Finance Tips Financial Planning

How to Budget Money on Low Income

Quite a lot of us will have a goal to save money for things that we need some time down the line, whether it is for days out with the family, paying off a larger car payment, or just having it there in case of unexpected expenses.

However, as much as we would like to save money for these different things, that is not always going to be the case, and if you, like many Americans, live on an income that is on the low side, you may be wondering how you can put together a low-income budget that helps you pay your fixed expenses and have enough money left over at the end of the month to put in a savings account or emergency fund.

With today’s article, we will discuss how you can budget money on a low income and save money just in case some extra living expenses decide to rear their head down the line.

Analyze What Your Current Budget Is

Before you can create a budget and savings goals, you need to look at what you are currently doing with your money and what your spending habits are so you can see where you can adjust or cut out completely.

Write down what your current take-home pay is.

Combine your take-home pay with your partners (if you have one), and any other income streams that you have coming into your home each month, e.g. side hustle money/part-time money.

If you do not have a consistent one, for instance, you are a freelancer or are on a contract, then you will need to estimate the average that you take home per month so you have a better idea of what your monthly budget will be.

Make a List of Fixed Expenses and Variable Expenses

Your fixed expenses are going to be –

  • Mortgage/rent payments
  • Car insurance and other car-based payments
  • Utility bills
  • Subscription services
  • Other monthly outgoing expenses that are on a regular basis

Your variable expenses are going to be –

  • Shopping trips
  • Days/nights outs
  • Takeaway meals

Anything that you spend money on that you don’t always spend each month.

It will go up and down depending on what you are doing.

Write Down Your Monthly Savings and Investment Amounts

If you are paying into a retirement savings account or you are paying for investments, you will need to write these down to prioritize them when sorting out your financial goals.

Once you have gathered all your expenses together and added up the ones you know will be coming out of your bank account each month, you can then go about taking away your outgoings from your income and seeing what you are left with.

Putting it Somewhere Safe

Whatever is left should go into your checking account or savings account (if you don’t have any additional expenses coming up), but if you don’t currently have one, then you will need to research various banking services that can provide you with an account that works at a percentage that suits you.

The extra money you have will not always be going into your savings, especially if you have extra payments to make elsewhere, but you should aim to get as much in there as possible.

Doing a Zero-Based Budget

If you find it hard to stick to a budget (that is more than likely why you are here), then you could look at doing a zero-based budget.

This is a budgeting technique where all expenses must be justified for a new period or at the start of the new year starting from zero, instead of going off the previous budget and just adjusting it slightly.

How to Budget Money on Low-Income and Save It

Now that you know what your current budget is, and how you are going to be spending money each month, it is important to go into how you can budget money on a low-income with the right financial planning techniques.

Save as Much as You Can

This is pretty self-explanatory: you need to save as much money as you can while still paying all your bills and essential extras like debt repayment.

Furthermore, adopt different strategies to reduce your monthly expenses. This may involve cutting down on utility bills by availing the services of a firm that offers spray foam insulation Central Alberta or elsewhere to improve your home’s energy efficiency. By enhancing insulation, you can maintain a consistent indoor temperature, reducing the need for excessive heating in winter and cooling in summer. This not only helps lower utility costs but also contributes to a more sustainable living environment.

Similarly, you could cut down on your food expenses by planning meals, buying in bulk, and taking advantage of sales and discounts. Preparing meals at home instead of eating out can also result in significant savings.

Additionally, you can reduce transportation costs by using public transit, carpooling, or biking when possible. By adopting these strategies, you can manage your expenses more effectively, ensuring that you can pay your bills and meet your financial obligations without unnecessary stress.

Try to reduce discretionary spending habits as much as possible, and only pay for things that you truly need and cannot do without for the coming month.

Save First, Spend Later

First and foremost, your mind should always be on ways that you can save your money within your budget.

If you stick to the same amount that you are saving per month, it will help you keep focused on your goals and provide you with strong financial health.

Settle Your Debts

Being on a tight budget can put you in a bind when you need to pay off your debts, but as they are incredibly important to keep you above water and not always worried about where your money is going next, you will need to contribute payments toward your debts.

Set the money you have left over aside to pay off your debts or set up a payment plan with whichever company you have debt with so you know what is going to come out each month.

Also, there are certain loans you might have that require refinancing if the original loan doesn’t turn out well. These could extend to mortgages, solar loans, car loans, and more.

If you’re not sure where to start when it comes to refinancing loans, you should do your research on the web or with the help of a financial advisor. There are plenty of resources you can find to use and work up a fool-proof refinancing plan. For instance, if you need to clear a loan that you have taken up to install solar panels at home, you could consider browsing through or a site similar to it.

Once you have assessed how you can clear up loans and debts, add them to your fixed expenses list from the date you are paying it until the end, so you know for how many months you will be paying that back to keep you focused on your future goals.

Do Activities That Won’t Cost Money

There are fun things that you can do with your family that don’t require you to have to pay out too much money or any money, you just need to know where to look.

At your local library, they will have events for children at weekends or in school holidays, some national parks may have discounts for kids, you can take them to parks and have a picnic, go on car trips, get cheap cinema tickets, etc.

You won’t have to shell out too much, and you can use some of the money you have saved to spend on some of the entertainment.

Cut Out Bad Habits

If you are a smoker or you drink alcohol, it is the right time to put those away and start again by saving the money you would be spending on them.

You can save a lot of money by cutting out bad habits like these as you may not be aware of just how much you are spending on them until you sit down and calculate what you are spending per week on packets of cigarettes or bottles/cans of alcohol.

Impulse purchases are also bad habits as you may see them as a one-off until those one-offs start being near enough every week, and before you know it you have gone through a pretty large chunk of your budget that you were sure you were going to save.

Do Your Own DIY

If you or one of your family members is a dab hand at fixing things, then you won’t have to worry about calling someone out to deal with any little issues you come across as you can probably do them yourself.

When we see damage in our home or something that looks out of place, our first instincts are to call in professionals to get it assessed and see what has to be done.

Before you go and do this, you may want to check it out thoroughly yourself or ask someone else to come and take a look so they can see if it is something that can be dealt with using DIY.

Obviously, if it is something big or you are worried, you will need to call in a professional as doing it yourself or leaving it could mean a hefty bill down the road, and all that emergency cash you had saved up is now gone.

Look Out For Coupons and Deals

A great way to save money on days out or in the supermarket is by finding deals and coupons that can help you get money off items you frequently use or places you like to go to.

You can either find them in local newspapers or you can go online and search for codes and deals for your next shop.

You should have a set food budget, so if you are able to save money using coupons and deals, you can then set aside that extra food budget money for the month and put it into your emergency fund or savings account ready for when it is needed.


Having a low income can be very hard, especially for big families who rely solely on that income, so if you are able to create a financial plan that works with your income and your budget, you should be able to at least have some wiggle room when it is needed.

You will find yourself cutting back on things that you really want, but in the long run, it will make a significant difference and help you stick to your laid-out budget.

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