{"id":90252,"date":"2023-01-25T16:01:00","date_gmt":"2023-01-25T20:01:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=90252"},"modified":"2025-09-15T10:14:38","modified_gmt":"2025-09-15T14:14:38","slug":"how-to-budget-money-on-a-low-income","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/how-to-budget-money-on-a-low-income\/","title":{"rendered":"How to Budget Money on a Low Income"},"content":{"rendered":"\n

Do you want to know how to budget money on a low income? What are some budgeting practices you can adopt to secure your future and maximize the value you\u2019re getting for your money?<\/p>\n\n\n\n

Budgeting is one of the most important financial skills you can develop, especially if you’re working a low-paying job. However, many low-income earners don\u2019t budget their money and spend to their heart\u2019s content, without much regard for how their spending takes them further and further away from long-term financial security. <\/p>\n\n\n\n

With this in mind, here\u2019s how to budget money on a low income. <\/p>\n\n\n\n\n\n\n\n

Editor\u2019s note: This article is part of\u00a0Shortform\u2019s guide to saving money<\/a>. If you like what you read here, there\u2019s plenty more to check out in the guide!<\/em><\/p>\n\n\n\n

The Importance of Budgeting<\/strong><\/h2>\n\n\n\n

When budgeting your money on a low income, your main focus should be improving your financial prospects and making sure you’ve got a safety net to fall back on. However, many low-income earners don’t realize that and budget their expenses with a different goal in mind: to prove to others that they have more money than they actually do. They set money aside from their monthly income to buy luxury items and pay for premium experiences instead of saving or investing it. They do that because they care more about others’ opinions than about their financial security.<\/p>\n\n\n\n

In his book The Millionaire Fastlane<\/em><\/a>, MJ DeMarco explains that people spend more than they can afford because they want to enjoy the pride, admiration, and respect that rich people enjoy, and they believe that they can achieve the same positive feelings simply by looking rich.<\/p>\n\n\n\n

However, allocating a significant amount of your budget to things that make you look rich<\/em> is financial self-sabotage, especially if you aren’t earning much to begin with. With this in mind, the most important tip for how to budget money on a low income is to stop caring about others’ opinions. Instead of trying to look rich<\/em>, you should emulate the habits of rich people<\/a><\/em>:<\/p>\n\n\n\n

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  1. Create and live by monthly and annual budgets.<\/strong> More than half of all millionaires say they budget. They\u2019re motivated by visualizing the long-term rewards<\/a> of achieving financial independence<\/a> and being able to retire.
    <\/li>\n\n\n\n
  2. Know what your family spends annually for basic needs<\/strong> (food, clothing, and shelter). 62% of the millionaires surveyed knew their monthly expenses. In contrast, the the majority of the non-millionaires had no idea how much their consumer-oriented lifestyles cost them.
    <\/li>\n\n\n\n
  3. Set specific daily, monthly, yearly, and life goals.<\/strong> Most millionaires are goal-oriented and take a long-term view. Their goals are not spending and acquiring material possessions, but being able to retire, be financially secure<\/a>, and enjoy life. People who are financially secure are happier than those in their age\/income category who aren\u2019t. Unlike those living paycheck to paycheck, they don\u2019t worry about the next economic slump.<\/li>\n<\/ol>\n\n\n\n

    \nTITLE: The Millionaire Fastlane
    \nAUTHOR: MJ DeMarco
    \nTIME: 15
    \nREADS: 77.2
    \nIMG_URL: https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2022\/02\/the-millionaire-fastlane-cover.png
    \nBOOK_SUMMARYURL: the-millionaire-fastlane-summary-mj-demarco
    \nAMZN_ID: XYZ
    \n<\/p>\n\n\n\n

    Budgeting for Low-Income Earners<\/strong><\/h3>\n\n\n\n

    Once you adopt the rich mindset<\/a>, the next step is to develop budgeting practices that work for you. If your income is low, the goal of your budget is to cut down on what you don’t need, while saving room for what you do.<\/strong> To that end, Joshua Fields Millburn<\/a> & Ryan Nicodemus<\/a> (Minimalism<\/em><\/a>) recommend establishing a written monthly budget, following a few guidelines:<\/p>\n\n\n\n