How to Budget Money on a Low Income

Article Summary:

You can budget even on a low income by avoiding unnecessary expenses, tracking your payments, automating your savings, and paying off high-interest debt first. When you have to spend money, try cutting costs by couponing, using public transportation when possible, shopping only at the end of the season, and powering your home through energy-efficient means.

If you have a low income and are currently living paycheck to paycheck, the word “budget” probably makes you break out in a cold sweat. Do you feel like you’re constantly swimming upstream when it comes to reaching your financial goals? You’re not alone.

For a lot of people, budgeting on a low income is an uphill battle. But creating a budget doesn’t have to be a stressful experience. With a few smart strategies, some self-discipline, and a sound budget, you can finally start saving for the future.

Why is having a budget important?

Having a budget is important for everyone, but it’s especially important if you have a low income. The reason is simple: When your income is limited, you can’t afford to overspend or splurge every day. In fact, even small unexpected expenses can throw off your entire budget and set you back weeks or even months.

By creating a budget and sticking to it, you can make sure that your money goes where you need it to go. This means you’ll not only be able to cover your essentials and save up for goals, but you’ll also create a sound financial future for yourself.

8 ways to budget even with a low income

Not sure how to budget with a low income? Don’t worry, here are some actionable tips that you can implement today and start saving.

1. Eliminate unnecessary expenses

When you’re having trouble making ends meet, every penny counts, and it’s even more important to eliminate any unnecessary expenses. So next time you’re tempted to spend $5 dollars on a cup of coffee before work, you might want to think twice and make coffee at home instead.

You can also cut down on your monthly spending by bringing your own lunchbox to work instead of eating out every day. And, if you really want to save money fast, you could even give up your cable TV subscription. There are plenty of free alternatives, like watching shows online or listening to podcasts.

By getting rid of non-essential monthly expenses, you can free up quite a bit of money to add to your savings, put towards your emergency fund, and even invest in stocks.

2. Use a budget tracker app

If you’re looking to save money but don’t want to commit to making a big lifestyle change, then using a budget tracker app can be a small and easy way to help you out.

Budget tracker apps like Mint or Personal Capital can keep track of your income and expenses so you have a clear idea of where you’re spending money each month. This can be especially helpful if you have a low income because you can identify areas to cut back on spending.

Pro Tip

If budget tracker apps are not your cup of tea, consider using a simple budget calculator to get an idea of exactly how much money is going out of your account each month.

3. Pay off existing debt

Another not-so-obvious way to save money is to pay off any existing debt you have. Though you’re shelling out a portion of your income to tackle debt each month, you’re actually reducing the interest expenses that would otherwise incur if you keep delaying your debt repayment obligations.

Let’s say you have $10,000 in credit card debt with an interest rate of 20%. If you only make the minimum payment of around $300 each month, it’ll take you over four years to pay off the debt. Not only that, but you’ll also end up incurring over $4,000 in interest charges! By paying off your existing debt as soon as you can, you can save a lot of money on interest charges over time.

4. Automate your savings

By setting up a regular transfer from your checking account to your savings account, you can make sure that you’re always putting away a portion of your monthly income instead of splurging it all. And once you get in the habit of saving, you may find it easier to resist the temptation to spend money.

So, if you haven’t already, make sure to set up automated transfers with your bank.

5. Try using coupons

Being on a low-income budget doesn’t mean you have to give up your favorite things or guilty pleasures. With a little bit of planning and effort, you can still enjoy the things you love while sticking to a budget. One way to do this is by using coupons.

To get started, try signing up for a coupon clipping service or downloading a couponing app like Rakuten, Honey, or Ibotta. You can also find coupons in newspapers and magazines. Some stores even offer coupons directly on their websites.

Pro Tip

If you’re really committed to saving money, you can even learn how to “extreme coupon” and potentially save thousands of dollars on groceries.

6. Use public transportation if possible

If you commute a lot for work, fuel costs can quickly add up and put a dent in your bank account. According to Business Insider, the average American spends anywhere from $2,000 to $5,000 annually on transportation costs.

So if you’re on a tight budget, using public transportation can be a great way to save money on a low income. Not only will you save on gas and car insurance, but you’ll also avoid the hassle of parking. And if you live in a big city, you can often get around quite easily without a car.

Of course, public transportation isn’t always convenient, and it may not make sense if you live in a rural area. But if you have the option, it’s definitely worth considering.

7. Make your home more energy-efficient

High energy bills can be a real struggle when you’re on a tight budget. Fortunately, there are a number of ways to make your home more energy-efficient and save money in the process.

One way is to seal any cracks or gaps around doors and windows. This will help keep heat from escaping during the winter month and reduce your heating bill.

Another simple way to save energy regardless of the season is to use energy-efficient light bulbs like LED or CFL bulbs. These bulbs use less electricity than traditional bulbs, and they last typically longer as well.

8. Shopping end-of-season sales

In the holiday season of 2021, consumers in the U.S. spent approximately $840 billion dollars on retail sales. But this isn’t without a reason. By waiting until the end of the season, consumers can often find items at a fraction of their original price. This is especially true for items that are likely to go out of style quickly, such as clothing and accessories.

However, end-of-season sales are not just for fashionistas. You can also find great deals on home goods, electronics, and even food. So if you’re looking to save money on a low-income budget, be sure to keep an eye out for end-of-season sales. You never know what bargains you might find.

Consider a prepaid debit card

Studies show that consumers tend to overspend when they use credit cards instead of cash. If this is the case for you, you might want to consider using a prepaid debit card to help you stick to your budget. When you load money onto the card, that’s all you can spend — so you won’t have the chance to overspend, incur overdraft fees, or go into debt.

Also, prepaid debit cards are typically either Mastercard or Visa, so it should be accepted by most places. If you’re looking to overcome your poor spending habits and improve your finances, give prepaid debit cards a try.


When budgeting, what is the 50/30/20 rule?

If you’re on the journey to bettering your finances, you may have come across the 50/30/20 rule. In a nutshell, it’s a budgeting guideline that helps you allocate your income to achieve your financial goals.

Here’s how it works: 50% of your income goes towards needs and obligations like rent and food. Of the remaining funds, 30% goes towards non-essential expenses — such as clothing, gym, and monthly subscriptions — and 20% goes towards savings, retirement contributions, investments, etc.

Though this rule of thumb can be a great way to guide you on your savings journey, everyone’s financial situation is different. So don’t be afraid to tailor the 50/30/20 rule to fit your own needs.

How do you create a budget for a beginner?

When it comes to creating a budget, the most important thing is to just get started. There are tons of resources to help simplify this process for you. For example, budgeting apps like Mint, PocketGuard, or You Need a Budget (YNAB) are great options to help you on your way.

You can find also printable budget worksheets or spreadsheet templates online. And even if you can’t find any resources online that fit your preference, you can use a notebook to jot down all of your income sources and expenses.

Key Takeaways

  • Saving money on a low income is possible as long as you watch your spending habits and stick to a budget each month.
  • Apart from cutting expenses, paying off high-interest debt can also be a great way to save money on future interest charges.
  • If you’ve had a bad history with credit cards, consider using prepaid debit cards to help keep your spending under control.
  • The 50/30/20 rule is a budgeting method that divides your paycheck into three categories: 50% for essentials, 30% for wants, and 20% for savings or debt.
View Article Sources
  1. Making a Budget —
  2. Budgeting: How to create a budget and stick with it — Consumer Financial Protection Bureau
  3. 7 Easy Steps to Create a Successful Budget — SuperMoney
  4. 11 Smart Money Moves You Can Try Today — SuperMoney
  5. 10 Personal Finance Decisions To Protect Your Family — SuperMoney
  6. 14 Practical Tips To Attaining Financial Freedom — SuperMoney
  7. 5 Ways Prepaid Debit Cards Can Help You Budget — SuperMoney
  8. The Ultimate Guide to Budgeting — SuperMoney