17 Ways on How to Budget on a Small Income

how to budget on a small income

Budgeting is one of those things that seem intimidating regardless of the amount of money you earn. It becomes a challenge when you have small or low income. This might make you wonder, how can I budget my small or low income?

If you have small or low income right now, you are not alone. A lot of people have seen their incomes dry up in recent months.

Trying to start a budget with small income coming in can make you feel bad. You might feel like you are not in control of your finances.

A sudden reduction in cash flow is stressful.

However, there are many things you can do to budget your small income to serve your purpose and achieve your goals.

When money is tight, budgeting any amount can be the last priority on your list. This is because you are just trying to get by.

How can you reach your financial goals on a small income?

Related: 11 Ways to Stop Struggling with Money Today

I know you have financial and non financial goals that you want to achieve like taking care of your family, travelling or buying your dream home.

The only question on your mind right now is, how can I budget my small income and achieve financial success?

Well, the lofty dreams you have seem impossible when you consider the small income you have. However, it is possible that you can budget your money on a small income and still reach your goals.

17 Ways on How to Budget on a Small Income

The following ideas, strategies, tools and tips can help you get a handle on your finances and feel more in control of managing your money.

  1. Deal with High Interest Debt First.
  2. Eliminate Some Expenses.
  3. Take Advantage of Free Money.
  4. Keep Your Budget Lean/Create a Budget.
  5. Start a Side Hustle.
  6. Check Your Food Expenditure.
  7. Automate Saving.
  8. Consume Free Entertainment.
  9. Use the Library.
  10. Try Cash Envelope Method.
  11. Find a Fee-Free Bank.
  12. Evaluate Your Car Costs.
  13. Take Care of Your Health.
  14. Use Couponing.
  15. Increase Your Income.
  16. Check in with Yourself.
  17. Gather Your Resources.

The above seventeen tips are some of the ways on how you can budget with a small income. The income could be from your employment or from your business if you are an entrepreneur.

17 Tips and Tricks on How to Budget Your Money on Low Income 

When it comes to personal finances, it is important to not only think about the now but also the future.

Even if you’re earning a minimum wage, you can still save little by little. Here’s how:

  1. Deal with High Interest Debt First.

In order to start saving more, you have to tackle your debt head-on. Specifically high-interest rate from personal loans, or credit cards, because they force you to pay outrageous fees and interest charges.

When paying off debt, you need an attainable, yet challenging plan to pay it off. Start by prioritizing your debt so you are paying off the ones with highest interest first.

Then, as you go forward, avoid accumulating any more high interest debt, especially credit cards.

  1. Eliminate Some Expenses.

Trying to save money when you have low income can be very difficult. Sometimes it feels impossible to cut down even a dollar or two every month.

Aside from the usual money-saving ideas, like cooking meals at home and cancelling your cable bill, what more you can do?

Instead of trying to cut back your small expenses; focus on the larger ones so you can make more of a significant impact.

For most people, housing costs tend to be biggest part of their expenses. If you are renting, consider downsizing to a smaller home or living with a roommate to share rent payment costs.

If you own your home, take at look at whether or not refinancing your mortgage for a lower rate would be beneficial.

You can also rent out a room or parking spot for additional income.

  1. Take Advantage of Free Money.

Take advantage of “free money” when you can. As a family with low income, you may qualify for the earned income tax credit (EITC). According to the IRS website, the EITC, can be a large refund on your taxes, helping you keep more of what you earned.

Sometimes even as much as a few thousand dollars.

You should also look into a 401K at work and see if your company matches up to a certain percentage of your contribution.

If they do, you should take advantage of it and start saving as much as possible. The company match is basically free money that will help you save towards retirement.

  1. Create a Budget and Keep it Lean.

To save more, you have to take control of how much you spend. Choose the categories you want to indulge in, and keep the rest of your budget as lean as possible.

You will have to make sacrifices but it’s not impossible.

Just learn to spend in moderation. For instance; cut back on how often you dine out. You can still enjoy a nice meal at a restaurant, just not multiple times a week.

  1. Start a Side Hustle.

If you cannot cut costs anymore than you already have, consider diversifying your income by starting a side hustle to earn extra money.

Aside from your full-time job, you can get a job on the side to provide another income source.

Many side hustles can be done right from your own home in your spare time. Think about what you are good at doing, what kind of hobbies can earn money or what you already enjoy that can be turned into a side job.

Related: 21 Ways on How to Develop Passive Income Streams

Popular side hustles include freelance writing, blogging, affiliate marketing, data entry, and graphic design among others.

Saving money when you have a small income is certainly hard but can be done. It is important to understand what your priorities are, and create a values-based spending and saving plan.

Once you do, you will be smarter and savvier with how you spend money and ultimately, be able to save more.

  1. Check Your Food Expenditure.

Food spending can wreak havoc on any budget. With the constant temptation to eat prepared food at a restaurant, sticking to a food budget can feel like an impossible challenge.

According to the Bureau of Labor Statistics, the average household spent over $3,000 on food away from home.

Although you might not be spending that much on eating out, there is likely room for improvement. Look for ways to cut your restaurant spending.

One of the best ways to combat last-minute food purchases is through meal planning.

If you already know what you are supposed to eat for dinner, it is easier to drive home without stopping at your favorite take out place. Meal planning can take some time to get used.

  1. Automate Saving.

As you budget for your small income, it is always important to ensure you have a percentage of it going into a saving fund or account.

One of the easiest way to ensure this happens every month or with every payment, is to automate the process.

Setting up an automated savings plan ensures that you’re hands-off. This will amplify your savings effort and improve your process on how to budget with a small income or low earnings.

  1. Consume Free Entertainment.

One area of your budget that is entirely variable is your entertainment budget. You have the power to overspend in a big way with entertainment.

On the flip side, some frugal fun can allow you to pad your savings without feeling deprived.

Here are a few of my favourite entertainment options that do not break the budget:

  • Netflix
  • Host dinner parties instead of going out.
  • Go for a hike.
  • Practice cooking with your significant other.
  • Look for free museums to explore.

Do some research in your area to find the best frugal entertainment options.

  1. Use the Library.

The library can be a great source of free entertainment. But it offers so much more that it deserves its own mention.

Of course, you can check out books, movies, and CDs. But most libraries often have many more.

For example, there might be community events, free local attraction passes, seeds for your garden, and more. Talk to your local librarian to see what is available at your library.

The library is my favorite frugal resource! Check out yours today. If you aren’t sure where to find yours, then find it on Overdrive. Once you get your library card, you can borrow books online via the Libby or Overdrive apps that connect directly to your local library.

  1. Try Cash Envelope Method.

If you struggle to keep track of your spending, then the cash envelope method could be a great option.

The cash envelopes could help you realize how much you are spending. It might open your eyes to your harmful spending habits.

Once you have a better understanding of what you like to spend money on, then you can work on adjusting those habits.

  1. Find a Fee-Free Bank.

It is all too easy to get stuck paying unnecessary fees.

According to the Consumer Financial Protection Bureau, the median overdraft fee at banks is $34. That coupled with other banking fees can lead to a leeching effect on your financial situation.

If you find that your bank is constantly charging fees, then it might be time to make a switch.

There are many banks that advertise free accounts without any associated fees. Why not take advantage of that opportunity?

It could help you avoid any unnecessary banking fees down the line.

  1. Evaluate Your Car Fuel Costs.

A car can come with thousands of dollars of annual upkeep and maintenance each year. In addition to a car payment, you also have to contend with several other expenses. Car insurance and repairs are just the tip of the expensive iceberg.

You can lower these costs in a few ways.

  • Comparison shop for car insurance. You might be able to save hundreds of dollars each year by switching to a different insurance company.
  • Eliminate your car payment. Try to pay off your car early. In the future, avoid financing a car when possible due to the high costs.
  • Use less fuel. You can cut down on fuel costs by using public transportation or biking to work.
  • DIY car repairs. Although you might not want to do major repairs, think about taking care of basic repairs yourself. You can save money while learning a new skill!

Get creative when it comes to cutting your transportation costs.

  1. Take Care of Your Health.

Healthcare is expensive. Unfortunately, there are not too many ways to cut down on your healthcare insurance costs. However, a preventative attitude about medical problems can help you save money and enjoy a higher quality of life.

A few ways to practice preventative healthcare include:

  • Exercise
  • Eating right.
  • Quit smoking.
  • Sleep enough.

If you have healthcare insurance, then take advantage of what that plan offers. For example, if it includes annual doctor visits, then make time for a check-up.

  1. Use Couponing.

Couponing can be your way to buy exactly what you want for less money. It is not too difficult to get started with couponing. Here are a few of the best places to get started:

  • Rakuten: You’ll be able to earn cashback from your everyday purchases. Many of their offers allow for between 1% and 12% cashback. That can add up quickly! Try Rakuten today.
  • Ibotta: As you plan your grocery shopping, check out Ibotta for cashback deals in your area. Give Ibotta a try soon!
  • BeFrugal: This app allows you to stay on budget while enjoying your shopping. You can earn cashback from over 5,000 stores. Plus, it will help you find coupons that apply to your purchase. Check it and BeFrugal today.

These are just a few couponing sites to help you get started.

  1. Increase Your Income.

At some point, you might not be able to squeeze any more pennies out of your budget. Or you might want to create some more breathing room in your finances.

If you feel that there is no room to create savings in your current situation, then it might be time to increase your income.

Although it is not as simple as it sounds, increasing your income is completely doable. One way to increase your income is through a side hustle as discussed above.

It could be the perfect way for you to increase your income without taking a leap from your day job.

  1. Check in with Yourself.

A time of small or low income can be really stressful to you. That is just normal.

The idea that your budget is going to have a items you cannot afford right now can make you feel like giving up on budgeting as a whole.

Take a moment to remind yourself that you are not alone in this. A lot of other people, just like you, are going through the same challenge today.

It is also good to remember that low or small income is a temporary thing. This is especially true if you use the ideas shared here about how to increase your income.

If you had time with more income, do not forget how things were. You can also visualize a time when you will have more money and the capacity you shall have to buy more things.

Remaining positive and aware of the current situation is a step in the right direction. You got this and you shall make it through.

  1. Gather Your Resources.

At the moment, I know you are or might be frustrated by your small income. While you do not have lot of funds at your disposal, you might be having some other resources you can draw on.

You might be wondering, what resources are you talking about?

You could be having resources that you have not thought about. These could include;

  • Severance Package
  • Benefits and Reimbursements.
  • Funding from the Government.


Almost everyone finds themselves in a no-income situation from time to time. It is nothing to be embarrassed about. I have been there myself too. Plenty of situations can leave you with a low income, or even zero cash flow.

If you are trying to budget money on a small income, it can feel like a challenge. But do not let a small income stand between you and your goals.

You should not feel like you absolutely have to put these on goals, such as retirement or a home down payment, on hold. Luckily, there are some creative ways to budget money on a small income.

The ways I have shared with you above will help you to budget your money on a small income. It might require you to think outside the box, but I do believe in you. You have the capacity to do it and the above tips will guide you.

Consider making it a challenge to increase your savings with a frugal approach to your budget that doesn’t cut out the fun parts of life.

I do hope that you will use these tips and ideas in helping you to budget your small income today and the days ahead.

Frequently Asked Questions

What is the 50 20 30 budget rule?

The 50/20/30 budget rule is a simple way in which you budget and does not involve detailed budgeting categories.

In principle, this budget rule proposes that you should spend 50% of your income on needs, 30% on your wants and 20% on savings or paying off your debt.

Related: What is the 50 20 30 in Personal Finances?

What’s the best way to budget on a low income?

If you are earning a small or low income, this is how to save money;

  • Put your rent a priority.
  • Save your loose change
  • Reduce your food Expenses.
  • Use a list to shop your grocery.
  • Prepare yours meals in advance.
  • Check your mobile or internet data usage.
  • Reduce your entertainment costs.
  • Walk more and drive less to save fuel expenses

How can I save money on a low income?

As a person with small income or if you earn low income, the following tips and strategies will help you to save money on a low income;

  1. Be positive and proactive.
  2. Have a detailed budget.
  3. Pay bills on time.
  4. Ensure you pay your debts when they fall due.
  5. Buy in bulk to get discounts.
  6. Find ways to earn more money to increase income.
  7. Educate yourself to increase your skills.
  8. Downgrade your life to save more.