How to budget on a low income

Living on a low or stretched income can be tough, and every pound matters. But budgeting effectively is possible - and it doesn’t mean giving up everything you enjoy. With some simple steps, you can gain control, reduce stress, and build a more stable financial future.

In this article, we will explore the basics of effective budgeting and practical ways to save. Read on to find out more. 

Understanding Budgeting Basics 

Budgeting is simply deciding where your money goes, rather than wondering where it went. It helps you prioritise essentials, avoid debt, and stretch your income further.

Start by distinguishing between your essential expenses - like rent, groceries, utilities, transport, if you pay for medications or prescriptions, and minimum debt payments - and non-essential costs such as subscriptions, eating out, new clothes, or holidays. 

You can find a free online budgeting tool at MoneyHelper to get you started. 

Remember, budgeting isn’t about cutting out fun, but about choosing what matters most to you. Find out more with our article about how to manage your money day-to day.

Steps to Create an Effective Budget 

1. Track Your Income

   List all sources of income - salary, benefits, freelance work - to know exactly what you have to spend.
   
   
2. Categorise Expenses

   Divide your spending into fixed costs (rent, bills) and variable costs (food, fuel). Use past bank statements to help you can access paperless versions through Online Banking or through the Mobile Banking app.
   
   
3. Set Priorities and Find Flexibility

   Identify your essential expenses and look for non essential areas to reduce, like pausing subscriptions or cutting back on takeaway meals. Small changes can free up money for essentials or savings.
   
   
4. Review Monthly

   Budgets aren't set in stone. Check in monthly to see what s working, adjust where needed, and be kind to yourself if things don't go perfectly.

Find out how to Spring Clean Your Finances

Practical Money-Saving Tips

• Plan meals and batch cook to avoid waste and reduce takeaway temptation
• Compare energy providers and switch to cheaper plans
• Cancel unused subscriptions or memberships
• Use loyalty cards, cashback sites, and discounts wherever possible
• Enjoy free or low-cost activities - parks, libraries, community events, or online clubs.

Find out how you can save money on your household bills with ApTap.

Helpful Budgeting Tools 

Whether you prefer pen and paper or apps, tracking your money helps you stay on course. Apps offer spending summaries, alerts and savings pots or goals, while simple spreadsheets or notebooks work just as well if that suits you better.

Managing Unexpected Costs 

Unexpected expenses happen to everyone. Build an emergency fund - even just £1 a week - to create a safety net. And if money feels tight, don’t hesitate to reach out for support. TSB Money Confidence Experts are here to help you explore options without judgment and it s important to have conversations sooner rather than later if you are concerned about money.

Keeping Your Budget on Track 

Consistency matters more than perfection. Try these habits to stay steady: 

• Ask yourself whether you truly need it or simply want it - and consider if it’s something that can wait until you’re more comfortable with your budget
• Spend 10 minutes weekly reviewing your spending
• Begin with small monthly savings goals - even starting with just £5 or £10 is a great first step. You can always increase the amount as you re able to save more
• Use text alerts to remind you of bills and limits
• Celebrate every win, no matter how small - each step forward counts
• Schedule a no-spend day in your calendar where you avoid buying any nonessentials and stick only to what you truly need. savings text alerts

Final Thoughts

With patience and persistence, budgeting on a low income is achievable. You can create a plan that fits your life, giving you confidence and control over your money.

Quick Budgeting Checklist: 

• Track all income
• Categorise expenses
• Prioritise essentials and find small ways to save a little each month
• Review your budget monthly
• Use meal planning, switch providers, and review subscriptions
• Leverage apps or simple tracking methods
• Build an emergency fund and ask for help when needed
• Maintain regular check-ins, set small goals, and celebrate progress

You’re doing great - keep going!

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