How To Budget on a Low Income (With Real Examples)

Are you trying to figure out how to budget on a low income?

When you don’t make a lot of money or are trying to manage with rising everyday costs, it can feel like your entire paycheck disappears as soon as you get paid. Between rent, groceries, utilities, insurance, and everything else, there may not be much left over.

And if you’re already spending as little as possible, you may be wondering how you’re supposed to budget when you barely have enough money to cover your bills.

I understand how frustrating that can be, and many people are feeling the same way right now. Everything just feels so expensive lately!

When I was paying off my nearly $40,000 in student loan debt, I paid close attention to how much money I was making and spending. I was constantly looking for ways to lower my expenses and earn extra money because I wanted to get rid of my debt as quickly as possible.

Having a budget helped me figure out where my money was going and how much I could afford to put toward my goals.

But I also know that budgeting looks very different when you’re making $1,500 a month compared to $5,000 a month. If most of your income goes toward your basic living expenses, you probably don’t have much room to make changes.

In today’s article, I’m going to explain how to budget on a low income, including how to divide your paycheck, plan for bills, and make a budget when you don’t have much extra money. I’ll also share monthly budget examples for people earning $1,500, $2,000, and $3,000.

You don’t need any fancy budgeting tools to get started, either – a notebook or spreadsheet on your computer can work just fine.

P.S. I have a free monthly budget printable that you can download by clicking here (no signup or anything needed).

How To Budget on a Low Income

Below are the steps I would take to create a budget on a low income.

1. Figure out exactly how much money you make

Before you can create a budget, you need to know how much money you have coming in.

And I’m talking about your take-home pay, not how much you make before taxes.

For example, if you earn $35,000 a year, you won’t actually have $35,000 to spend because taxes and other deductions may come out of your paychecks.

To get started, look at your recent pay stubs or bank deposits and write down how much money you actually receive.

You’ll want to include income from things like:

Your full-time or part-time job
A second job
Side hustles
Freelance work
Child support or other regular payments
Any other money you regularly receive

If you get paid twice a month, figuring out your monthly income is pretty easy. Just add your two paychecks together.

If you get paid every two weeks, it’s a little different – let’s say you bring home $900 every two weeks. You would receive 26 paychecks throughout the year, which means your average monthly income is $1,950.

However, most months you’ll only receive two paychecks, or $1,800.

I would base your regular monthly budget on that $1,800 instead of the higher average. That way, you’re not depending on money that won’t arrive until a future month.

You’ll also have two months each year when you get three paychecks, and you can make a separate plan for that extra money.

What if you don’t make the same amount each month?

If you work different hours each week, earn tips, or are self-employed, your income may change quite a bit.

I know what that’s like because I’ve worked for myself for many years, and business income isn’t always the same every month.

One thing you can do is look at how much you’ve made over the past three to six months.

For example, maybe you made:

$1,800 in January
$2,100 in February
$1,950 in March
$2,300 in April

Instead of creating a budget around your highest month, I would look at what you typically make during a slower month.

If you can cover your basic expenses with $1,800, then that may be a good number to use for your regular budget.

Then, you can save some of the extra money during higher-income months to help pay bills during slower months.

2. Write down everything you spend money on

Next, make a list of your monthly expenses.

This includes your big bills, such as rent and groceries, but also the smaller things that you may not think about very often.

For example, you may remember that your electricity bill is $120 a month, but what about laundry detergent, toilet paper, birthday gifts, or other household items?

Those things cost money too!

Here are some common expenses to include in your budget:

Rent or mortgage
Electricity, water, and other utilities
Groceries
Gas
Car payment
Car insurance
Health insurance and medical expenses
Phone and internet
Childcare
Debt payments
Household supplies
Entertainment
Subscriptions and memberships

I would also look through your bank and credit card statements from the past few months because you may find expenses that you forgot about or realize that you’re spending more in certain categories than you thought.

For example, maybe you’ve been budgeting $300 a month for groceries, but your statements show that you’re actually spending around $400.

That doesn’t necessarily mean you’re spending too much on groceries. Food prices can be expensive, especially if you’re buying food for a family.

But it does mean that your budget needs to reflect what you’re actually spending. Otherwise, you might keep going over your grocery budget every month and not understand why.

Note: If you want help keeping track of your money, you may want to try Empower. It’s a free financial dashboard that can help you see your spending, accounts, and overall financial situation in one place. I think this can be helpful if you’re trying to figure out exactly where your money is going each month.

3. Put your most important bills first

When you’re living on a low income, you may not have enough money to pay for everything you want.

That’s why I think it’s important to start your budget with the things you need.

These are expenses like:

Housing
Food
Utilities
Transportation to work
Essential medical needs
Childcare so you can work
Insurance and other important obligations

Let’s say you make $2,000 a month after taxes.

Your rent is $900, groceries cost $300, utilities are $150, and transportation costs $200.

That’s already $1,550.

You have $450 left for everything else, including insurance, debt payments, phone bills, and other expenses.

Seeing these numbers written down helps you understand what you’re working with.

You may have heard of the 50/30/20 budget, which suggests spending 50% of your income on needs, 30% on wants, and 20% on savings and debt payments beyond the minimums.

While that can be a helpful guideline for some people, I don’t think it works for everyone.

For someone making $2,000 a month, spending only $1,000 on all of their basic living expenses might be impossible.

Your rent alone could take up that much!

If your basic bills take up 80% or 90% of your income, your budget needs to reflect that.

I would start with the things you absolutely need and then figure out what you can afford to spend on everything else.

Also, if you don’t have enough money to pay all of your bills, pay attention to which ones have the most serious consequences if they’re missed. For example, falling behind on rent, utilities, or transportation needed for work can create major problems.

If you’re in this situation, contacting the companies you owe money to and asking about payment arrangements may help.

4. Choose a budgeting method that works for you

There are several different ways to budget, and you don’t need to use the same method as everyone else.

I think a simple budget is usually best, especially when you’re just getting started.

Here are three budgeting methods that may work well for you.

1. Zero-based budgeting

With zero-based budgeting, you give every dollar of your income a job.

For example, if you make $2,000 a month, you decide how all $2,000 will be used.

That might include rent, groceries, utilities, debt payments, savings, and other expenses.

The goal is to have your income minus your planned expenses and savings equal zero.

This doesn’t mean that you have to spend all of your money. Putting $50 in a savings account still counts as giving that money a job.

I like this method because you can see exactly how much money you have available for each category.

2. Paycheck budgeting

If you live paycheck to paycheck, you may prefer budgeting based on when you get paid.

For example, maybe you get paid $1,000 every two weeks.

Instead of creating one big budget for the entire month, you decide which bills you’ll pay with each paycheck.

You might use your first paycheck to cover rent and groceries, then use your second paycheck for utilities, insurance, and other expenses.

This method can be especially helpful if you regularly find yourself running low on money before payday.

Note: I have an example of paycheck budgeting later in this article.

3. Cash envelope budgeting

Cash envelopes can be helpful if you have a hard time sticking to certain spending limits.

How does this type of budgeting work?

So, let’s say you’ve decided that you can afford to spend $250 a month on groceries.

You could put $250 in an envelope at the beginning of the month and use that cash whenever you go grocery shopping.

You can also use different envelopes for gas, household supplies, clothing, and other expenses.

The idea is that you know how much money you have available before you make a purchase. Of course, you may need to adjust the amount if prices change or your household needs more than you originally planned.

5. Decide how much money you’ll spend in each category

Once you’ve listed your income and expenses, it’s time to put the numbers together.

You can start by writing down how much money you make each month.

Then, subtract your most important expenses, such as rent, groceries, utilities, and transportation.

After that, decide how much money you can afford to put toward your remaining bills and other expenses.

For example, your budget might look something like this:

Monthly income: $2,000
Rent: $800
Groceries: $300
Utilities: $150
Transportation: $200
Phone: $50
Insurance: $100
Debt payments: $150
Household expenses: $75
Savings: $25
Other expenses: $150

Total: $2,000

This is just an example, of course, your own budget may look very different.

Something I would be careful about is making your budget too strict.

For example, if you usually spend $400 a month on groceries, I wouldn’t suddenly lower that amount to $150 just because you want to save more money.

Unless you have a realistic way to make that work, you’ll probably end up going over budget.

Instead, maybe you could try lowering your grocery spending from $400 to $375 and see how that goes. You could plan meals around ingredients you already have, compare prices at different stores, or buy more store-brand products.

If you’re able to stick to $375, you could try lowering it a little more the following month.

And if you can’t, that’s useful information too.

Your budget should be something you can actually live with after all!

One more thing I recommend is having a category for expenses that don’t happen every month.

For example, you may need to buy new tires, pay your car registration, replace worn-out shoes, or buy Christmas gifts. These things may not happen very often, but they’re still expenses you’ll want to prepare for because they can be expensive.

6. Make a plan for months when your expenses are higher

You may have some months when you spend more money than usual.

For example, your electricity bill might be higher during the summer, your child may need school supplies, or you might have a car repair.

I think it’s important to plan for these expenses because they can really hurt your budget when you don’t have much extra money.

One way to do this is with sinking funds.

A sinking fund is simply money you save for a future expense.

Let’s say your car insurance is $600 every six months.

Instead of trying to find $600 when the bill arrives, you could set aside $100 each month.

That way, when it’s time to pay your insurance, you already have the money saved.

You can do this with expenses such as:

Car insurance
Car repairs
Christmas gifts
Birthdays
School supplies
Annual memberships
Medical expenses
Pet care

Of course, if you’re already struggling to pay your monthly bills, you may not have enough money to save for all of these things.

That’s okay. Start with the expenses that are most important or most likely to come up.

Even setting aside $10 or $20 each payday can help if you have room in your budget.

I would also look at when your bigger bills are due throughout the year.

For example, if you know your car registration is due in three months, you can start figuring out how you’ll pay for it now instead of being surprised later.

$20 bills and coins on table with notebook

Example of a $1,500 Monthly Budget

I wanted to include a few sample budgets because I think it helps to see what budgeting on a low income can actually look like.

First, let’s say you’re bringing home $1,500 a month after taxes.

Here’s one way your budget might look.

Monthly expense	Amount
Rent (shared housing)	$600
Utilities	$100
Groceries	$230
Transportation	$120
Phone	$45
Insurance and medical	$80
Debt payments	$100
Household supplies	$40
Personal spending	$30
Emergency savings	$25
Other expenses	$130
Total	$1,500

As you can see, this budget is pretty tight.

It also assumes that you’re able to find shared housing for $600 a month and that you have relatively low transportation costs.

Depending on where you live, that may not be possible.

For example, if your rent is $1,000 a month, you would only have $500 left for everything else.

And that probably won’t be enough to cover all of your basic expenses.

I think this is important to point out because not everyone can make a $1,500 monthly budget work, especially if they’re supporting children or living somewhere with expensive housing.

Example of a $2,000 Monthly Budget

Next, let’s look at someone who earns $2,000 a month after taxes.

Monthly expense	Amount
Rent	$750
Utilities	$125
Groceries	$250
Transportation	$200
Phone	$40
Insurance and medical	$100
Debt payments	$150
Household supplies	$75
Personal spending	$50
Emergency savings	$50
Other expenses	$210
Total	$2,000

With $2,000 a month, there’s a little more money available, but you would still need to watch your spending carefully.

Housing is one of the biggest things that stands out to me in this example, because if rent increased from $750 to $1,100, that would be an extra $350 a month.

You would have to find that money somewhere else in your budget.

This is why I think it’s so important to pay attention to your largest expenses.

While cutting small purchases may help, things like housing, transportation, and insurance can make a much bigger difference.

For example, if you could lower your car insurance by $40 a month by comparing rates, that would save you $480 a year.

Or, if you could reduce your phone bill from $80 to $40 a month, that would be another $480 a year.

Of course, you may have already lowered these expenses as much as possible, but if you haven’t, I think these are worthwhile to look into.

Example of a $3,000 Monthly Budget for a Family

Budgeting for a family can look quite different because you’re paying for more than just yourself.

You may have higher grocery bills, childcare costs, school expenses, and other things to think about.

Here’s an example of how a family might budget $3,000 a month after taxes.

Monthly expense	Amount
Rent	$1,050
Utilities	$250
Groceries	$550
Transportation	$250
Childcare	$180
Phone and internet	$120
Insurance and medical	$150
Debt payments	$160
Household supplies	$100
Emergency savings	$80
Other expenses	$110
Total	$3,000

For this example, I’m going to assume the family has one child who is already in public school and only needs occasional childcare. I’m also assuming they live in an area with relatively affordable housing.

For many families, childcare alone can cost hundreds or even thousands of dollars each month. For example, at my daughter’s first preschool, the monthly cost was a little over $2,200 a month, and that was the normal rate for all of the preschools in the area.

If you’re paying $1,000 a month for childcare, this budget obviously isn’t going to work without some major changes.

One thing I would pay attention to is planning for expenses related to children.

For example, you may need money for:

School supplies
Field trips
Birthday parties
New clothes and shoes
School pictures
Holiday activities
Medical appointments

These expenses can sneak up on you if you’re only thinking about your regular monthly bills.

I would also see whether there are any free or low-cost programs in your area that could help.

For example, your local library may have free activities for kids, your community may offer affordable recreation programs, or your family may qualify for childcare assistance.

And don’t forget that you can still have fun as a family without spending a lot of money – going to the park, having a movie night at home, visiting the library, or exploring free local activities can all be enjoyable.

I have an article on how to have fun while budgeting that shares more ideas.

Note: One easy way to earn rewards on groceries you’re already buying is with Fetch Rewards. This is a free app that lets you scan grocery receipts and earn points that you can redeem for gift cards. You’re not going to get rich from scanning receipts, of course, but it’s an easy way to get a little something back from purchases you’re already making. I personally use it for all of my grocery shopping!

How To Budget When You’re Paid Every Two Weeks

If you get paid every two weeks, budgeting by paycheck is a method that some people prefer.

Instead of thinking about how much money you’ll have for the entire month, you plan around the paychecks you’re actually receiving.

Let’s say you bring home $1,000 every two weeks.

During a normal two-paycheck month, you would have $2,000 to budget.

Here’s an example of how you might divide those paychecks.

First paycheck: $1,000

Expense	Amount
Rent	$750
Groceries	$125
Gas	$75
Other expenses	$50
Total	$1,000

Second paycheck: $1,000

Expense	Amount
Utilities	$125
Groceries	$125
Transportation	$125
Phone	$40
Insurance and medical	$100
Debt payments	$150
Household supplies	$75
Personal spending	$50
Emergency savings	$50
Other expenses	$160
Total	$1,000

Now, something important to remember is that your bills may not line up perfectly with your paychecks.

For example, if rent is due on the first but you don’t get paid until the fifth, you can’t wait until the fifth to come up with the rent money – you’ll need to save that money from an earlier paycheck.

This is why I think writing down your bill due dates is so helpful.

You can use a calendar to keep track of things like:

When you get paid
When rent is due
When utilities are due
When your insurance payment comes out
When credit card payments are due
When other automatic payments are scheduled

Then, you can decide which paycheck needs to cover each bill.

What about the two extra paychecks each year?

If you’re paid every two weeks, you’ll generally have two months each year when you receive three paychecks instead of two.

I think this can be a great opportunity to get a little ahead financially.

For example, you could use an extra paycheck to:

Build your emergency fund
Pay off credit card debt
Get ahead on rent
Save for car repairs
Pay an upcoming insurance bill
Prepare for Christmas expenses

You don’t need to use the entire paycheck for one goal, either – maybe you put $500 toward savings, $300 toward debt, and $200 toward other expenses.

What matters is that you have a plan for the money instead of accidentally spending it.

How To Budget When Your Income Changes Every Month

If you have an irregular income, I would make a few changes to how you budget.

This may apply to you if you work in a restaurant, have a seasonal job, are self-employed, or work hours that change each week.

For example, let’s say your income looks like this:

January: $1,600
February: $2,100
March: $1,850
April: $2,400

That’s a pretty big difference between your lowest and highest months. And if you create a budget assuming you’ll always make $2,400, you’ll have a problem during the months when you earn much less.

Instead, I would start by figuring out how much money you need each month to cover your basic expenses.

Let’s say you need $1,500 for rent, groceries, utilities, transportation, and other necessities.

Your first goal would be making sure you can cover that $1,500.

Then, during months when you earn more, you can set some money aside to help during slower months.

For example, if you make $2,400 one month and your essential expenses are $1,500, that leaves $900.

You may need some of that money for debt payments and other expenses, but if there’s anything left, you could save it.

Over time, you may be able to build up enough money so that you’re not depending on every paycheck arriving at exactly the right time.

I also think it’s helpful to have a separate account for money you’re setting aside for future bills because that way, you’re less likely to accidentally spend it.

One other thing to watch out for is automatic payments.

If your income changes each month, you’ll want to make sure there’s enough money in your checking account before bills are automatically paid. Overdraft fees can be expensive, and they’re especially frustrating when you already don’t have much money to spare.

What If You Don’t Make Enough Money To Cover Your Bills?

Sometimes, after adding up your income and expenses, you may realize that you just don’t make enough money.

Example of a budget that doesn’t work

Let’s say you bring home $1,800 a month after taxes, but your monthly expenses add up to more than that.

Here’s what your budget might look like:

Monthly expense	Amount
Rent	$950
Utilities	$175
Groceries	$325
Transportation	$200
Insurance	$125
Phone	$50
Debt payments	$150
Household supplies	$75
Total expenses	$2,050
Monthly income	$1,800
Amount you’re short	-$250

As you can see, this person is spending $250 more than they make each month.

And the hard part is that there aren’t really any unnecessary expenses in this budget. There’s no restaurant spending, shopping, or expensive entertainment to cut.

So, what can you do when your budget looks like this?

1. See if you can lower any of your bigger bills.

Housing, transportation, and insurance are often some of the largest expenses in a household.

Depending on your situation, you may be able to save money by changing phone plans, comparing insurance rates, using public transportation, or sharing housing costs.

For example, switching to a less expensive phone plan might save $20 or $30 a month.

If you’re able to lower several bills, those savings can add up.

Recommended reading: 10 Monthly Bills You Can Negotiate Today

Note: If you drive, you may want to see if Upside is available in your area. This is a free app that can help you earn cash back on eligible gas purchases. It won’t lower your car payment or insurance, but it may help you save a little money on gas you’re already buying. I use this whenever I can because it can save you money on each gallon of gas or diesel that you buy.

2. Find out if you qualify for financial assistance.

Depending on your income and household size, you may qualify for programs that help with groceries, healthcare, utilities, childcare, or housing.

Some programs to look into include SNAP, WIC, Medicaid, and local utility assistance. You can also check with local food banks or community organizations.

I know some people feel uncomfortable asking for help, but these programs exist for a reason. If you’re struggling to afford basic necessities and qualify for assistance, there’s nothing wrong with using it.

Recommended reading:

3. Look for ways to earn more money, if possible.

I’ve talked about side hustles a lot on Making Sense of Cents because they can be a great way to earn extra money.

For example, you may be able to make money by:

Babysitting
Walking dogs
Selling items you no longer need
Cleaning homes
Doing freelance work
Delivering groceries or food

Even an extra $100 or $200 a month may help cover bills.

But I also know that not everyone has the time or ability to work more hours. If you’re already working full-time and taking care of children, adding another job may not be realistic.

Here are articles on ways to make extra money that you may find helpful:

4. Contact companies before you miss payments.

If you’re having trouble paying a bill, it may help to contact the company and explain your situation.

Some utility companies, lenders, and other bill providers offer payment plans or hardship programs, and you can ask whether they have any options for someone who’s struggling financially.

And if you’re having trouble keeping up with debt, I’d be especially careful about taking out payday loans or other loans with very high fees and interest rates because they can make it even harder to get caught up.

I go into more detail about this in my article 8 Things To Do if You’re Barely Scraping by Financially.

Frequently Asked Questions About Budgeting on a Low Income

Below are answers to some common questions about creating a budget when you don’t make a lot of money.

How do I budget when I barely make enough money?

If you barely make enough money to cover your bills, start by writing down your income and the expenses you absolutely need to pay. This includes things like rent, groceries, transportation, and utilities. Then, see how much money is left for everything else.

If you have very little left over, you may need to focus on keeping your bills organized and avoiding unnecessary fees rather than trying to save a large amount of money. For example, knowing that your electricity bill is due next week may help you avoid spending money that you need for that payment. And if your expenses are higher than your income, you’ll need to look for ways to close that gap.

How do I budget $1,000 a month?

Budgeting $1,000 a month can be extremely difficult if you have to pay for housing and all of your other living expenses.

For example, if your rent is $900 a month, that only leaves $100 for food, utilities, transportation, and everything else. That’s probably not going to be enough and will not be possible to do.

If you only make $1,000 a month, I would start by looking at your housing situation and whether you qualify for assistance programs. You may also want to see if there are ways to increase your income, depending on your schedule and circumstances.

How much should I save if I have a low income?

I don’t think there’s a certain amount that everyone needs to save each month because everyone is different.

If you can comfortably save $10 a week, that’s $520 over the course of a year. If you can only save $5 a month, that’s okay too.

And if you’re having trouble paying for basic necessities, those should come first.

Once you have enough money to cover your bills, you may want to start with a small emergency fund. For example, you could set a goal of saving your first $100. After that, you could work toward $500 or another amount that makes sense for your situation. Even a small emergency fund can be helpful if your car breaks down or an unexpected bill arrives.

What are the best books on budgeting?

The best books that can help you improve your personal finance situation and budget better include The Simple Path To Wealth, The No-Spend Challenge Guide, The One Week Budget, How to Stop Living Paycheck to Paycheck, and I Will Teach You To Be Rich. You can read my full list at 14 Best Books About Budgeting.

How To Budget on a Low Income – Summary

I hope you found my article on how to budget on a low income helpful.

I know that budgeting on a low income isn’t always easy, especially when it seems like your entire paycheck goes toward paying bills. But I still think having a budget can help, even if you’re not able to save much money right now.

You can see exactly what you’re spending, plan for upcoming bills, and figure out how much money you have available before making purchases.

And you don’t need anything complicated to get started!

You can just write down how much you make, list your monthly expenses, and start figuring out how to divide your money.

What matters most is that you’re using a budget that makes sense for your income and your life.

What is your biggest challenge when it comes to budgeting on a low income?