How to Budget Money on a Low Income. (2024)

This is a guest post written as part of our Home Success Series written by Amanda Ashley at Simple Life of a Frugal Wife.

If you live on a small income, then you know that almost no one tells you how to budget money with low income. Most of the budgeting advice out there is given assuming you have enough money to cover your basic essentials. Tips like “stop buying Starbucks and save $120 a month!” feel like a slap in the face when you can’t pay your rent and you don’t buy extras.

I’m about to change that.

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I grew up on government assistance and spent the majority of my adult life poor. That wasn’t the end of my story though and this isn’t the end of yours.

I turned everything around and paid off my debt by learning how to budget money on a low income.

Public Assistance

5 years ago, my life looked completely different than it does now. It was a pretty dark time for us.

My husband and I had spent our whole marriage struggling financially and I felt like I was looking through a tunnel that was my life and there was no light.

It felt like no matter what we did, we couldn’t get ahead.

I came from a home that was on social assistance (which is Canada’s version of Public Assistance) and I was disappointed in myself that I wasn’t doing much better financially. My husband and I weren’t on social assistance, but we were getting to the point where we weren’t sure how we were going to pay for our basic needs.

We had no idea how to budget on our low income.

There’s nothing like looking your kids in the eye and feeling like you’ve failed them. The last thing I wanted was to do was to repeat the old cycles of my childhood, but here we were.

Low Income

When you’re poor, spending usually isn’t the problem. It’s income. We didn’t live above our means, we just didn’t have means to live.

Our biggest struggle at the time was that we were working so hard and had no idea how to increase our income. We both had jobs and didn’t qualify for anything better.

Learning a new trade or going back to school seemed impossible because we couldn’t pay our bills now, how would we live on less while one of us went to school?

Looking back now though, the real issue was that we were so discouraged from never being able to get ahead that neither of us really believed it was possible. We had never known anything else and it felt pointless to even try.

I knew we wanted a different life, but for so long we just didn’t know how to get there.

Rock Bottom

Five years ago, I was working on our budget and discovered that there was just no way we could pay for our basic necessities. I had seen it coming for months but it didn’t make it any easier when it got there.

It completely broke me.

My husband came home from work that day to find me crying on the kitchen floor. I explained to him how bad it really was. We couldn’t make it.

We knew that if we didn’t change something we would lose everything.

You Can Only Go Up From Here

The thing about rock bottom is that you can only go up from there. I spent years of my life in fear of getting to that point, but when I was there… it was the only thing that got us going in the right direction.

For years, we’d been saying we couldn’t retrain for new jobs because we wouldn’t be able to pay our bills while we were in school. Well, we couldn’t pay our bills anyway, so why not do it now?

My husband went back to school to learn carpentry and give us a chance to increase our income, and I buckled down on budgeting. I’m not going to lie, it was scary for my husband, the sole breadwinner, to go back to school when we had three children and little money.

But the alternative was scarier.

While I never had a spending problem, I did often go off budget on little things when I felt like the budget was impossibly restrictive due to our low income. You would think I’d have the same problem again when our income was even lower, but it was the opposite. I stuck rigidly to that budget and never ever overspent.

I had finally figured out how to budget money on a low income.

What made the difference? For the first time, I had hope. We were going to claw our way out of poverty if it killed us.

That meant a lot of saying no to friends when they asked us to go out or to eat out. Itmeant a lot of pasta and potatoes for dinner and it meant meal planning to save money.

Never Use Credit

With my husband at school, we made a decision that we would NOT use credit to get us through his time in school. We’re lucky to live in Canada because we could get 60% of his income through Unemployment while he was in the trades program.

While living on credit seemed like an obvious solution to get us through that time, I’d been down that road before. It’s a cycle that’s almost impossible to break.

Because we had hope for the future this time, we were able to get through that period without credit.

Increasing Income

Once he got through training, his income increased considerably. We stuck with the same budget and started paying off our debt rapidly. The skills I learned when I was living on next to nothing and still sticking to my budget never left.

So now I had more income and the ability to budget.

Chasing Dreams

We had always wanted to live in the country. But of course, that had never seemed possible. But with our debt being paid off, increased income, and the ability to budget, we started dreaming about all of the things that were now possible.

I can’t tell you what that feels like after a lifetime of feeling hopeless.We moved to the country.As we set goals and met them, we kept finding new goals. I have always dreamed of the ability to work from home. Seriously, being able to switch a load of laundry while you work is life-changing for a mom of 3.

I tried to find work from home opportunities many times over within the past 10 years but had always failed. Once I started down that path, I would feel discouraged and just give up.

Not this time.

Armed with newfound self-confidence and without the desperate need to make it work in order to survive, I started a blog.

I had tried my hand at blogging three times before. I failed every other time and always told myself that I just wasn’t cut out to be successful.

This time, I treated it like a business and looked at it as an opportunity of something I get to do. Not something I had to do.

4 months into blogging, I saw my first paycheck. I could hardly believe it. And it just kept growing.

I officially get to work from home now. (And switching that laundry during the day really is life changing!).

One of the biggest factors in learning to budget money on low income is realizing that you need to increase your income. It’s not just about budgeting.

Setbacks

Last year we had to get a van on a vehicle payment, something we have always avoided but had no choice at the time as our one and only van had died. I felt sick about the payments.

We had worked so hard to get here and once again something out of our control was knocking us back. It would have been so easy to let this derail all of the progress we made.

But because of our increasing income and budgeting skills from our hard work before, we were able to pay down the 10,000 dollar vehicle in less than a year!

Ultimately, the secret to learning how to budget money on low income is to believe that it’s possible.

When we thought there was no way out… there was none.

When we thought we could fix it… we did.

My husband is now in his last block of trade school. He will be fully licensed as a carpenter in less than two months. My blog continues to bring us in some extra money. And we continue to budget while we dream and work hard.

Your Past Does Not Define You

As a child who grew up below the poverty line and now as an adult who struggled all through my 20s, I never imagined my life could be this amazing.

Without meaning to, I would tell myself I wasn’t good enough and could never succeed. I have so much hope now. Hope for the future, and hope for our children. I know that they’ll never be in the place that I was.

We still live on a modest income. But we have enough money for everything we need and many of the things we want. We know that our income will continue to rise in the future. And we know that whatever life throws at us, we can handle.

Don’t ever believe it’s too late or that you are destined to live the same life you were born into.

No matter what is in your past you can rise above it. Work hard, and get up no matter how many times you fall. Never quit.

There will be days you will think you can’t do this, but you just have to ignore those voices, put your head down, and keep working.

It’s worth it.

Next Steps: Learn How to Budget Money on Low Income

If you are struggling financially and want to increase your income and/or pay down debt like we did, focus on mastering these skills:

The first thing you need to do is join the 90-day budget Bootcamp. You’ll walk through every single step of paying off your debt and learning how to budget in this in-depth boot camp that takes nothing for granted.

The best part? It’s free if you use this link…

This will head you into the right direction …

• Realistic meal planning to avoid eating out or overspending at the grocery store. Rice, beans, frozen vegetables, and potatoes are the cheapest foods you can buy with nutrients.
• Pay down debt with any extra money you get – those are often forgotten or used for one-time splurges but add up over time.
• Pick up a side hustle like babysitting, blogging, or cleaning homes. Every dollar helps.
• Instead of going out with friends, invite them over to your home for coffee
• Cut any extra expenses, such as trips to the salon, cable or satellite, or a gym membership.
• If you don’t see any way to increase your income in your line of work, consider a career change. If you’re already in a cheap house and drive a cheap car, then you have to increase your income no matter what. Get the skills to get yourself a better job.

To make progress in our own life financially, we did all the above and more. I would meal plan, shop the sales, and make frugal dishes. All of our extra income, whether it was a gift or tax refund or anything else would end up being put towards our debt.

I picked up a side hustle as a blogger and my husband changed careers. We stopped going out to eat with friends (or even just as a family), instead opting to eat in each other’s homes. I canceled my gym membership and opted to exercise on my treadmill at home (the one I found for $50 dollars secondhand!)

While these changes were difficult at first, as time went on and we saw results – our debt go down and our income increase – it got easier. Over time our lives didn’t feel as hard as they once did because figuring out how we were going to pay for our day to day expenses were no longer something that kept us up at night.

You can do this! We can help.

Do you have any tips on how to budget money on low income?

P.S. Overwhelmed on how to get started? You can get the Easy Budget Binder for just $9 today. It gives you step by step directions on how to set it up and maintain your budget, and it has built in incentivization so you actually stick to it. Plus, it’s so easy that you can do it in just two minutes a day. See Cara’s walkthrough of how she’s using the Easy Budget Binder to pay off over $100,000 in debt as someone who self admittedly used to suck at budgeting here.

Amanda is a Canadian mom who blogs over at Simple Life of a Frugal Wife about frugal living, homesteading, and simple living. She is happiest when she’s at home on her 2 acres with her husband, kids, chickens, and dog.