betterment helps you build a portfolio built on your long-term goals and your risk profile.

You can get started investing with a small amount, and set up an automatic transfer. 

Open an account with Betterment today or read our full review


Empower is a financial management tool that helps you get a holistic view of your finances, including credit and bank accounts, as well as your investment portfolio.

It’s a good way to see everything, and how it integrates. There are also plans available for asset management.

(Personal Capital is now Empower)

Open an account with Empower today or read our full review


Stash offers micro-investing starting at 1 cent¹, so you can learn how to invest as you go. Choose individual stocks and ETFs², and use the educational tools to learn how to learn more about investing and personal finance.

Stash can help you learn how to make the most of every dollar in you invest.

Open an account with Stash today. Special promotion: Sign up and add $5 to your investment account and get $5 added to your Stash investing account!³

Terms and conditions apply*


Rather than aiming at helping you invest, blooom can manage your 401(k) for you.

It will help you cut down on fees and manage your retirement portfolio more efficiently so that your money works harder for you.

Open an account with Blooom today and get $15 off your first year of Blooom with code BLMSMART or read our full review.

And many more

There are other robo-advisors and investment companies, including Wealthfront, Acorns, and Robinhood that can help you get started investing and growing your wealth quickly and easily.


Early retirement is a goal that can be reached if you do your best to cut expenses and invest what you save. By adding other strategies, like sacrificing some of your wants and taking on a side gig for extra income, you might be able to meet your early retirement goal even faster.

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Empower Personal Wealth, LLC (“EPW”) compensates Webpals Systems S. C LTD for new leads. Webpals Systems S. C LTD is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

*Terms and conditions apply – Stash legal disclosures

This material is not intended as investment advice and is not meant to suggest that any securities are suitable investments for any particular investor. Investment advice is only provided to Stash customers. All investments are subject to risk and may lose value.

¹For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

² Before investing in any exchange-traded fund, consider your investment objectives, risks, charges, and expenses.

³Promotion is subject to terms and conditions.

Money Under 30 is a paid Affiliate/partner of Stash. Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser.

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