How to budget effectively when you have a low income

It can be difficult to save money on a low income. However, don't let a low income stop you from reaching your savings goals! Here is how you can budget with a low income.

Effective ways to budget when your income is low

A study was done by recently, and the stats from that are fascinating. It states that close to 38% of women and 42% of men don't have a budget. The reason stated by the majority of them is - they don't earn much. Yes, it can be tough to budget when your income is low. However, you should not let your income stand between you and your savings goals. 

Some ways to budget even if you have less income:

  • Build a budget that works for you -

Budgeting is about managing your income, expenses, and savings for your financial goals. The beauty is that you have to get into the habit of saving. How much you are saving is secondary. When you create your budget, create one that works for you. Don't compare it with others - it does not matter what your friend is doing. Financial situations vary from individual to individual. Start small but start now.

Also Read: What's Your Budgeting Style?

  • Eliminate your debt -

If you get into a debt trap, most of your time will go figuring out how to clear off debts. Hence, the first essential step is to eliminate your debt. If you have existing debt, try to figure out how to clear that off. If you are thinking of taking a debt, avoid taking it unless it is good debt. 

  • Automate your savings goals -

You should not save what is left at the end of the month. You should keep aside a specific percentage at the start of the month. As mentioned above, it could be any amount, whatever you are comfortable investing. Next, you have to ensure that you automate your savings goal. For example, if you want to save Rs 5000 per month, you should have a plan to deduct the amount at the start of the month and get invested automatically. If you follow this approach, you will not think about spending the money - it will happen automatically. It will bring the required discipline to your budget, and eventually, you will build a habit.

Also Read: Investing On A Budget: How To Invest With A Monthly Salary Of Rs 50,000

  • Find free or affordable entertainment -

If you look at your expenses, a substantial amount may be spent on entertainment - movies, different subscriptions, going out every weekend, etc. You don't have to cut down on the entertainment, but you should look for ways that come at low cost or best - are free. For example, if you like reading, read more books. 

  • Try the cash envelope method -

The method is simple - you first have to figure out all your expenses and sort them into categories. Create an envelope for each expense. Label each envelope for each category and allocate the amount to that expense. At a high level, you should follow a 50/30/20 budget when you create envelopes - 50% of your total income should go into the needs, 30% for your wants, and 20% into the savings envelop. 

  • Take utmost care of your health -

Health is your biggest asset, and you should take care of it all the time. Eating healthy food and exercising daily are important. You can only take care of your financial assets if you stay healthy, so never compromise on your health.

If you follow the above simple steps, you will be able to make budgets irrespective of your income.


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