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There’s no doubt about it. 

Learning to budget on a low income is hard.

Maybe you’ve bought this book. And you’ve read several articles online. 

But still… 

It’s hard to know where to start, right?

You’re not alone. One of the most often asked questions in my inbox is:

What are your tips for living on a tight budget? 

So let’s talk about it.

Our Personal Budget Example:

  • Rent: $1000
  • Electric: $55
  • Water: $40
  • Groceries: $260 ($65/week)
  • Gas: $48.00
  • Amazon Prime Instant Video: $8.25/month
  • Cell Phones: $100.00
  • Internet: $51.00
  • Car Insurance: $70
  • Pet Care: $40
  • Savings: $455
  • Fun Money: $75
  • Charitable Donations: $30.75 

 Total: $2,233

Okay, so those are our numbers. Now let’s talk about what we do to make it work.

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1. We Save While We Spend

jar of coins

Do you like to keep things simple?
Me too.
So you probably don’t always have time to clip coupons. But you don’t want to leave money on the table, either. Here’s what I recommend:
Use a cash back app like Rakuten.
Rakuten is a rewards program that gives you cash back as you buy things online. It’s an effortless way to get the best deals.

More importantly:
When you make large purchases – like holiday shopping or birthdays – you’ll double your savings. Like last year, when we replaced some furniture, we got $57 from that purchase alone.
Little things add up when you’re trying to budget on a low income.
So here’s how it works:
Sign up for a free Rakuten account and use the search bar to find the retailer you want to shop with.

For my visual readers, here’s how that looks:

rakuten homepage

As you make purchases, you’ll earn cash back. Cash back gets sent via PayPal or through check. 

Related: How to Manage Your Money When You Don’t Have Any

2. Groceries

vegetables on a cutting board

Let’s face it.
Groceries can be expensive.
But Annette and Steve from America’s Cheapest Family transformed the way we shop for groceries. Annette, Steve, and their 5 kids lived on an average income of $35,000.
So I thought to myself:
If they can do it, so can we.
So we did.

 A month after reading their book, we were able to cut our grocery bill down from $120/week to $65/week. It was eye-opening.
And if you’re learning how to budget on a low income, then that book is a gamechanger. So I won’t share everything from their book, but I will share a few tips:
1 | Shop Only Once a Month 

Do you shop a few times a month?
We did too, but there are 2 reasons we switched to shopping once a month:
1) Sale Cycles Usually Run Every 4-6 weeks
2) Fewer Shopping Trips = Fewer Impulse Buys
And here’s the deal:
Meat and produce are two of the most expensive items at the grocery store. They also go bad the quickest.
The worst part?
Research shows that the average person wastes $2,200 of food each year. Talk about money going down the drain.
So to preserve our precious food, we started vacuum sealing it with a FoodSaver. We’re now able to stock up on food when it’s on sale and seal it for freshness.
Our food stays fresher for up to 5 times longer and the FoodSaver paid for itself in 2 weeks.

2 | Use Your Grocery Store’s Flyer

Did you know that you’ll get the best deals by shopping around your grocery store’s flyer?
Try it and see how much you save.
3 | Use Unit Pricing

Unit pricing makes comparing products—from one brand to another or between different sizes—more like comparing apples to apples. (So it’s easier to see which products are a better deal)
Have you ever noticed the unit price on the product label?
Here’s what I mean:

Unit Price shopping

Let me give you an example. Let’s say you’re picking between two products: brand 1 and brand 2.

Here’s the unit price formula:
Total Price / Size = Unit Price
Brand 1: $5.00/18oz = $0.27 per ounce
Brand 2: $4.75/16oz = $0.29 per ounce
At first look, brand 2 is cheaper.
But when you take the unit price into consideration – the first one wins. See how that works?
Here’s another example:

unit price example


The 32-ounce yogurt is a better deal because it’s only $0.05 per ounce compared to $0.12 of the one on the right.
Pretty simple, right?

Related: The Total Money Makeover: A Proven Plan for Financial Fitness

3. Home Expenses

key hanging from front door lock

Word to the wise:

Debt is the enemy to your financial freedom.
Are you tired of the never-ending payments? Tired of having that burden on your back? Tired of feeling stuck?

I get it. So in 2016, we made the decision to sell our house to pay off debt. We also traded in our car for something more affordable.

Because we didn’t want to be stuck with debt any longer than we had too. Don’t get me wrong, the decision to sell our house was tough.

But, when it came to learning how to survive on a low income budget, we knew we needed to be debt free.
Plus, we are in a high cost of living city. The average rent here is $1,700 – $2,000. As you can see, our rent expense is almost half of our take-home pay.

Our total rent is $2,000, so we split the rent and utilities with a roommate to make this work.
We have a long-term goal of moving to a cheaper area. But in the meantime, we’re saving money for a down payment.

Related: Get a Financial Life: Personal Finance in Your Twenties and Thirties

4. Utilities 

lightbulb in grass

Did you know that heating and cooling account for about 50% of your electricity usage? Our summers get hot where we live. Smoking hot. 
Still, we do our best to keep our heating and cooling costs low by opening up windows and only running the AC at night.
We’ve tried to go without running the air at night but that wasn’t feasible during the summer. All it took was spending one night curled up next to a sweaty husband to know that wasn’t the best idea.
Sorry, let me rephrase.
A terrible idea.

During the summer, we run the AC all day and night to maintain our sanity
Our electric bill is higher in those months, but it’s well worth it. During the other seasons, we turn the fans on when it’s warm and bundle up when it’s cold.
We’ve gotten used to this, so it’s not bad.
We also save by unplugging things when we aren’t using them (phone chargers, coffee maker, etc.) And we wash our clothes in cold water with only full loads.

Related: Why Didn’t They Teach Me This in School?: 99 Money Management Principles to Live By

5. Gas and Car Insurance

pile of money

Can we be honest?
Spending tons of extra money on something that sits idle 90% of the time isn’t the smartest idea.

What am I talking about?

So we made the decision to become a one-car household. And I’m so glad we did. Holly from The Simple Dollar helped convince us.

She talked about it in her article:
One Year Later: How We Make It as a One-Car Family in the Suburbs.
She has some great tips for making it work. It’s well worth it for you if you’re learning to budget on a low income.

6. Fun Money, Internet, and Cellphones

notebook and phone sitting on desk

Because we all gotta have a little fun, right? Even though these are tips for living on a tight budget, we still think everyone should have fun money.
Granted, I know some people swear by having a bare-bones budget. But for us, that wouldn’t be realistic.
So here’s what we do:
Amazon Instant Video
Instead of paying a high amount on cable, we pay $99/year (set aside in $8.25/month increments) for Amazon Instant Video. I get to watch my stuff and he gets to watch whatever he likes, so we’re both happy.

For our cellphones, we each have the $50 Cricket Wireless Plan. We save $10/month by using auto-pay with them.
We switched from AT&T to Cricket Wireless and have never looked back. If you want to lower your phone bill, go with a company like StraightTalk or Cricket Wireless.
They use local towers (from companies like AT&T and Verizon) so the cell service is the same. And our phones are both completely paid for.

Plus we don’t upgrade every year. Right now, we’re focusing on staying a month ahead on our bills.
$51 (including taxes) gets us high-speed internet where we live. We could go cheaper but we’re pretty happy with the amount we pay + the internet speed.

7. Retirement & Savings

money growing out of ground

Chris Hogan transformed the way we handled our retirement. Before I read Retire Inspired, retirement investing seemed intimidating.

Traditional 401(k). Roth 401(k). Roth IRA. Traditional IRA. Employer match. Contribution limit. 

Is it a bit overwhelming for you too?
Here’s the thing:

Your retirement is an investment in your future self. So do something now that you’ll thank yourself for later.
More importantly?

The real risk with retirement is doing nothing at all.

You’ll either reach retirement age and saved enough money to live comfortably, or you won’t – and you’ll wish you had.
So listen:

There is no pension for our generation, guys. We must save for our own retirement. If you don’t know where to start, then this will be a massive help.

8. Pet Care

dog playing fetch

Pets care can cost an arm and a leg. Between food, vet visits, toys, and everything else – it all adds up quick.

Can you relate?
But regardless of the cost, our dog has been an awesome addition to the family.
So we put $40/month aside for his food, toys, and vet care. 
We use to average about $60/month on Porter’s pet care but then we started buying his stuff from Chewy. We’ve saved an average of $10 each month by using Chewy.
Plus, we don’t have to worry about loading that big bag of dog food into our grocery cart when we shop. It’s delivered to our door. Win-win.

9. Charitable Donations

woman holding ball of money

It feels good to do good. Is there a cause or foundation that you’re passionate about?

For us, even though we budget on a low income, it’s still important for us to give to others.
We have 3 charities we like, so we give them each about $10 a month. We’d like to increase this in the future. But for right now, every little bit counts.
Final thoughts?

When your budget works, it so works. So, commit yourself to your budget. To being money savvy. To getting ahead financially.

Start making tiny ripples. That’s how change begins.

Are you ready?

3 Resources for living on a tight budget:

To start your financial journey, grab the free worksheet below:

Budget Sheet

Want to make budgeting easy?
Join our newsletter & get your free budgeting worksheet:


If you're wonder how to budget or budgeting tips, you can take a peek inside our actual finances. This is how we budget $2,200 each month. We use the Dave Ramsey inspired zero-based budget (also called the zero-sum budget). #howtobudget #daveramsey #moneytips


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