Living on a low income budget can be stressful and sometimes seem impossible. Learning how to budget money on low income can help ease that! These simple tips and tricks can be done by anyone at any time! Read on to learn how they can help you too!
I don’t know about you, but when my money is tight, the last thing I want to do is . But the truth is, the tighter the income and the shakier your finances are, the more important it becomes to know where your money is going and what your monthly expenses are.
Simply put; without a plan in place, your money is going to run you and it’s going to run wild. Your budget, even with a low-income, is what wrangles those dollars and cents back into place. And it’s what allows us to begin to get on a more solid financial foundation.
How to Survive with Very Little Money
If you’re currently struggling with a low income, living paycheck to paycheck or are maybe not even able to do that, trust that I know exactly where you are coming from. I have been there more times than I can count myself. Having an income that is low and may not pay everything does not mean you’re bad with money. That’s a pretty common myth. What it does mean is that you will need to be incredibly intentional every step of the way.
How Can You Save Money if You Have a Low Income?
Well, you’ve already done the first step. You’re here, ready to learn and ready to make changes and for right now, the answer is you don’t. If you are currently running negative meaning you have bills that are past due, don’t have food, can’t afford gas, your medicines or any other necessities, you can’t and shouldn’t worry about saving right now.
Because the idea of saving money only works if you have extra money to begin with. So, the first step to being able to save money if you have a low income is to get your finances into a better place. And that starts here for you and it starts today.
Is the 50/30/20 Rule a Good Idea?
In theory, absolutely. The 50/30/20 budget rule says you spend 50% on necessities, 30% on savings and 20% as fun money. However, like I said above, if you’re behind on bills and your needs, the 30 and 20% parts of this budget theory need to be postponed until you are current on everything.
Once you’ve got everything current, you’ll have more freedom to begin looking at the 30% savings/investment and 20% fun money.
But, with that said, I am a very firm believer that we all must have some fun money. If you don’t have any, you will very likely experience budget burn out at some point. If that happens, there’s a chance you could actually do quite a bit of damage to your budget. So, instead of letting that happen, spend some time at the end of your budgeting session adjusting things if possible to allow yourself at least one fun activity each week.
Now, with all of that said, ready to get started? Grab a notebook and pen, a printable budget worksheet, your budget binder, a spreadsheet budget, or an app like Tiller Money and let’s get started budgeting with a low income. Use whatever works best for you!
Step 1: Know What You’re Working With
Like anything else in life, you start at the beginning and for your budget that means starting with your monthly income. Now I don’t mean your hourly wage or your net pay, I mean your after-tax income. Sorry, but you don’t get to spend what is taken out for taxes so that amount can’t be included in your budget. However, if you receive child support or any other consistent monthly payment, you absolutely should include that.
If your income is like mine and your current job (or you do gig/freelance work) pays an income that is irregular or not consistent, you’ll want to take an average. Look back at the past 3 months and take your lowest number as your starting point. For this, we go low since it is easier to budget extra money than it is to pull money from thin air if we overestimate.
If you prefer to do your budget weekly, that is perfectly okay. Simply take your monthly income and divide it by 4 to get your weekly income.
Step 2: Track Every Expense
I’m not going to lie. Tracking expenses sucks. It requires a lot of time and thought and is the part of budgeting most people skip. Honestly, I can be pretty bad about it myself until I’m sitting down wondering where my paycheck just went.
But this is the single most important part of learning how to budget a low income. It tells you where your money is actually going and if you’re spending money on something other than your necessary monthly payments.
To start, grab your bank statements and track your non-negotiable necessary expenses. These can include, but may not be limited to:
- Rent or mortgage
- Utility bills (water, electric, trash, etc.)
- Food
- Transportation (gas, car payments, car insurance, car repairs, bus fare)
- Minimum debt payments
- Child care or school costs
- Cell phone/internet
- Medical expenses
- Subscriptions
Once those are written down, check your last month’s bank statements and receipts to find the things that don’t show up as bills. This is things like fast food, games, hobbies, entertainment, or impulse shopping. Usually, this type of spending is where money leaks and surprises happen.
Step 3: Prioritize in the Right Order
Because your money is tight, you may not be able to pay everything all at once; or even when it’s due for the first couple of months. Know what? That is perfectly okay as long as you’re working hard to get things back on track and aren’t wasting money on silly things.
This means that you will need to prioritize which categories you are spending your money on and should only be spending your resources on things that help you survive. In other words, your necessities.
Things such as:
- Food – If you don’t eat, nothing else matters. But that doesn’t mean expensive takeout. Budget grocery money wisely and take the steps necessary to save money on food.
- Housing – Rent or mortgage comes next. It keeps you off the street, but look at these ways to save money on rent to see if any can help you.
- Life savings medications – Simply put, no one wants to attend your funeral.
- Utilities – Keep the lights, water, and heat (or air) running and yes, in some parts of the country a/c is a necessity. However, there are ways you can cool your home without air conditioning.
- Transportation – If you can’t get to work, you can’t earn. If you drive, find ways to save money on gasoline.
- Insurance – Especially car insurance if you drive regularly. It’s legally required in most states.
- Minimum debt payments – Stay current where you can, but don’t prioritize debt over survival. Personal loans and credit cards can both have a high interest rate. Missing payments on them does more harm than good, but now isn’t the time to be working hard to pay them off. That comes later. If you need to keep track of your credit score, you can do so for free by creating a Credit Karma account HERE.
Step 4: Cut the Non-Essentials
I can be really bad at this one myself if I allow myself to be. Sometimes we tell ourselves something is “needed” when it’s really just wanted out of habit. Subscriptions, extra phone features, impulse Amazon buys, name-brand products, frequent eating out can and should be trimmed, canceled, or paused until you are more financially stable
This isn’t forever. It’s just for now and even if you only free up $30 or $40 a month in your bank account, that’s money that can be re-routed to cover a need or create a buffer. On a low income, small changes matter.
Step 5: Create a Spending Plan; Not Just a Budget
Your budget is a big-picture view. It allows you to see, at a glance, that your needs are covered. A spending plan tells you how to walk that out week to week. Yes, you need both; especially if you’re living on a lower income. Once you’ve covered the necessities we talked about and have dropped what doesn’t belong, divide what’s left into daily or weekly spending amounts.
Step 6: Use Cash (or a Cash System) When You Can
I don’t know about you, but I have a harder time letting go of cash money than I do swiping my debit card. Because of this, I use a cash based spending system. Do I use all cash? No and I talked about why HERE, but the gist of it is, most of my bills, including my rent, are paid online. I use cash for things such as groceries and gas, but my debit card the rest of the time.
This does two things for me. Every dollar has a name. I know where it’s going and what it’s supposed to be doing for me. But, I am also limited by the amount of cash in my hands meaning that overspending is not possible.
If cash envelope system isn’t an option for you, try creating separate bank envelopes by using prepaid debit cards or a digital envelope system. The idea is to give every dollar a home before you spend it.
Step 7: Build a Mini Emergency Fund
Even on low income, saving is possible. It just happens slower. Instead of building a fully funded emergency fund, you’ll want to start smaller such as $100.00. This gives you a bit of breathing room when the car battery dies or a bill pops up unexpectedly, but isn’t likely to put a strain on your finances.
You can build this by saving change, setting aside things like birthday presents from Grandma, or shaving just $5.00 off your weekly grocery trip. Just keep in mind that saving should not be your actual goal until you are okay and current with the rest of your budget.
Step 8: Increase Income If You Can
I know this isn’t always an option, but finding a side gig to bring in extra cash can make all the difference in your budget. For me, I have several side hustles.
I do surveys and offers on Swagbucks and places such as Pinecone Research, MyPoints, Survey Junkie and Inbox Dollars. I Doordash for side cash. I resell on Ebay and other apps. I write Kindle books. I even play games on Mistplay to earn free gift cards in my free time. No, you don’t have to spend money to earn them over there.
I like knowing that my needs and wants are covered and extra side jobs help me do just that.
- A weekend side hustle like reselling or gig work
- Mowing lawns on the weekend (or raking leaves in the fall)
- Babysitting, house cleaning, or pet sitting
- Selling unused items around the house
- Taking surveys or using rewards apps for gift cards
Anything you earn beyond your usual income can be used to pay down debt, build your savings, or stop living paycheck to paycheck.
Step 9: Revisit the Budget Every Month
A low-income budget isn’t something you write once and forget. It changes. Prices go up. Income shifts. Needs evolve. This means you should be revisiting your budget once a month at the very minimum. Your spending plans should be updated once a week.
At the end of each month, take 15–20 minutes to review where your money went and adjust as needed. Did you overspend on gas? Was your electric bill higher than expected? This helps you stay flexible and gives you better control over your money moving forward.
Step 10: Don’t Try to Be Perfect
Finally, give yourself some grace. Some months you’ll do great. Other months, something unexpected will throw everything off. That’s not failure. That’s life. A good budget isn’t about being perfect; it’s about having a plan to come back to when things go sideways.
Give yourself some grace while you figure it out. Every step you take toward better money management makes a difference, even if it’s small.
Living on a low income doesn’t mean you’re stuck. It just means the path takes a little more effort and creativity. But with the right mindset and a solid plan, it’s absolutely possible to meet your needs, reduce stress, and start building a better future one dollar at a time.
Leave a Reply