14 Tips to be Financially Stable with Low Income

We can pitch the merits of budgeting all day long and you still might be thinking “A budget – on my income? Who are you kidding?”. However, following a few simple budgeting tips can be a literal lifesaver that helps you maintain the spare cash to cover an emergency.

Of course, it doesn’t matter where you fall on the socio-economic scale –any household, regardless of income, can make financial mistakes such as spending more than they originally planned. Unfortunately, the impact of these mistakes is felt far more within a low–income household simply because there is less room for error.

Checkout: 12 Side Hustles You can do While Working Full-time

Most households want to save money so they can build wealth and plan for the future. They have goals they want to reach or things they want to buy (like a dream house).  However, this can seem farfetched, when you are depending on a low income.

This is why it’s important to not only think about the present but also the future. Even if you’re earning a minimum wage, you can still save little by little if you learn how to budget money on a low income.

Here are 14 tips that can help you become financially stable with a low income:


Save first, spend later – keep aside a minimum of 20% of your income for savings every time you get paid before doing anything else. By doing so, you will be saving every month and have a clear idea about how much you will have by the end of the year.

Even if you have debts to pay, make sure you are saving something for yourself because emergencies always come unexpectedly.


No matter your income class, setting a budget that works and sticking to it is a great way to ensure financial stability. Give yourself a set amount to spend on groceries, bills, personal care, etc., and then make sure not to overstep it.

Be realistic when setting your budget. When setting a budget, take time to study your family’s eating and spending behavior, then create a financial plan to tighten things up without suffocating everyone.

Checkout: 11 Effective Budgeting tips for low-income families.


Build a shopping list and stick to it. Always shop on a full stomach so you don’t end up buying junk food. Try the 30 days rule to control the impulse to purchase unnecessary items so you can always shop with a plan.


Every household needs to have an emergency fund for occasional expenses such as car repairs, back-to-school supplies, and gifts. This is especially important for lower-income households because when emergency expenses come up, there is a much bigger risk that other important expenses will go unpaid.


Take advantage of “free money” when you can. As a family with a low income, you may qualify for the earned income tax credit (EITC). According to the IRS website, the EITC can be a large refund on your taxes, helping you keep more of what you earned. Sometimes a few benjamins can save the day.


If you can’t reduce costs any longer than you already have, consider adding more to your income by starting a side hustle to earn extra cash. Aside from your full-time job, you can get a job on the side to provide another source of income. This should be done if you have cut your spending to the bone and are still having issues making ends meet. This could mean asking for overtime at work.

Many side hustles can be done right from your own home at your convenience time. Think about what you are good at doing, what kind of hobbies can earn you money, or what you already enjoy that can be turned into a side job.

Common side hustle includes freelance writing, editing, proofreading, data entry, graphic design, event planning, pos agent, digital marketing, starting a Youtube channel, online fitness training, etc.


It is a good idea to open a bank account that is dedicated to saving only. No matter how much money you have in your checking account, it can be tempting to spend it as long as it is there.

So, keep a separate saving account, transfer a percentage to it as soon as you receive your salary, and don’t touch it.


Borrowed money should be used if the gain will exceed your borrowing value. This might mean investing in yourself – for your education, to start up a business, or to buy a house. In this case, borrowing can provide the advantage you need to reach your financial goals faster.

However, avoid borrowing to impress people or lead a lifestyle that you cannot afford at the moment. Learn to live within your means and that will go a long way in helping you become financially stable.


Life happens, it can come without conviction, such as an economic crisis, or loss of a job, and much can happen between when you are in your 20s and say, 40 years later when you may retire. As such, the prospect of planning into the future can seem overwhelming.

Instead of setting long–term goals, set a series of small short-term goals that are both measurable and exact – for instance, paying off credit card debt within a year or contributing to a retirement plan with a set contribution each month.


Credit card debts, student loans, and other debts can hold you back from reaching your financial target. This is because the interest keeps growing, making it difficult to pay off the whole amount for a very long time.

When you make your budget plan, keep aside a small portion each month to pay off outstanding debts, and you can choose to pay off high-interest debts first.

Checkout: 9 Aggressive Tips to paying off your credit card debts


Your health should be one of your priorities, even on a budget. Falling sick can make you lose your income if you have to stop working, and you will have to spend money on medications as well.

Be sure to follow up on your preventative care and pay a visit to the doctor when needed by getting health insurance that covers the basic costs.

Sadly, insurance is something a lot of low-income people drop as an “unnecessary” expense. For instance, according to data from the US government, for children in poverty, the uninsured rate in 2020 was 9.3%, compared with 7.0% for those with family incomes within 100% and 399% of poverty and 2.2% for those with incomes 400% of poverty or higher.

Getting health insurance for you and your family members should never be an area you neglect when budgeting.


To save more, you have to take control of how you spend, live within your means, keep your standard of living below what your earnings can afford. Select the categories you want to indulge in and keep the rest of your budget as lean as possible. You will have to make sacrifices but It’s not impossible.

As you advance in your career and gain more experience, your income should increase. But rather than using this excess income to buy new things that are not necessary and live a more luxurious lifestyle, the best option is to put the money towards reducing debt and adding to savings.

Just learn to spend in moderation. For example, cut back on how often you eat out, travel for vacation, and buy new things, you can still enjoy all these things, just not all the time.

When the cost of your lifestyle is behind your income, you will have more cash flow that can be put towards achieving financial goals or unexpected financial emergencies.

This could be achieved if you are mindful of your income and spending. Otherwise, it’s impossible to get off the cycle of living from one paycheck to the next.


In many household budgeting plans, one of the first things to do is the “entertainment budget”. While TV, movies, and games can be a great way to relax, and relieve stress, they are often seen as unnecessary expenses.

Thankfully, it’s easy to reduce entertainment cost without negatively affecting your lifestyle. Larsen comments that “cable TV is a common cost that people like to cut from their budgets”.

Some people may even opt to eliminate home-based internet, phone, and Tv services and use an unlimited cell phone plan and stream from their phones to their televisions. Some opt-out for other forms of entertainment like running, or biking in the park, borrowing books and movies from the library and attending community events.

Do your research to find the cheapest alternative that will have a long-term payoff. The alternatives can be in form of hanging out with friends once in a while, adding a budget for entertainment, or a fun thing that gives you joy.


To be financially stable, one has to consider switching to a no-fee bank or a credit union. The process of closing an account and moving your money to a new bank can come with a lot of stress, but that notwithstanding, it is important to use a no-fee bank or credit union. Your budget will thank you if you can get rid of a bank that charges you ridiculous monthly fees.

Most banks in the US and abroad should have a free checking account, so there is no reason to pay for an account when free options are available. Do research and switch to a bank that offers more perks than your current one.

The perks could include no maintenance cost, no ATM fees, no overdraft fees, and high interest on savings accounts. Also, be sure to check for any hidden fees in the bank agreement – a careful check of their Terms of services document could help save you a lot of time, money, and headaches in the future.


Living with a low income doesn’t have to discourage good money habits. No matter how little you earn, you can always make a room for some savings.

You may have to start small, but something is better than nothing. This is how you will eventually reach your income goals and be more financially stable in the future.

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