7 Low-Income Budgeting Strategies

#1 Write down your monthly income

The first step to creating a budget is understanding your income and expenses. This means sitting down to write out how much money you have coming in from all sources every month.

If you have a job, this is usually pretty straightforward. But don’t forget to include other sources of income, such as scholarships, grants, stipends, and money from side hustles.

Once you have your total monthly income figure, you can use the following strategies to start looking at ways to budget that money.

#2 Track your spending for a month

The next step is to track your spending for at least one month. There are a few ways to do this, but the easiest is to use a budgeting app like Rocket Money.

Rocket Money allows you to connect your bank and credit card accounts so you can track your spending automatically. This makes it super easy to see where your money is going and how much you’re spending in each category.

If you don’t want to use a budgeting app, you can also track your spending manually. Just write down everything you spend for one month, including even small purchases like coffee or snacks.

At the end of the month, take a look at your spending and see where you can cut back. Maybe you’re spending too much on entertainment or maybe you need to save more for transportation. Whatever it is, knowing where your money is going is an essential step to budgeting on a low income.

#3 Monitor your debt and credit score

If you have debt, it’s important to keep track of how much you owe and make payments on time. Late payments can damage your credit score, which can make it harder to do things like get a loan or rent an apartment.

You should also check your credit score by using a free service like Credit Karma. Monitoring your credit score is a good way to catch errors on your credit report and make sure you’re on track to improve your credit. 

You’ll want to use the information you find to make a plan to build your credit. For example, you can work on paying down debt, which will help improve your credit utilization ratio. You can also work on building up a positive payment history by making at least all of the minimum payments on time.

For more ways to build credit, you can also look into getting a secure credit card from Sable, an online banking service that helps users establish good credit scores. Another option is to use a credit-building service like Kikoff, which can help you build a positive payment history by putting you on a plan to reduce your credit utilization. 

#4 Find and cut unnecessary expenses 

One of the best ways to save money is to find and get rid of hidden, unnecessary expenses. You may be surprised how many “extras” you’re paying for that you don’t even realize. One survey found that thousands of Americans waste $348/year on unused subscriptions!

For example, you may have a gym membership that you never use, or you may be paying for a streaming subscription service that you don’t need. If you can identify these hidden expenses and get rid of them, you’ll be able to save a lot of money.

To find these hidden expenses, start by looking at your bank statements and credit card bills. See if there are any charges that you don’t recognize. If so, try to figure out what they are and whether or not you really need them. Rocket Money is also an excellent tool for this!