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How to Live on a Low Income

Finding the right resources and programs may help reduce the burden of living paycheck to paycheck.

Last Updated: 8/18/2022
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Living on a low income is a problem that approximately 37.2 million Americans face. While the definition of low income may vary per person and location, the Federal Poverty Level (FPL) guidelines may help determine whether an individual is considered a low-income earner.

Low-income earners face various challenges. But with the right resources and financial planning, you can ensure that you and your family still meet their basic needs, such as health care, housing, nutrition, transportation and education.

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What Qualifies as Low Income?

The idea of low income may vary per state. But generally, an individual is considered a low-income earner if their household income is less than double the FPL.

FPL guidelines are released annually by the Department of Health and Human Services. The guidelines simplify income limits to help different agencies determine who may be eligible for government programs. Knowing this information is essential as it can help you identify which benefits you may be eligible to receive.

2022 Federal Poverty Level Guidelines

The FPL measures family income. Inflation and the most recent completed year are reflected in the price changes. For instance, the 2022 poverty guidelines are based on price changes through 2021.

For 48 states and Washington, D.C., there’s one set of FPL figures. Meanwhile, Alaska and Hawaii have separate sets of figures. The separate guidelines for the two states are due to the Office of Economic Opportunity's administrative practices from 1966–1970.

The table below shows the latest FPL guidelines.

  • Number of Household Members
    48 States & Washington, D.C.
    Alaska
    Hawaii
  • 1

    $13,590

    $16,990

    $15,630

  • 2

    $18,310

    $22,890

    $21,060

  • 3

    $23,030

    $28,790

    $26,490

  • 4

    $27,750

    $34,690

    $31,920

  • 5

    $32,470

    $40,590

    $37,350

  • 6

    $37,190

    $46,490

    $42,780

  • 7

    $41,910

    $52,390

    $48,210

  • 8

    $46,630

    $58,290

    $53,640

For households in the 48 states and Washington, D.C. with more than eight members, add $4,720 per additional person. The amounts to add for each additional person in Alaska and Hawaii are $5,900 and $5,430, respectively.

Benefits You May Be Entitled to Based on Your Percentage of the FPL

Many federal programs use a certain percentage of the FPL as the basis for eligibility. For instance, adults with household modified adjusted gross income (MAGI) less than 138% of the FPL may qualify for Medicaid in many states. That means if an individual earns below $18,754.20 ($13,590 x 138%), they’ll be eligible for Medicaid.

You can check the limits by visiting specific programs’ websites. Depending on the state, percentage limits may also vary.

You may also use the table below to get an idea what the percentage limits some programs have set. The check mark indicates what percentage of FPL qualifies a household for specific benefits.

  • Percentage of FPL/Program
    0%
    1–100%
    100–138%
    138–150%
    150–185%
    185–200%
    200–250%
    250–400%
  • Medicaid and CHIP
    (Non-Expansion State)

  • Medicaid and CHIP
    (Expansion State)

  • Supplemental Nutrition
    Assistance Program (SNAP)

     

     

     

     

     

  • Special Supplemental
    Nutrition Program for
    Women, Infants and
    Children (WIC) for
    pregnant and mothers
    with children 0–5

     

     

     

     

     

  • National School Lunch

    Free

    Reduced
    price

     

     

     

  • School Breakfast
    Program

    Free

    Reduced
    price

     

     

     

  • Special Milk
    Program for
    Children

    Free

    Reduced
    price

     

     

     

  • Summer Food
    Service Program

    Free

    Reduced
    price

     

     

     

  • Child and Adult
    Food Program

    Free

    Reduced
    price

     

     

     

  • Low Income
    Taxpayer Clinic

     

  • Low Income Home
    Energy Assistance
    Program

     

     

     

     

  • Weatherization

     

     

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FINDING UNCLAIMED FUNDS

If you don’t know your eligibility for certain benefits, you could end up not claiming what you’re entitled to receive. If you think you could have unclaimed cash benefits, start by searching within your state-specific resources. You may also use online search tools, such as the interactive map provided by the National Association of Unclaimed Property Administrators.

If you find that you do have unclaimed money, verify how you can claim them. Ask about the state’s process and requirements.

For federal tax refunds, check with the Internal Revenue Service (IRS).

A woman is thinking about her basic needs and how to best budget.

Meeting Your Basic Needs

Living below your means — due to low income or through unemployment — can be challenging. It could mean sacrificing certain items other people consider essential, such as health care, housing, nutrition, transportation and education.

Fortunately, there are various programs, aids and subsidies that cater to low-income earners. Below are some of the resources you may find beneficial.

Health Care

Ensuring that you’re healthy is essential regardless of your income. Failure to meet this basic need can cause a health crisis, which can lead to huge expenses. Proper diet, exercise and getting regular check-ups can help. But if these aren’t enough, you may have to look for programs suitable for the type of care you or your family members need.

1. Physical Treatment Assistance Programs

The right coverage can help you get proper physical treatment. Finding the most affordable health insurance is a must for low-cost income earners. That’s especially true if an employer-sponsored policy isn’t an option.

In most cases, the best health care assistance is applying for a government-sponsored benefit such as alternative health insurance programs, Medicare and Medicaid.

  • Children’s Health Insurance Program (CHIP): CHIP provides health insurance benefits to children. Households meeting the income eligibility limits are entitled to receive free health insurance for children. Any parent, legal guardian or grandparent can apply on behalf of a child (including teenage children). State rules on CHIP implementation may vary.
  • Medicare Savings Programs: Americans who have resided in the U.S. for five or more years qualify for Medicare when they turn 65. Younger people with certain diseases or disabilities may also qualify. Benefits may include Medicare premium payments, hospital insurance, medical insurance, deductibles, copayments and coinsurance depending on the type of program you qualified for.
  • Medicaid: This program is the largest health coverage source in the U.S. and is a joint federal and state effort. Medicaid provides coverage to low-income households, qualified pregnant women, children and Supplemental Security Income (SSI) recipients. Eligibility and coverage may vary per state.
2. Mental Health Programs

For low-income families, the stigma associated with mental illness can be compounded by a lack of resources. That said, Medicaid, Medicare, and CHIP all pay for mental health services, including counseling. Additionally, there are nonprofit organizations offering resources, tools and programs to help individuals learn more about and find ways to deal with mental health issues.

  • Mental Health America (MHA): An education and outreach nonprofit offering programs to help people better understand mental health issues. It has more than 200 affiliates that offer services and resources to communities. You can use the organization’s Affiliate Resource Center to find an affiliate in your area.
  • National Alliance on Mental Illness (NAMI): NAMI is an organization offering resources to help people with mental health issues. Join online discussion groups, access reports and publications, find support groups or local NAMI affiliates and learn about assistance programs for prescription medications.
  • Substance Abuse and Mental Health Services Administration (SAMHSA): Some people may need treatment for their mental health illnesses. If this is the case for you, SAMHSA’s Behavioral Health Treatment Services Locator can help you find the nearest state-funded or nonprofit facilities.
3. Disability Resources and Benefits

According to the Centers for Disease Control and Prevention (CDC), 61 million adults in the country live with a disability. That means one in four U.S. adults has a type of disability.

Many people living with a disability or with a person with a disability know how costly medical bills can be. For low-income earners, dealing with the expenses is much more difficult. Finding assistance programs can help.

  • Achieving a Better Life Experience (ABLE): The ABLE Act allows individuals with disabilities to maintain a tax-free savings account, which can cover qualified expenses. To qualify for an ABLE savings account, you should be eligible for SSI and childhood disability benefits (CDB), disability insurance benefits (DIB) or disabled widow/widower benefits (DWB) based on a qualifying disability that began before the age of 26. A disability certification is also necessary.
  • Disability Benefits: The Social Security Administration offers Social Security Disability Insurance (SSDI) and SSI programs. Both pay benefits to eligible individuals. However, the SSDI pays benefits if the person is insured. Meanwhile, the SSI benefits are for adults and children with disabilities with limited income and resources. To qualify, you’ll need to meet medical and non-medical requirements.
  • VA Disability Claim: Veterans suffering from an illness or injury affecting their mind or body may be eligible for a disability claim. If your illness or injury was caused by or has gotten worse because of your active military service, you may receive financial compensation and other benefits.
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FINDING AFFORDABLE HEALTH COVERAGE

The cost of health insurance varies per person. Depending on your circumstances and needs, it can be pricey. Here are some tips to help you find an affordable health plan.

  • Check the Marketplace: Low-income earners or unemployed individuals may find low-cost health insurance plans in the Marketplace suitable for their income level and household size.
  • Compare your options: One of the best ways to find a valid policy at a fair price is to shop around. Compare personalized quotes. It would also help to ask for available discounts.
  • Consider COBRA: The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to continue health insurance coverage after losing their job or having fewer work hours. That means even if you’re no longer eligible to receive your employer’s health insurance benefits, you’ll remain covered for a certain period.

Housing

Shelter is a basic need, but finding a comfortable place to live can be a struggle if you have limited income. Missing even a few rent payments can lead to eviction. Finding government agencies or nonprofit organizations offering housing assistance programs will help prevent this situation.

1. Government Resources

Public housing is available to eligible low-income families through government agencies. Low-income individuals, people with disabilities and seniors may also qualify for affordable rental housing. Another option is to get a housing choice voucher.

  • Public Housing Agency (PHA): The application process for public housing assistance programs vary per state. You may check eligibility requirements. Typically, the applicant must meet the annual gross income limit and must be a senior citizen, a person with a disability or a family. A U.S. citizenship or an eligible immigration status is also necessary.
  • Affordable Rental Housing: The U.S. Department of Housing and Urban Development (HUD) helps low-income individuals, people with disabilities and seniors to get affordable rental housing. Under this program, the HUD pays states and building owners to ensure low fees for renters.
  • Housing Choice Vouchers: People with limited income who want to rent a house from the private market may try housing choice vouchers. This program is for low-income families, people with disabilities and the elderly. If you qualify, you can choose a house suitable for your needs. The PHA will pay the landlord for you. That said, the property owner should agree to rent the unit under this program.
2. Non-government Resources

There are many nonprofits offering housing assistance to low-income individuals. Before applying, make sure you check eligibility requirements and program details. Below is a list of a few organizations working to help people become homeowners even with a limited income.

  • Habitat for Humanity: This global organization focuses on helping low-income families own decent and comfortable homes. It serves all states in the U.S. Generally, Habitat for Humanity selects families based on the level of need and ability to pay off mortgages through a payment plan.
  • Catholic Charities USA: One of the advocacies of this organization is access to affordable housing. It offers emergency shelters to people in need. Members of vulnerable populations may also get long-term assistance.
  • Modest Needs Foundation: This nonprofit caters to low-income individuals and families who need short-term financial assistance but don’t qualify for conventional government assistance. Beneficiaries of Modest needs don’t receive cash directly. Instead, the organization directly remits the payment to landlords or creditors. Modest Needs offers grants for various purposes, including monthly rental or mortgage payments.
3. Online Tools and Resources

Finding affordable housing can be challenging. If you don’t know where to start, you can begin your search online. Below are a few tools and resources you can easily access.

  • HUD Resource Locator: This interactive map helps you locate the public housing authority serving your area. You can get their address and contact information.
  • Affordable Housing and Rental Resources: You can look for online search tools that help find affordable housing in a specific area. Examples of these include AptFinder.org, GeorgiaHousingSearch.org and MassAccess.
  • State or City Registry: Some states and cities post an updated list of affordable rental and housing units, as well as housing agencies. The State of California, Chicago and Miami are among these.
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STARTING YOUR HOMEBUYING JOURNEY

Many people dream of owning a house. However, having a limited income can hinder you from achieving this goal; however, there are ways to purchase a house even with a low income.

  • Prepare your finances: The first thing you need to do is to ensure you’re prepared for the purchase. Start with your credit: try to maintain a good credit score or build your credit by ensuring timely payments. Save money for the down payment.
  • Check low-interest loans: Look for loans with low-interest rates. You can start with government-backed loans, such as USDA, VA and FHA home loans. You may also consider other mortgage lenders. That said, it’s important to remember that a loan is a commitment you’ll have to pay.
  • Search for affordable houses: While preparing your finances and weighing your financing options, you can start looking for affordable houses near you. Compare prices and features.

Nutrition

Eating well on a budget might sound too good to be true, but it's a goal that's within reach. Government-run programs, community resources and even apps can help low-income individuals and families get the nutrition they need.

1. Affordable Eating and Wellness

Many people think that a limited income also limits their food choices, making it hard to ensure nutritious meals. But with planning and research, you can come up with a healthy menu without breaking the bank. Listed below are some tools you can use.

  • USDA MyPlate: Build meals that include the five food groups, find cost-saving opportunities, learn how to cook budget-friendly recipes and get a personalized plan.
  • Grocery Pal: Plan your meals with the help of the grocery shopping mobile app. Track your grocery inventories, set reminders for expiration dates and get alerts to prevent purchasing duplicate items. You can compare products online to find the lowest prices. The app also informs you about weekly sales at local supermarkets and discount stores.
  • Price Cruncher: Stay on budget and save money by finding the best prices. This app allows you to compare the prices of grocery items from various stores.
2. Government Assistance

There are different government programs aimed at helping individuals access nutritious meals and snacks. Depending on the program, qualified individuals may be eligible for reimbursements or meals.

  • Supplemental Nutrition Assistance Program (SNAP): SNAP is a federal program often called the "food stamps" program. It provides a supplemental budget to eligible women and families to help them purchase food from major grocery stores, restaurants and farmer's markets accepting SNAP cards as payment.
  • Special Supplemental Nutrition Program for Women, Infants and Children (WIC): WIC is a federal program serving low-income pregnant women or mothers of children up to age five, offering supplemental food, nutrition-centered education and referrals for healthcare services.
  • USDA Child and Adult Care Food Program (CACFP): This federal program reimbursed eligible families for nutritious food. Low-income individuals may be eligible for CACFP if they’re enrolled at child and adult daycare centers. Children participating in afterschool care programs or living in emergency shelters, seniors and people with disabilities enrolled in participating facilities may also be served meals.
3. Nonprofit organizations and Charities

Various organizations help low-income families get the nutrition they need by organizing food pantries. Many churches and religious groups also serve free meals to people in need on a first-come, first-served basis. The following are some examples of nonprofits having food drives across the country.

  • Family Promise: An organization helping families in need of temporary shelter, utility support, rental assistance and transportation assistance. It also organizes community food pantries.
  • Feeding America: This organization conducts food assistance programs in various locations, including senior centers and schools. It also has mobile pantries that bring free groceries to communities. Other food drives it organizes include drive-thru food pantries, summer meal programs, school pantry programs, senior food programs, the BackPack program and Kids Cafe.
  • Salvation Army: It provides food to help low-income individuals and families. The organization has food pantries that provide fresh produce, healthy frozen food and canned goods to communities experiencing food insecurity. It also has meal programs conducted in residential facilities and shelters.
  • FoodPantries.org: This website helps you find food pantries in your area and know their schedules. Simply click on the state and city where you live.
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HEALTHY LIVING ON A BUDGET

Sticking to a limited budget may make it challenging for you to maintain a healthy living. That said, it’s possible with strategic planning and the right habits.

  • Be kind to yourself: Stress has a huge impact on a person’s overall well-being. It can also affect one’s appetite and behavior around food. Manage stress by exercising moderately, meditating and getting enough sleep.
  • Be strategic with your meals: Planning your meals can help you track the food you eat. It also allows you to budget your meal expenses. Eating out once in a while is okay. However, if you’re on a tight budget, cooking your meals is a more affordable and healthier alternative.
  • Be a smart shopper: Eat before going to the supermarket to avoid impulse buying. Creating a list based on your meal plan for the week can help you stay on budget. You can also save money by buying ingredients with multiple uses.

Transportation

Transportation is necessary to move people and goods from one point to another efficiently. However, it also comes with expenses. Aside from the money you need to purchase a vehicle, you also need to consider finding affordable auto insurance and maintenance expenses.

To help improve access to cars and transportation, many organizations and government programs offer assistance and grants to low-income individuals and families.

1. Buying a Car on a Low Income

It can be expensive to buy a car. But if you think it’ll help you save money in the long run, you can apply for grants and aids, including the following:

  • Grants.gov: This is a database listing different federal grants. Select “Individuals” and “Transportation” to find all grants that may be available to you.
  • Vehicles for Change: This program offers low-interest loans to help qualified low-income families own cars. There’s a maximum income level required to ensure that the vehicles it offers are reserved for low-income families. Vehicles for Change is also behind Freedom Wheels, which is a used car outlet offering donated cars at a low cost. That said, Vehicles for Change only serves Maryland and Virginia.
  • Working Cars for Working Families: The National Consumer Law Center created Working Cars for Working Families to help protect consumers against abusive car sales and financing practices. It also has a database of available car programs in different states.
2. Low-cost Car Insurance

Auto insurance protects you and your family against possible huge expenses due to unexpected incidents. However, paying for insurance premiums can be challenging if you’re already living on a low income. Additionally, the cost of a policy tends to be higher for people with low credit scores.

The best option for you is to shop around. By comparing auto insurance prices, taking advantage of discounts, or bundling multiple insurance policies you may save a significant amount. It will also ensure that you’re getting enough coverage to protect you financially.

3. Other Commuting Options

Taking public transportation is an excellent alternative if it’s accessible to you. It can lower your car expenses, especially in terms of insurance, gas and vehicle maintenance.

If you live close to work, consider walking or investing in a bicycle. In doing so, you eliminate your transportation expenses. Consider refurbished bicycles you can get for a small fee or for free. You can visit the Bike Collective Network to start your search.

4. Workplace Subsidies

The IRS allows employers to pay for employees' commuting costs on buses, ferries or trains, as long as the costs are within set monthly limits. If your employer offers transportation subsidies, you may have to elect to deduct a certain amount from your pre-tax income and submit proof of transit for reimbursement.

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ALTERNATIVE TRANSPORTATION OPTIONS

With the rising cost of car ownership, low-income earners looking to save money on transportation may consider other alternative options. Check out carpool options, free or low-cost pick-ups and reduced-fare MetroCards.

  • Set up a carpool: If you have a colleague living in the same part of town or your kids have a friend from school in the same neighborhood, check if you can carpool. This will reduce gas expenses and prevent any unnecessary buys along the way.
  • Look into free or low-cost van pick-ups: Look for van pick-ups offered for free or for a small fee. Typically, faith-based organizations and nonprofits offer these to seniors and people with disabilities.
  • Consider MetroCards: Riders who are 65 years or older and those with qualifying disabilities are eligible to get reduced-fare MetroCards. This will lessen your base fare in half. You can use this card when riding local buses and subways.

Scholarship, Grants and Financial Aid

Just thinking about the costs associated with higher education — whether it's for you, a spouse or a child — can be overwhelming enough to squash dreams of college.] Fortunately, there are various scholarships, grants and financial aid that can help low-income students pay for college.

  • Federal Application for Federal Student Aid (FAFSA): Check deadlines, requirements and the amount of aid you’re eligible to receive. Determine the best repayment plan for you.
  • Scholarships: Different kinds of scholarships are available for students. Some are merit-based, while others are based on financial need. You can find federal scholarships or ask your school’s financial aid office.
  • Foundations and Organizations: Many nonprofits, foundations, organizations and corporations offer scholarship programs to deserving students. One example is the Jeannette Rankin Foundation (JRF), which explicitly helps low-income women 35 and older who are pursuing their first bachelor’s, technical college degree or post-secondary diploma.
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PAYING FOR COLLEGE

College education can be expensive. However, a diploma can help you access more career opportunities that offer higher salaries. So, it’s essential to understand the different financial options that may be available to you, such as school and community grants. The following tips may also help.

  • Look for free tuition offers: Many colleges and universities offer free tuition to students who come from low-income families. Check if the school you have chosen has this program.
  • Ask about emergency financial assistance: If you need funds to cover education or basic living expenses, consider applying for emergency financial assistance. Some schools offer interest-free loans to students in need.
  • Apply for a work-study program: Working while studying allows you to gain valuable work experience while pursuing higher education. Check if you qualify for the Federal Work-Study program. Some schools may also hire student assistants.

Taxes

Depending on your income and family circumstances, you may be eligible for certain tax credits. You can check this with the IRS. Visit their website to learn more about the different tax credits. Here are some examples to give you an idea about possible credits you may be eligible to receive.

  • Child and Dependent Care Credit: Generally, families have to pay a portion of childcare costs, not unlike co-pays for medical insurance. But the IRS provides credit for childcare expenses. Your tax credit will be based on your income and the percentage of childcare expenses.
  • Earned Income Tax Credit (EITC): Low- to moderate-income earners may qualify for EITC. The amount of the credit varies depending on your family composition (individual, married, head of household) and income.
  • Health Coverage Tax Credit: For qualifying individuals, this IRS tax credit pays for 72.5% of their health insurance premiums (as long as those health insurance plans are also qualifying plans). This can make health insurance significantly more affordable. If you're wondering whether you qualify, call the IRS at (800)-829-1040.
  • Mortgage Interest Tax Credit: If you own your home, you may be able to deduct the interest you pay on your mortgage loan from your annual taxable income.
  • Saver's Tax Credit: If you make eligible contributions to a qualifying retirement savings account, you may be able to deduct from your taxes if you meet specific requirements.
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TAX TIPS FOR INDIVIDUALS WITH LOW INCOME

Generally, income gets taxed at the federal, state and local levels. Additional deductions may also apply for the funding of Social Security and Medicare. For low-income earners, these significantly reduce their finances. Aside from tax credits, the following strategies can help you save money.

  • Deduct IRA contributions: If you’re a low-income taxpayer, you can take an IRA deduction. You may be able to deduct your full IRA contribution even if a retirement plan at work covers you. That said, make sure you check IRS requirements to avoid any issues.
  • Check deductible medical expenses: Medical expenses can be costly, but they may be qualified for tax deductions. The IRS allows taxpayers to deduct unreimbursed medical expenses, including dental, vision, preventative care treatments and surgeries. You may also deduct unreimbursed payments for prescription medications.
  • Get assistance for free: Dealing with taxes can be a bit overwhelming. A tax professional can help ensure you comply with IRS regulations and get counseling. You can check the Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE).
A woman is putting money in a piggybank to help her save.

Budgeting on a Low Income

A solid budgeting strategy can help with proper money management. However, many Americans don’t know how much money they spend. Knowing what expenses to focus on can help you learn to prioritize expenditures and ensure that you’re able to meet your basic needs even with a tight budget.

Below are a few tips to help low-income earners create a budget plan.

  • This is an icon

    Analyze your current budget

    The first thing you have to do is determine how much money you have. Take note of all sources of income. If you don’t have a consistent income amount every month, get the average amount of your salary for the last three to six months.

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    Learn to prioritize

    Make a list of your expenses, categorize them and determine which are necessities. Then, prioritize your bills. Consider setting aside a certain amount for your emergency funds and savings.

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    Minimize your expenses

    Review your expenses. Check areas where you can reduce spending. For example, getting a less expensive phone plan may be a good idea. List your subscriptions and membership plans and cancel those that you don’t use.

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    Monitor your progress

    It’s important to regularly check your progress. See if you’re able to meet your goals. Evaluate your spending and determine if your budget plan is suitable for you.

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    Adjust your spending as needed

    Be flexible with your budget plan. Adjust it as needed. Create a new budget plan before a new month begins. Sometimes, finding the right budget plan requires trial and error.

4 Easy Steps for Tracking Your Expenses

Tracking expenses is one of the most important steps in managing and budgeting money when you have limited income. It helps you know where your money goes. It also allows you to gain control of your finances.

1

Review your account statements

You need to know your monthly cash flow. If you know your household income, you can use that as your basis. If you don’t, review your account statements. You can ask for a copy from your bank. Make sure you check all accounts, including checking and credit card accounts.

2

Create a list of your expenses

The next step is to list your expenses. Categorize them into fixed and variable expenses — it will help you evaluate your spending habits.

3

Use a tracker

An effective way to track expenses is to use a tracker. You can do this by simply writing down your income and expenses on a sheet of paper, a notebook or a ledger. You can also use spreadsheet programs. For convenient tracking, you may download a tracking app on your phone.

4

Make necessary changes

Your expense tracking information will help you develop a solid budget plan and set financial goals.

Smart Ways to Cut Household Expenses

Cutting your household expenses can help you save money. However, you need to determine first which areas of your spending you can reduce. You can do this by categorizing your expenses.

Generally, there are two types of household expenses — fixed and variable. Fixed expenses are those that remain the same, such as your monthly rent, mortgage, insurance and utility bills. Meanwhile, variable expenses are costs that change based on quantity or price fluctuations like food, entertainment and travel expenses.

Reducing Your Fixed Expenses

Below are some of the most common fixed expenses and tips on how you can save money.

  • Fixed Expenses
    Title
  • Mortgage
    Mortgage payments are fixed. However, you may lower your payment by refinancing your loan with a lower interest rate. If you have an extra room, consider renting it out for extra income.
  • Rent
    Some landlords may be willing to give discounts if they know the renter personally. You may also ask for ways to reduce your rental rate, such as helping with plant maintenance around the apartment or doing repainting or repair projects.
  • Utilities
    Review your utility bills. Consider cutting or dropping your cable subscription. Renegotiate your phone plan. You should also be mindful of your water and electricity consumption.
  • Insurance
    Ask your insurance agent if you’re qualified to get certain discounts. You may also increase your deductibles to reduce your monthly premiums.

Reducing Your Variable Expenses

The table below enumerates some of the variable expenses most households have and provides simple tips to help you reduce your expenses.

  • Variable Expenses
    Title
  • Food
    You can reduce your food costs by creating meal plans. Buying goods in bulk can also help you save money. Coupons can also help you reduce the cost of your groceries.
  • Shopping
    Prioritize your needs over your wants. Comparing prices can also help you find the best deals.
  • Exercise
    If you’re paying for a gym membership you rarely use, cancel it. You can also save a lot by working out at home. Jogging around in your neighborhood is also a good workout for free.
  • Entertainment
    Calculate the average amount you spend on movies and concerts. Consider limiting your budget for these activities.
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MONEY-SAVING TIPS FOR LOW-INCOME EARNERS

Most people are aware of the importance of saving money. However, having a limited income prevents many individuals from starting. Finding the right strategy can help you achieve your saving goals.

  • Reduce energy costs: Making a few tweaks at home can help you save money on electricity and water costs. Conduct regular inspections of your home. Fix leaky pipes or broken appliances immediately to prevent further damage that may cost you more.
  • Check for discounts: Always look for discounts that may be available to you. This applies to groceries, entertainment costs and even insurance policies.
  • Set your goals: Determine your saving goals. Calculate the amount you need to save every month or year to reach these goals. Then, include savings in your budget plan. You can start by setting aside a small amount every month.
A person is boosting their income using creative strategies.

5 Creative Strategies to Boost Your Income

Having a limited income can also limit your spending power. Finding a way to boost your income can help you better navigate your personal finance. You may also look for opportunities that allow you to earn extra money.

Here are some simple strategies you can try to get extra cash.

1

Ask for a raise

Make sure you know the average salary for your job title and duties. Then, negotiate with your employer. If you’re offering services to companies or individuals, consider increasing your fee.

2

Sell items you don’t use

If you have items in your home that you no longer use, consider selling them. You’ll reduce the clutter at home and even earn a little. Many online platforms allow the selling of used items.

3

Try a side hustle

Consider getting a part-time job or a side gig. Depending on your skill, you may find freelancing opportunities online. You can also offer pet sitting or house-sitting services to friends and neighbors.

4

Look for a higher-paying job

Sometimes, asking for a raise won’t lead to your desired outcome. If you think you’re not paid enough for the job that you do, look for a higher-paying job.

5

Invest your extra cash

If you have extra cash, consider investing it. An investment can be a source of passive income. That said, it’s important to remember that investing comes with risks.

Low-Risk Investment You May Consider

Investing can help you grow your money. However, it can be risky, especially for low-income earners. That’s why it’s important to find the right investment product. Start your investment journey by consulting with a financial advisor. They can help you evaluate your risk aversion and create a suitable investment portfolio.

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START WITH LOW-RISK INVESTMENTS

The right investment product may vary per person. For low-income earners, the following may offer safer options.

  • Savings account: A savings account isn’t as risky as other investment options. That’s because there’s no possibility of losing the initial amount you invest. While savings accounts tend to offer meager interest rates, they can help build momentum over time.
  • Investing apps for beginners: You can start small by using micro-investing platforms and apps. These are great for beginners. There’s no minimum investment amount. That said, returns may also not be as high as in other investment vehicles.
  • Treasury notes, bills or bonds: Government bonds offer better interest rates than savings accounts. That means you can yield slightly higher returns. However, there’s also the risk of getting lower yields.

Practice Positive Spending Habits

Understanding financial components can help you maximize your limited income. However, you should also have the skills to make wise financial decisions. Being mindful of your spending and adopting healthy financial habits, such as preventing impulse buying and reducing credit card spending, can positively impact your finances.

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    Prevent impulse buying

    It’s important to monitor your purchases. Avoid buying on impulse. If possible, wait for a few days or a week to reflect. Consider the benefits that a product offers. Determine if you must have it.

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    Reduce credit card spending

    Using a credit card isn’t bad. You may even earn rewards or cash back. However, many cardholders end up with excessive debt because of uncontrolled spending. Try to limit your credit card spending and use cash whenever possible.

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    Compare prices

    It’s always a good idea to compare prices when shopping. Some stores offer better pricing and deals than others. Depending on the item, it may also be a good idea to look at a refurbished option.

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    Have an accountability partner

    Sometimes, it’s hard to control oneself. An accountability partner can help you be mindful of your spending. They can also prevent you from making unnecessary purchases. An accountability partner can be anyone you trust, such as your spouse, sibling or friend.

Take Care of Your Mental Health and Tackle Financial Stress

Money worries can make you feel overwhelmed. In some instances, it can even cause health issues. Many studies show a connection between physical and financial health — financial stress can manifest through physical symptoms and it can also affect your mental health.

Poor financial and mental health can be a vicious cycle. But knowing how to deal with the stress that comes with financial problems can help maintain your mental health and ensure overall well-being.

1

Open up to your loved ones

Starting the discussion may be difficult, but admitting to a loved one or a close friend that you’re struggling with your financial and mental health may help.

2

Find local programs

There are various services and programs for individuals struggling with their mental health. You can join support groups. You may also find assistance programs that can help you deal with financial burdens.

3

Consult a professional

If you find your problems too overwhelming, it may be best to seek professional help. A therapist can help you deal with your mental health issues. If you need counseling that tackles both your mental and financial problems, a financial therapist may be right for you.

Expert Insight on Living on a Low Income

Knowing the challenges and available resources can help you deal with the challenges that come with living on a low income. MoneyGeek spoke with industry experts for their insights on better financial management strategies.

  1. What are the biggest challenges low-income earners face?
  2. What programs, resources or tools can you recommend to low-income earners?
  3. How can low-income earners start saving while dealing with their expenses?
  4. What tips can you share with people struggling with financial management?
Seth Connell
Seth Connell

Financial Coach and Owner of Coach Connell

Carrie Fischer
Carrie Fischer

Life Coach, Money Coach, Author & Creator of the Financially Stressed to Money Savvy Course

Melanie Hanson
Melanie Hanson

Editor in Chief at EDI Refinance

Resources for Low-Income Earners

Finding support services can help low-income earners make better financial decisions. The following resources can help you manage your expenses and ensure you’re covering your necessities and more.

Financial Assistance

  • Administration for Community Living (ACL): Find community-based services for older adults and people with disabilities in need of support. The ACL has various programs, including the Aging and Disability Resource Centers Program, Centers for Independent Living and Eldercare Locator. Depending on the program, eligible individuals may get food, transportation, education or financial assistance.
  • Benefits.gov: Look for a financial assistance program in your state using the search tool or browse through the directory of federal and state programs.
  • Federal Employee Education & Assistance Fund (FEEA): Get emergency loans or find merit-based scholarships offered to federal public servants and eligible families.
  • Supplemental Security Income Program: Learn about the SSI program and determine how it can help you meet your basic needs.
  • USA.gov: Know what types of government benefits you may get. Find financial assistance programs, food benefits and other federal and state programs.

Financial Management

  • Consumers Cooperative Federal Credit Union: Access different government resources and channels, including financial calculators, money management resources and financial planning tips.
  • Consumer Financial Protection Bureau: Choose various education tools listed in CFPB’s directory. Check guides to help you make better financial decisions.
  • Internal Revenue Service (IRS): Learn about tax regulations. Find out how gift taxes and tax credits work.
  • Investor.gov: Access different financial tools and calculators, understand other investment products and learn about associated fees.
  • FINRA: Start your investment journey with the help of FINRA’s fund analyzer. You can compare and understand fund costs.
  • National Financial Educators Council: Find resources and services that will help you become more financially literate. The National Financial Educators Council focuses on teaching financial literacy to low-income families.
  • National Foundation for Credit Counseling: Get in touch with an NFCC Certified Financial Counselor and learn about financial planning, wealth building and debt management.
  • U.S. Department of Labor: Learn about retirement plans, what you need to do, the fees you need to take note of and the benefits you may receive.

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About the Author


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Nathan Paulus is the director of content marketing at MoneyGeek. Nathan has been creating content for nearly 10 years and is particularly engaged in personal finance, investing, and property management. He holds a B.A. in English from the University of St. Thomas Houston.


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