How To Budget Money On Low Income 

No matter how much you earn, everyone needs to learn how to budget money.

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. It would help if you had a strategy to budget money on a low income.

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Budgeting is even more critical if you are on a low income, as you have less disposable income, and going off course slightly could cause significant 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 money on a low income, 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 critical 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 to help you create a budget even if you are on a low income. 

Set Out Your Budget In Writing

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

You can use a ledger book, or you can create a spreadsheet. Whatever you use, it is vital 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, and 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 note 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.

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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, make sure to include the minimum repayments (or more if you can afford them) 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 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, 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 to live comfortably within your means. 

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

Can you plan your meals better or switch to cheaper brands to save money on 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 things.

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, use a figure that is slightly lower than the average in case you get offered fewer shifts. 


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

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

Andre Flowers
Andre Flowers

Hello, my name is Andre Flowers and I have been a Licensed Real Estate Professional for over 24 years. I also carry several certifications, including: Certified Distressed Property Expert, Certified Global Business Professional, Certified Credit Repair Specialist.

As a current Mortgage Underwriter with 15 years of experience, I have seen my fair share of money-related issues. Whether that be high levels of debt, not enough credit, or simply a lack of funds - I’ve had clients who fit into these categories.

Here I will share tips, tricks, and experiences on how you can get yourself back in control of your finances.

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