How To Budget Money On Low Income 

No matter how much money you earn, it is important for everyone to budget their finances.

It is easy to overspend and to lose track of your outgoings if you don’t have a planned budget that you keep on top of. You should have a strategy on how to budget money on low income.

How To Budget Money On Low Income

Budgeting is even more important if you are on a low income, as you have less disposable income and going off course slightly could cause big issues.

You need to make sure that you can pay for all the essential things as a priority. 

If you want to know more about how to budget your money on a low income then you have come to the right place.

We have put together this guide to tell you everything you need to know about making your own budget. Keep reading to find out more. 

Why Should You Have A Budget? 

Regardless of how much money you earn, budgets are important. You need to make sure that you live within your means to prevent building up too much debt and to ensure that you remain financially stable. 

Keeping track of your budget will help you to make important financial decisions such as whether you can afford to upgrade your car, move house, start a family or change jobs.

It will also help you to live your life to the fullest without being stressed as you will know how much disposable income you have for hobbies and socializing. 

Budgeting is even more important for people on a low income because the margins for error are much smaller. However, these tips will still come in handy for people on a higher income. 

Top Tips For Budgeting On A Low Income 

Here are the best tips that will help you to create a budget even if you are on a low income. 

Set Out Your Budget In Writing 

You don’t need to physically write down your budget, but you need to have a record of it somewhere.

You can use a ledger book, or you can create a spreadsheet. Whatever you use, it is important to be able to reference your budget and keep track of your spending. 

Start With Fixed Bills 

The first step to creating your budget is to make a note of all of the bills you pay every month that have a fixed amount.

This includes your rent or mortgage, your car finance payments, your home insurance and car insurance, your phone contract, your television contract, your broadband.

One of the easiest ways to check this is to look at your standing orders on your bank account.

Your utility bills may be included in this, unless you are on a pre-paid meter or variable rates. 

Move On To Essential Outgoings 

The next thing you need to make a note of is all of the essential payments you need to make that are necessarily fixed.

This will include groceries, fuel for traveling to work or the school run, and any utilities that aren’t a fixed amount. 

If you aren’t sure how much you spend on these things, go through your previous bank statements for at least three months to come up with an average monthly figure. 

Finally, Look At Your Non-Essential Outgoings 

This is where you make a note of your previous spending habits for non-essential items.

This includes takeaway food and coffee, eating out in restaurants, cinema trips, clothes shopping, day trips, online shopping etc. 

Again, look back at previous bank statements to get an idea of how much money you spend on these items. 

What Is Your Income? 

Now you need to figure out your income. It could be as simple as checking your monthly take home pay on your pay slip.

How To Budget Money On Low Income

If you are self-employed or don’t have contracted hours then your income could vary monthly by month, in which case you will need to come up with an average figure. 

Do You Have Any Debt? 

If you have any debt then make sure you include the minimum repayments (or more if you can afford it) in your outgoings.

Keeping on top of your debt payments is very important and should be a priority. 

The Math

Now it is time to do the math. Add up all of the outgoings, and subtract them from your monthly income.

Whatever you have left will be what you can put into a savings account every month.

It is important to save some money each month if you can, as you might need it for an emergency. 

If you have little to nothing left, or your outgoings total more than your income, then you need to look at areas where you can save money. 

How Can You Save Money? 

The first place to look for savings is in your non-essential outgoings section. What can you cut back on?

Can you eat out less often? Or buy less takeout coffee? It is good to have a social budget, but you might need to reduce your spending in order to live comfortably within your means. 

You can also look at your fixed bills and essential outgoings.

Can you plan out your meals better or switch to cheaper brands to save money on your grocery shopping?

Can you walk or cycle to work to save money on fuel? Can you downgrade your television package to save some money? 

Always Budget For The Worst

When compiling your budget, it is better to stay on the pessimistic side of the realistic.

This will ensure that you have budgeted for the worst case scenario, and any extra money you have is a bonus that you can add to your savings account.

For example, if your income is variable then use a figure that is slightly lower than the average in case you get offered less shifts. 


Budgeting on a low income can be difficult as it feels like your money doesn’t stretch very far.

However, it is possible to make a practical budget when you have a low income. You need to be realistic about your spending habits and look for areas where you can cut back. 

Andre Flowers
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