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If you are living on a low income, then things like sticking to a budget, saving, and building wealth must sometimes feel impossible. 

One report suggests a staggering 63% of Americans are living paycheck to paycheck. 

How can you maintain a budget on a low income? Is it even possible for someone earning minimum wage to build savings or investments?

I’m here to tell you that yes, those things are perfectly doable. 

This guide will help you understand how to create a realistic budget based on a low income. 

As a bonus, there will also be some tips on how to increase your income. 

Make sure to read to the end for that!

Why You Should Make A Budget

To successfully budget you must understand the reason for a budget

A budget isn’t just about knowing your income and expenses. It’s also about building a financial plan for your future. This includes things like building savings, planning for retirement, and investing.

The first thing you need to do is think about what goals you have in life. 

These are all pretty common – and AWESOME – goals.

Once you know what you want to achieve you can better plan how to get there!

When I first started budgeting it was because I wanted to start a family but had SO MUCH DEBT that I knew I wouldn’t be able to afford daycare. It was a game changer for me.

Take a couple minutes and write down a few big goals you have. It’ll help clarify your budget as you keep reading.

How To Create A Successful Budget On A Low Income

Now that you know your goals you can begin creating your budget. 

First, make a list of every expense down to the exact cent. Once you can see everything listed, then you can see what expenses could be cut.

A big part of maintaining a budget on a low income is cutting out expenses that don’t help you reach your goals.

Here are a few great places to start for cutting expenses:

When you have a low income cutting your expenses is almost like getting a pay rise!

Other big expenses you may be able to reduce include food, transport, and housing. 

Food is something a lot of people spend more on than necessary. 

Transportation is another big cost for many people each month. 

Could you save money using public transport and not having a car? Have you asked co-workers about carpooling? Depending on your area there may be lots of ways to save money on transport costs.

And maybe you saved a lot of money in 2020 working from home. Could you possibly negotiate with your employer to keep working from home so you can drive less? 

It’s worth asking.

Housing is everyone’s biggest expense. 

To save money here you could look for somewhere cheaper to live or ask about refinancing your mortgage. 

If moving isn’t an option have you considered getting a roommate or if you prefer something more casual, you could rent a spare room on services like Airbnb.

As a final note make sure to include in the budget some spending on yourself. 

It doesn’t have to be much but you should still enjoy yourself sometimes! For example, new clothes, a meal out, or a new video game are all things you could budget for.

Nobody is too old for a personal allowance. 

With your finely tuned budget, you can now think about what to do with any money left over after expenses are paid. 

Let’s talk about debt first.

How Should I Tackle Debt on a Low Income?

As part of your budget, you will have included all debts in your expenses and at least the minimum to pay each month. 

However, if you only ever pay the minimum amount it will take decades to pay off your debt. 

Instead, you need to make a realistic plan to tackle your debts and start getting them paid off.

Begin by making a list of all your debts. Some debts are worse than others. Remember to include the interest rate, total amount owed, and the minimum monthly payment.

Loans and credit cards often have high-interest rates and fees, so concentrate on paying these debts off first. 

Other debts with low-interest rates are a lower priority as they won’t increase much, but make sure you are still paying the minimum required every month. 

Check out these two resources to help you figure out which debt to pay off first and make a debt snowball spreadsheet to help you get out of debt FASTER!

Should I Save Anything?

The priority when budgeting on a low income is making sure your expenses are fully paid every month. 

After that, you need to concentrate on paying off debts. 

Does that mean you shouldn’t save anything?

If there is some money left over, then it is a good idea to save what you can. Even small amounts a month add up over time.

A great place to start is an emergency fund. 

Starting an emergency fund now means when unexpected bills arise, you will have some extra money to help with those costs. 

An emergency fund is especially important when you budget on a low income.

Once your debts are clear, then you can start adding much more to your savings. Plus, it will be easier as you are in the habit of saving!

More Budgeting Tips on a Low Income

When you are on a low income it may be tempting to think a budget isn’t important. 

After all, there isn’t a lot of money to spend. 

However, building a realistic budget and a plan to pay off debts will mean in the long run you will have MORE MONEY. 

To help you with this, here are some additional budgeting tips.

Get Organized with Your Money

OK, you’ve created a super-duper budget using pen & paper, a spreadsheet, or a budgeting app. 

Now what? 

The next step is to get organized so that you stick to the budget.

First, use a calendar either online or on paper to record when payments are made and received. Knowing exactly when everything is going in and out of your account will help you better follow your budget and keep it present in your mind.

To avoid missing payments automate as many bills as you can. 

Missed payments can incur fees so by automating them you can save money! 

When you are saving money, you could also automate this too. If the money is moved to your savings before you notice, then it’s easier to save!

Check and Update Your Budget Regularly

It’s up to you how often you review your budget, but checking it weekly is probably best when you are on a low income. 

This is because anything you can save one week will be a big help the next week.

Track your spending and update your budget accordingly every week. Sometimes spending creeps in without realizing it. 

By checking often, you cut out or cut back on unnecessary spending before it becomes problematic!

Increase Your Income

The best way to have more money is to have more income. 

I know, it sounds obvious.

Consider asking your employer for a raise or more hours. If that’s not possible you could start a side hustle to bring in more money.

Side hustles come in many forms and can be done online or offline. Many can be started for free! 

This is great when you are on a low income if there are no startup costs.

Have a think about your skills and what you have time to do. Blogging, driving for Uber, or freelancing are all fantastic ideas.

Another suggestion is to sell your unwanted items. 

Sites like eBay make this easy to do. Once you’ve sold everything you no longer want you could ask friends or family if they have unwanted items that you can sell.

Other Ways To Get Free Money

You can also get free money from many websites just for doing things you normally would! 

Completing surveys, playing games, and shopping can all pay rewards. Rewards can take the form of cash, gift cards, and discounts. Swagbucks, Ibotta and InboxDollars are all good sites to get started on.

If you like playing games, then you can save money on online games and earn as well. Check out sites like Mistplay for more info.

Lastly is SaverLife – a nonprofit with a goal of helping families save money, build emergency funds, and rewards people for saving money. Read more about SaverLife here.

Final Thoughts on Maintaining a Budget on a Low Income

Maintaining a budget on a low income isn’t easy, but you can do it. 

If you have realistic goals, a carefully thought-out budget, and a plan to tackle debts you can achieve your goals.

In the future, once your debts are cleared, you will be in the perfect position to save, invest, and build wealth for your family!

What’s next?

Keep working on your budget – every day, every week, every month – to move closer to your goals.

And when you want ALL the things and your budget says no, read this.

Our budget and goals changed our lives and it can change yours too.

Author BioHey, I’m Chris. I have a degree in Business Economics from the University of Liverpool, own a small fast food business and run LifeUpswing.com. I will help you to make money, save money, and think about money in a way that will give you back your freedom.

How To Maintain A Budget On A Low IncomeHow To Maintain A Budget On A Low IncomeHow To Maintain A Budget On A Low Income

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