Tips to Plan a Budget on a Low Income

10 Steps to STOP Living Paycheck to Paycheck

I receive so many questions from families who are barely making ends meet. Who are living paycheck to paycheck. They are in survival mode and are desperate to have less financial stress.

Although this article is written with the young military family in mind, these tips can be implemented in any household that is struggling to make ends meet.

Step 1: Attitude and Behavior Change

You are reading this article, so I am guessing your have had it! You are done living paycheck to paycheck and having the financial stress that is keeping you up at night. Congrats on taking this first step!

Changing your finances, requires a complete shift in your thoughts about money and how you manage it. Take a deep breath. Stop living in crisis mode. Everything WILL be okay if you develop an action plan.

You are going to have to take a long hard look at yourself. Are you clearly defining “wants” from “needs.” Do you have what it takes to tell yourself “no” and sacrifice whatever it takes to win?

Your previous attempts to manage your money are NOT working. It’s time for that behavior change and developing new and effective habits.

Step 2: Spouses are on Same Page

You are tired of living paycheck to paycheck and are ready to do anything and possibly everything to get your finances on track? Does your spouse share these feelings? Does your spouse know the specifics of the family finances?

Set up a “financial date” with your spouse. Meet in a relaxed setting away from the every day stress and distractions. Judgment, past mistakes, and any and all agendas are not invited to this “date.”

Talk about your financial dreams. How would it make you feel to accomplish these dreams ($1000 emergency fund, debt free, investing for retirement, etc.)? How important is it to you to have financial security? For example, having your husband go to your company Christmas Party is a 3, but financial security is a 9 on a scale of 10 for importance to you.

If your spouse is unaware of your finances. Let him/her know why you are worried about your finances. Tread lightly if your spouse is the “bread winner.” You don’t want to bruise his/her ego because they are unable to “provide.”

Once you both have an understanding of why it is important to get your finances on track AND you are both ready to do something about it. Then move onto the next step.

Step 3: Stop Using Debt & Take Inventory

Take out those credit cards out of your wallet. No more purchases will be made using debt.

Then determine your Income, Savings, and Debts. Write them down or input into a spreadsheet.

Example: Military personnel (E1 rank) and spouse, living in Eastern WA state

Budget Example (4)


Step 4: Determine Survival Expenses 

This is the start of your budget. These expenses are required to “survive” and to attend employment to produce further income.  These expenses include: food, shelter, utilities, transportation expenses to work, and very basic clothing. Write down or input into a spreadsheet your own “Survival Expenses.” Here is a FREE “Allocated Spending Plan” (google doc.) to budget for each paycheck or visit Dave Ramsey for FREE budget forms.


Budget Example (1)


*This is a small Grocery Budget. You will need to Meal Plan with Budget Friendly Meals, Coupon, Stay away from Expensive convenience foods (pre-packaged/pre-prepared meals), Cook from Scratch, Buy Generic Brands, and Avoid Food Waste

*Rent: You may be able to save further money if you find a room to rent in someone’s home.

*Utilities: Consider all expenses before renting an apartment. Many places will include some or all utilities.


Step 5: Determine Necessary Expenses:

These expenses are necessary to prevent further debt and to ensure your employment. But you could “survive” if absolutely necessary without these expenses. These expenses include insurance, child care, phone, some utilities, and debt repayment. Write down or input into a spreadsheet your “Necessary Expenses.”


Budget Example (2)


*Phone(s): Cheapest plan available (prepaid plan or even a landline).

*Garbage: You could haul your trash to the local dump or come up with a arrangement with a neighbor to eliminate or greatly reduce this expense.

*** If your income does not cover ALL of your “Necessary Expenses” you need to prioritize this list. Determine which expenses will be paid with the remainder of your income. You will need to do everything in your power to increase your income and reduce any expenses possible. Get creative and remember “where there is a will, there is a way.”

Step 6: Determine Optional Expenses

These are the expenses that you don’t necessarily “need.” These expenses will vary from household to household. With only $338 left and no emergency fund to speak of, I am going to be very, VERY selective in what I choose as optional expenses. If you have no further income to spend or if you are behind on your bills then you stop here and eliminate all optional expenses. Let me repeat, You will NOT have optional expenses. Pay your bills until they are current. Work to reduce your expenses and increase your income.  Write down or input into a spreadsheet your “Optional Expenses.”


Budget Example (3)


Step 7: Determine Financial Priorities

You NEED to have an emergency fund. A very minimum of $1000. Work your way up to 3-6 months of expenses. Then you will work on your financial goals as you prioritized them.


Budget Financial Priorities

If I woke up in the Example’s Shoes:

My first priority would by my Emergency Fund (I currently have $0): Save $278 + any penny I can scrape up.

-After 4 months without any major emergencies, I should have the $1000 emergency fund. I ONLY use it for emergencies (car repairs, medical expenses, deductible if in car accident, etc. )

After funding my Emergency Fund, I would Pay-off My Debts as quickly as possible.

-Start with the credit card with the lowest balance. I will pay the minimum (I’ve been paying this all along) + $278 + any penny I can scrap up. I use the snowball method. Once this debt is paid off, I use all this money to pay off the next credit card, then my car loan, and then finally my student loan.

-Try out this basic Debt Snowball Calculator   to determine your debt pay-off date.

After my Debt is Paid Off, I will have an “extra” ~$800. I will minimally increase “optional expenses” and boost up the emergency fund.

Step 8: Speed Up The Process

If I stuck with the above plan. Although it is a good plan, it would take me 7 years to pay off the debt. 7 YEARS!!! I scream “NO WAY” back at this possibility. So I’m going to dig deep and do everything in my power to speed up this process.

  • Sell things via Craigslist, Ebay, Facebook pages, Yard Sale. Sell anything that is not essential or that we don’t regularly use.
    • Items I could currently sell: Kitchen Table, GPS, smart phones, Bookshelves, Books, Mirrors, Home Decor, Kitchen Appliances (mixer, waffle maker, electric skillet), Serving Platters, Desk, Desk Chair, Like New Shoes & Coats.
      • Keep in mind my husband and I got rid of half our belongings with the move to England and I still came up with a good list of things we could sell. Probably bringing in ~$400.
  • Extra Income: get 2nd and 3rd jobs if necessary!
    • Perhaps we could Babysit evenings & weekends, Walk a couple of dogs, Rake leaves or Shovel snow, Clean a house or two once a week. There are lots of possibilities.
      • Let us assume between my husband and I we could bring in an “extra” $600/month.
  • Reduce Expenses: We already live on a very strict budget. But let us say I get really good with our grocery budget and can reduce it by $30. We find cheaper ways to have “date night” and spend $30 less. We reduced our energy use and saved $20. We also carpool more frequently, saving $50.
    • Total Savings from reduced expenses: $130

By increasing our income and reducing our expenses with the above examples. We can now pay off our debt in 2.5 Years! I like the sound of that much better!!! Plus you have to remember, you will be receiving income raises during this time so you will pay it off even faster!

  • Extreme Changes to Expenses: Perhaps once you have your budget in front of you, some of your expenses are just too high for you to make any ground on your financial priorities. It may be time to take dramatic measures.
    • Move! Find a cheaper apartment to rent. Perhaps live in the basement or in an above garage studio of someone’s home.
    • Sell Your Car! Use public transportation or buy a much cheaper car. Keep in mind fuel efficiency and possible repairs!
    • Get a Roommate! Do you have an extra room? Rent it out!

Step 9: Need Help? Ask for it!

If you have a low income, chances are you will qualify for aide programs. There are many state and non-profit programs that could possibly help you get yourself back on your feet. These programs can sometimes provide assistance with food  and utility expenses. If you are a military family contact your installation’s family readiness group/center. If you are a civilian family contact your local Food and Nutrition Services  about programs such as WIC and SNAP. Contact your energy provider and inquire about assistance programs.

Contracts: If you are in a contract (cable, internet, phone, etc.) and are having a difficult time paying your bills. Please contact that company directly. Inform them you are experiencing financial difficulty and are not able to pay your bills at this time. Request your contract be placed on hold for 6 months. Double check that you will not be charged fees. If the company allows your contract to be placed on hold, you will then have this time to get your finances on track. Once the 6 months has expired, you will then have to finish out your contract. Determine if paying the early termination fee would be worth it.

Family Member or Friend: At times you will need moral support to get through this journey! If you have a family member or friend who lives a frugal lifestyle or is also getting their finances on track. Reach out to them and request moral support.

Step 10: Stick With The Plan and Never Live Paycheck to Paycheck Again!

This journey will NOT be easy! You are changing your attitude and behaviors regarding money.  The first 3 months will be the most difficult. But It WILL get easier.

As you begin to have a savings account and stop living paycheck to paycheck you will feel so much weight lift off your shoulders. There will be set-backs, but you just keep pushing forward because nothing is going to stop you from financial security. With each accomplishment, you will get more motivation to continue this journey. Keep going! Your debts will become less, your income will become greater, this difficult journey will be behind you, and your financial future will look so, SO AMAZING!


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Do you have inspiration for those currently living paycheck to paycheck?

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Debt to Wealth: 3 Years into Our Journey  Budget Loving Military Wife  Budget Loving Military Wife

24 thoughts to “10 Steps to STOP Living Paycheck to Paycheck”

  1. I could not agree more! These steps are beneficial to even those not living paycheck-to-paycheck!

  2. I really like this. I’d love for us to stop living paycheck to paycheck, time to sit down with the husband and talk about this. Thanks for sharing.

  3. This is a great post! My husband and I are considering part-time jobs at the KC Royals. Hoping to get hired as ticket agents because then we would also get to see the games! 🙂 Two birds.

    1. Thank you Rachel! 🙂 That would be a great part-time job to pick up a little extra money! Probably perfect because most games are evenings and weekends and you would have stretches of time off with away games! Sounds perfect! 🙂 It’s funny as a teenager/young adult I always wanted to work at the hockey games in our area but never did. Sounds like a fabulous side hustle or maybe retirement gig someday. Thank you for reminding me this is a job I want to do someday! 🙂

  4. I definitely spent most of my time from late college until after finishing graduate school pretty much scraping by each month, but I managed to avoid debt by not spending much and working my butt off at a couple jobs simultaneously. It’s so easy to spend what you make, whether that amount is $2000/mo or $10,000/mo. Both of us have parents who are pretty bad about just spending money they really shouldn’t have spent and knew that’s not how we wanted our lives to be. We keep trying to encourage our parents (particularly his), to evaluate their financial choices, but we haven’t been very successful yet. =(
    Natashalh recently posted…6 Things I’m Still not Used to After 6 Months of MarriageMy Profile

    1. Congrats Natasha on finishing grad school without acquiring debt! That’s amazing! My grad degree set me back $40K… so I understand that you truly worked your butt off! lol.

      It is difficult to see loved ones struggle with finances. I have found that only people who are truly sick and tired of their finances and are ready to change their ways will ever have a chance of changing their finances for good. For now, I encourage you and your husband to continue leading by example. Hopefully, one day your loved ones will take notice and ask for guidance! Best wishes!

  5. These principles work. I went from 40k in the red to in the black in 2.5 short years. Sure I still have a mortgage and car payments, but we can save for what we need instead of using credit.

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