How to Budget Money on a Low Income – 9 Crucial Tips!

My wife and I used to be broke, heavily in debt, and so far behind, we didn’t even think we could start budgeting. But when you’re broke, the key to getting ahead financially is learning how to budget money on a low income!

Budgeting money on a low income starts with prioritizing expenses, cutting unnecessary expenses, pressing pause on expenses like retirement & college savings if you have debt, and then adjusting your budget until the spending is less than the income, taking on side jobs if needed.

So this post isn’t about planning for the future or about thinking long-term. You’ll get there and I have a number of posts that can help with that when you’re ready.

Today we’re going to look at how to take care of your immediate needs, get back on track and learn how to budget money on a low income.

In over your head? Find Your Best Personal Loan Option can help!

If you’re in the situation where you think a personal loan might make sense to consolidate credit cards, pay off student loans, or take care of some much-needed home repairs, the folks over at HonestLoans make it easy to get the best offers in under 2 minutes.

Even as little as a hundred bucks.

You could possibly save thousands a year and you have nothing to lose in checking! It doesn’t even ding your credit score to look at the offers!

CLICK HERE to see how much you can borrow! Apply in seconds and often, you can get the funds in your bank within 24 hours.

How do you start a budget with no money?

Starting a budget with no money is tough!

We don’t even feel like we have enough money to get started. Then we’re tempted to hide our head in the sand and just pretend the problem isn’t there.

The trouble with that approach is:

  • The problems don’t go away just because we aren’t focusing on them
  • They actually get worse the longer we procrastinate
  • Financial freedom and flexibility can ONLY be had by getting on a budget and being intentional with your money

The thing is, you need to learn how to budget in a way that suits your family, and you won’t always know which way that is at first. It can also make you feel embarrassed when you face the money you’ve been spending on nothing – and you may not even notice what you’ve been spending half the time!

 Your budget could help you to learn a lot about yourself and where you are all spending, and you don’t need to have money in the bank to help you to answer those burning questions, either. Budgeting without any money right now may seem like a bad idea, but you can only learn to budget effectively when it really matters and there is no frivolous spending involved. It’s why we’ve put this guide together.

So to get started on a budget when you have no money is essential. Here’s what you need to do, step by step:


Cut out the Starbucks and eating out.

If you have expensive cable TV eliminate that too. Then get the top-rated digital antenna (click to see current price on Amazon) from Amazon for under 30 bucks.

Or get a Roku Stick (click to see current price on Amazon) and stream Amazon Prime, Netflix, Hulu (click to sign up on their site), and other similar channels. Don’t have Amazon Prime? It’s got tons of channels, movies, and TV shows.

Try Amazon Prime free for 30 days! You’ll also get their famous free 2-day shipping on all qualified purchases.

Also temporarily hold off on retirement savings, kid’s college funds or any other type of savings.


Craft a written household budget each month, before the month starts.

Make sure you and your spouse are both on the same page too. Not sure how to get started? Let me walk you through how to use the Free Budget Excel Template (click to learn more on my site) you downloaded above.


Cash holds you and your spouse accountable in ways that reaching for plastic just can’t.

My wife and I follow Dave Ramsey’s Envelope System (click to read my detailed article). Essentially we take out cash each payday (an amount we agreed to in advance when we did the budget).

We divide that cash up among different categories (groceries, gas money, family fun, each spouse’s personal spending). When the money’s gone, it’s gone until next payday.

Thus we tend to scrutinize each purchase much better than when we used credit or debit cards. You WILL spend less doing this system. The link above walks you through the entire process.


There are a ton of ways to add extra income each month!

I work a full-time job and run this blog on the side. Guess what? Blogging generates a couple thousand dollars for me each month with just a few hours of work. Some bloggers make hundreds of thousands.

Not sure how to start a blog?

Check out exactly How I Built My Blog (click to read my detailed guide). If I can do it, so can you. I used to ponder how to budget money on low income. Thanks to blogging and some hustle, that no longer applies to me and my family.


Blogging not for you? No problem! You can do a lot of things to bring in anywhere from an extra couple of hundred dollars each month to thousands.

And no, I’m not talking about mowing lawns or delivering pizzas (although I’d sure do that before filing bankruptcy).

Check out ALL my Earn Extra Money (click to see all 53 of my recommended ways) on the side, and see if some of them don’t sound perfect for you!


Take every bill you know you have. List them out from most important to least.

Not sure what’s most important? Rent or mortgage comes first. Electric and other utilities second. Grocery money is 3rd. Everything else comes after that.

Things like credit card bills should be dead last.


If something has to get paid late, make it the least important things on the list.

Would you rather get yelled at by a credit card company’s call service or get a foreclosure notice in the mail?


Even better than making late payments in full is to send your creditors a very small amount of money but on time.

Creditors can’t claim you’re late if you paid on time but just simply didn’t pay the amount they wanted you to pay!

They won’t like it. They make threats or call and harass you, but a tarnished credit report is better than bankruptcy or foreclosure.

If you want to later come back and work on your credit score, take a look at my best tips for raising your Credit Score (click to read my detailed guide on how to raise yours) that doesn’t cost you a dime!


Don’t simply charge your bills on credit cards and absolutely don’t borrow on your house!

It usually takes time to create a mess, so don’t expect to figure out how to budget money on low income in an instant. Trust me; if you’re broke, why would you want to simply delay the inevitable and pay thousands extra for the privilege of doing so?

In this post we looked at the crucial steps you must take when you have more bills than money.

We learned how to budget money on low income, but we also learned how to stay afloat while you get your financial house in order. Lastly, we looked at what expenses to cut or delay so you can get the traction you so desperately need. You’ll get there and this post can help! Thanks for being here.

What is the 30 day rule?

Many people who are in a lower income situation have often found themselves there because of impulse spending problems.

I’m not here to judge as I grew up fairly low income and I’ve been there as an adult too. But I’m probably not the first guy to notice people using food stamps who have an iPhone in their back pocket.

The 3o-day rule simply refers to waiting 30 days on any purchase above a certain level that you set.

For my wife and I, that threshold would be fairly low; maybe $100. So any time we wanted to buy something that cost $100 or more, we would hold off for 30 days before buying it.

Why would we wait 30 days before purchasing?

Because that cooling off period allows us time to decide if we really need that item without the emotional rush of buying it spur of the moment.

I guarantee you that if you use the 30-day rule for your spending you will spend less!

How can I save money on a low income budget?

Right now we have 2 goals:

  1. Stay afloat!
  2. Keep the lights on and put food on the table

The good news is that you can get past even the worst situation. You just need to stay focused, have a plan and not let the negatives derail your goals or your relationships.

The terrible truth about relationships and money fights

Right now emotions and tensions are high. You (and your spouse if you have one) are stressed out! In that fight or flight mode, it’s hard to be rational; it’s difficult to figure out how to get out of this situation.

So to get started we have to take a deep breath.

We have to pause for a second and assess where things are at. I want you to get fired up about moving forward. I want you and your spouse to figure out how to budget money on low income.

But getting mad at one another or at the situation doesn’t help anyone.

After all, money fights and money problems are among the Top 3 Reasons for Divorce (click to read my article that breaks them down). So don’t make a bad situation worse by taking it out on each other, even if your spouse has helped create this situation. Work together, talk without judgment and find the solution.

What are the steps in creating a personal budget?

A budget simply lists you known income for the month and then all the known expenses for the month. You subtract the expenses from the income. Ideally, you get to a place at the bottom where it’s at zero or close to it.

The reason for that is when we have extra cash that isn’t allocated for something specific, we tend to blow it frivolously.

I have a copy of my household’s budgeting spreadsheet available right here! It’s the very same spreadsheet my family used to pay off over $60,000 in debt and one we still use to this day over 7 years later!

You can’t learn how to budget money on low income without the right tools, and this is one of the best! Get your copy of my budget spreadsheet for free now, delivered instantly, by clicking below!

how to budget money on low income free budget spreadsheet banner Middle Class Dad

The uncertainty of this situation can put a huge strain on your relationship.

So to stay afloat, we need to focus on how to budget money on low income and being in sync with our spouse. Hopefully, you and your spouse already operate on a monthly budget.

If you don’t, I highly recommend you get started. One of my most popular posts on that subject is about Household Budget Template Tips (click to read my article). If you have no idea how to budget, that’s a great place to start.

Of course, that’s not the only way to cut expenses or put a few extra bucks in your pocket!

With Survey Junkie (click to learn more on their site) you can sit in your PJs, drinking coffee, taking online surveys while earning big money taking surveys online for cash.

Want even more tips? Check out the 53 Ways to Earn Extra Cash (click to see them all on my site) on the side!

If you can put a couple of hundred dollars (or more) in your pocket each month, learning how to budget money on a low income could become a thing of the past!

How do you budget your money the 50 20 30 rule?

This is a well-known concept for your household budget.

Essentially with the 50-30-20 rule, you put 50 percent of your income toward basic household expenses; mortgage/rent, utilities, etc. Then you put 20 percent towards long-term financial goals such as paying off debt and saving for retirement.

Lastly, thirty percent of your income goes towards more frivolous expenses, like eating out, vacations, etc.

If you’re totally new to budgeting this could be a good place to start with the ease of it makes it accessible to even the most math-challenged among us.

Personally, I’m not a huge fan of it.

For starters, I think if you’re broke or deeply in debt, 50% is too much to allocate to household expenses. I also think the other categories should be on hold until you clean up the mess.

But if it gets you started on learning how to budget money on low income that’s vastly superior to NOT getting started.

The worst budgeting mistakes to avoid!

When you’re broke and learning how to budget money on low income, emotions and tension can cause us all to do some really dumb things. Thus it’s crucial for your long-term stability to avoid some of the following pitfalls which may be tempting you.

  1. Reaching for the credit cards
  2. Considering a home equity loan
  3. Sticking the bills in a drawer and hoping they go away

Using credit cards to pay your bills is one of the worst things you can do.

Emotionally it may feel like the bills got paid. But all you’ve done is rob Peter to pay Paul. And when Peter comes to collect he’s bringing anywhere from a 10%-20% (or more) interest rate with him!

If you thought you were broke before, wait until you realize you still owe the exact same amount, but now you’re paying compounding interest of upwards of 20% on it!

How Do We Get Started Paying Off Debt When we Are Already Behind?

The dangers of going into debt when you’re broke!

As of this writing, according to CreditDonkey, the average interest rate on a credit card is 12.41%.

Let’s say you put 3 months of a $1,200 mortgage payment, 2 months of household bills and 3 months of a $299 car payment on that credit card.

That’s $5,397.

You still owe the $5,397 you owed before; all you’ve done is move the debt from multiple companies to one.

Let’s say you pay the credit card company $100/month. At 12.41% interest, you will end up paying a grand total of almost $8,000 and it will take you almost 7 years to pay that off!

Does that sound like a smart way to get ahead?

And of course, that’s IF you don’t ever charge anything else!! Factored using a calculator courtesy of CalculatorWeb.

Planning on using the equity in your home?

Think again. Sure the interest rate will be better than a credit card. But you’re still robbing Peter to pay Paul. Only now you’ve put your home at risk. What if things get worse before they get better?

You know what’s worse than being broke? Being broke and homeless!

how to budget money on low income homeless family during the great depression Middle Class Dad

How do I stop living paycheck to paycheck?

When you’re broke and trying to learn how to budget money on low income, it can be very hard to know what to do first or where to start.

We call this analysis paralysis. Essentially you feel overwhelmed in the face of seemingly insurmountable odds.

You must push past this.

Forget wanting to get to be a millionaire. Let’s just start with not being broke.

The best way to move forward if we’re budgeting when broke is to just accept where we’re at. Then we need to identify where we want to get to.

Then lastly, break down that goal of not being broke into a series of small baby steps. Jonathan Hewitt, the author with his wife Lana of the awesome book, Life Ki-do Parenting (click to see the current price on Amazon), refers to this process as the A-B Formula.

So most importantly, accept where you’re at and baby step to get where you want to get to.

If you need some additional tips, check out my highly shared post about the crucial steps I take when I Can’t Pay My Bills (click to read my article on what to do)!

how to budget money on low income hand holding coins Middle Class Dad

The terrible ways procrastination can kill your financial future!

Pretending the bills aren’t there doesn’t mean you don’t have to pay them.

My wife and I were house hunting in Dallas once in 2006. One of the houses we looked at had a Lamborghini in the garage (it was a pretty modest house too, btw). Our Realtor loved to dig around when we looked at houses to try and uncover any issues that weren’t disclosed.

What she discovered was a drawer full of many months of past-due bills.

So the lesson is don’t hide your bills hoping they go away. Be an adult and deal with this situation head-on. As I often tell my daughters, “it’s not OK to not clean up a mess you made or expect someone else to clean it up.”

Don’t buy a Lamborghini when you live in a $250,000 house might be another good lesson. But I digress.

How much should I save from my salary?

If you have debt, then you shouldn’t be saving anything until you’re debt-free (except your mortgage if you own your home).

Then, and only then, would I start to save 15% of my gross monthly income for retirement.

If you need help getting started on Saving for Retirement (click to read on my site), I highly recommend you take a moment and check out my ultimate beginner’s guide to get started.

The same is true for Saving for Kid’s College (click to see my detailed guide).

As a general rule, this infographic shows you what I think are the best ways to divide up your income each month.

Knowing when and where each of your hard-earned dollars goes each month is key to budgeting your money. Your income is less important in this equation than making sure you aren’t overspending in a particular category.

If you are, it’s time to cut those expenses. If you can’t then it’s time to take a big-picture look at your long-term career options.

how to budget money on low income How to divide up your paycheck infographic Middle Class Dad

Expenses to hold off on while in debt

Hold off on all of the following until things get back on track:

  1. Retirement Savings
  2. Kid’s college
  3. Short or Long Term Savings

Of course, it should go without saying that you’ll also want to put a halt to these expenses too:

  1. Eating out
  2. Coffee shops
  3. Cancel expensive cable TV (get a Roku Stick (click for current Amazon price) and stream Hulu (click to sign up on their site) for next to nothing)
  4. Fancy groceries, alcohol, etc
  5. Gym memberships

I recommend keeping internet service as it can be very helpful in job hunting. But it might not hurt to downgrade speed if it’s a big savings.

Final thoughts

In this post, we looked at the struggle all of us have gone through of trying to make our household budget work when we’re broke.

Specifically, we looked at how to budget money on low income.

More importantly, we looked at where to cut back, where not to cut back and the exact steps my family took when we were in that same boat.

You can get through this and get to a place where you’re financially better off.

The budget is the key. So either finding ways to stick to it when times are tough or getting back on it if you stopped is the action you need to take.

In over your head? Find Your Best Personal Loan Option can help!

If you’re in the situation where you think a personal loan might make sense to consolidate credit cards, pay off student loans, or take care of some much-needed home repairs, the folks over at HonestLoans make it easy to get the best offers in under 2 minutes.

Even as little as a hundred bucks.

You could possibly save thousands a year and you have nothing to lose in checking! It doesn’t even ding your credit score to look at the offers!

CLICK HERE to see how much you can borrow! Apply in seconds and often, you can get the funds in your bank within 24 hours.

If you like this post, please follow my Budgeting board on Pinterest for more great tips from myself and top budgeting experts!

Photo credits (that aren’t mine or which require attribution):
Pac Man Brickell Metrorail Station
– by Phillip Pessar is licensed under CC BY 2.0
PayDay – by Mark Strozier is licensed under CC BY 2.0
While I have years of successful financial & budgeting experience and run several million dollar businesses and handled the accounting, P&L and been responsible for the financial assets of them, I am not an accountant or CPA. Like all my posts, my posts are opinions based on experience, observations, research, and mistakes. While I believe all my personal finance posts to be thorough, accurate and well-researched, if you need financial advice, you should seek out a qualified professional in your area.
As an Amazon Associate I may earn a small comission from qualifying purchases if you click to Amazon from my site and choose to make a purchase. You can read my complete affiliate disclosure for more details.

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