How To Budget Money On a Low Income & Importance of Building Emergency Fund.

Financially Broke: a sad woman holding piggy bank

Since you found my blog, I assume that you struggle financially. You don’t have to, and I’ll show you how you could improve your financial situation and where to start. How to budget money on a low income is only one temporary aspect of the journey to financial freedom. You don’t need and don’t want to be indigent forever. I’ll provide you with tips on where to cut your expenses and how to increase your income. I’ll explain why building an emergency fund is important and suggest some options for saving money even with a low budget.

Disclaimer: I am NOT a financial advisor.

I am a woman in her 50s who has rich life experience. I came (legally!) to the United States from Russia 27 years ago with a 1.5-year-old baby-boy with severe disabilities. I had $0 in my pocket, didn’t speak English at all, which basically meant that I couldn’t get a professional job in my new country. 

I’ve learned and worked my butt off to rise and be well financially and raise my son to a happy and very able young man. Of course, I didn’t do it all by myself; I had help from family, friends, and society. I strongly believe in education, methodical, focused, and persistent work, and in people’s kindness.

Where Do You Start?

First and foremost you start with your mindset. 

Your current financial struggle or even poverty is a temporary state. You will get out of this situation. There is no “if”, it’s “when” and “how”. You need to be SURE that you CAN break out of your financial problems. In your mind, your subconsciousness, your whole self, this faith must be strong and free of doubts. You started your journey to success, and failure is not an option. Of course, there will be mistakes and failures along the way, but you will recover and move on to your definition of success.

You need to believe in yourself. 

“Everyone is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid.” Even though this quote was attributed to Albert Einstein, who never said it, it’s still a good quote.

Every one of us has his or her talents and strengths. You only need to find yours. You are smart in something – choose to do what you are smart at.

At the same time, don’t overestimate yourself. When you find your passion and strength and perhaps, believe that you know the subject well, remember that nobody knows everything. There is always room to learn more. 

Overcome fear of change! Take a step even if you feel scared. You have to… 

American writer Erica Jong said: “I have accepted fear as a part of life – specifically the fear of change… I have gone ahead despite the pounding in the heart that says: turn back.”

Without a change, you’ll be in the same place forever. If you want to improve your financial situation as soon as possible, prepare to make many changes within a short time.

Here is one more quote by another American author, motivational speaker, and entrepreneur Jack Canfield: “Everything you want is on the other side of fear.”

Education is the key to success. 

Never Stop Learning

“The more I learn, the more I realize how much I don’t know.” This quotation does belong to Albert Einstein. Please never stop learning.

No, I don’t suggest that you necessarily go to college on your current very limited budget. Though, if that’s what you want, I wouldn’t dismiss this option as some colleges offer good financial aid, you could find grants and scholarship programs for people with low income. Sometimes it’s harder to get a college education when your income is just above of formal definition of “low income” in your geographical area. If you’d like to study in a college, do your thorough research: chances are pretty high that you will find a program or programs that cover the cost of education for you. However, if that’s not what you can afford right now timewise or due to other circumstances, there are plenty of free or cheap online courses in almost every field. I’ll give you an example from my experience down below.

Another good way to learn is by reading books written by successful people in the field of your interest, watching more experienced people in your occupation, asking questions and understanding the reasons behind their actions. 

And of course, mistakes are unavoidable. One should always learn from them – whether own or made by others. When you make a mistake that draws back your progress toward success, analyze it: acknowledge all factors, including unfavorable circumstances, an unfortunate sequence of events, and other people’s mistakes or purposeful wrongdoing. Then, think of how YOU could handle them better. Don’t focus on things that you can’t control, don’t keep an offense, don’t use them as excuses. That’s life. Things will always happen in contradiction to your plans and expectations. Analyze and improve your own decisions and actions. Learn to prepare for misfortune and count in the risk factors. Make sure that if your plan A doesn’t work, you will be able to recover. Create plan B. Take a risk, but estimate it beforehand and be reasonable.   

Once all of the above has sucked into your psychology and physiology, you are ready to make a change in your life.

How To Budget Money On a Low Income.

Every individual or a family, whether poor or rich, need to budget their money. Budgeting means estimating income and expenses for a defined period. I’ve previously written “Budgeting Tips for Young Adults and Parents of Teenagers” article. In that post, I showed how to create a budget plan in a spreadsheet. I’ve even recorded a video demonstrating the process. Please feel free to follow the link if you need help creating a written plan.

You know you are okay if your monthly expenses are lower than your monthly income, and the difference goes into savings. The expression “trying to make ends meet” reflects on budgeting when your income is low. Your basic needs may exceed your earnings. Therefore, when budgeting on a low income, the first place to look at is where the unnecessary expenses sneaked in.

Let’s evaluate your expenses, try to catch the sneaky ones and cut them down…

  1. Eliminate your choking debts. High-interest loans are your greatest enemy!!!
No debt

Do you have any? If so, you need to get rid of them as soon as possible and keep away in the future. The article I mentioned above addresses this topic. It’s targeted to young adults who are just starting their independent life, but in reality, we could get into debt trap at any age.

You do need one or two credit cards. I use the VentureOne Master Card by Capital One bank and am very happy with the Rewards Miles program and other benefits they offer. You have to make sure that you never have an outstanding balance on your credit cards. If you already have a credit card loan, try to pay it off as soon as possible. I know, it’s easier said than done…

In order to do that, you would definitely want to increase your earnings. We’ll talk about it later. But, you need to start the process of eliminating your high-interest loans right this moment, even before you are able to improve your income.

With a good credit score, you should be able to find and be approved for credit card offers with 0% introductory annual percentage rate (APR) for up to 18 billing cycles. Apply and transfer your high-interest balance to this new credit card. This would allow you to win time. Make paying off this new credit card balance your highest priority. Having too many credit cards poorly affects your credit score. Decide which card is better to keep. Usually, the longer you own one card the better for your credit history, but the difference is not very essential. If you like the benefits of your new card better, close the old one as soon as your balance is transferred. If you like your old card better, close the new one as soon as you pay it off and before the introductory APR period expires. Once this debt is eliminated, make a habit of paying off your monthly balance a day before the due date – so that the interest is never charged.

You may also be able to refinance your mortgage and even a car loan if your current interest rate is too high. I’ve done both refinancings in my life experience and it helped a lot. Just be sure to not increase your loan amount significantly by taking out immediate cash and if possible, try to not increase the term of your new loan. As I recall, I’ve included the cost of the refinancing process in my new loan amount, but that was still a better deal because my new interest rate was substantially lower.

If your credit score is already poor, you’d probably won’t qualify for a lower interest rate on your loans. Then, in addition to improving your income, your only other option would be to seek professional financial services that offer debt consolidation programs.

  1. Get rid of your hidden expenses.

Have you forgotten about a recurring charge on your credit card for a service you don’t use anymore? Review your bank and credit card statements and make sure that you are not paying repeatedly for something you don’t need.

  1. Get rid of your frequent pocket expenses.

Something that seems too small in the amount to be considered, when used daily, turns into a 2- or 3-digit figures monthly.
$2.00 spent on coffee daily comes to $60.00 monthly. Buy an inexpensive coffee machine and a thermos mug, brew your coffee at home and take it with you wherever you go. This will save you $600.00 in your first year.

Another unnecessary expense that many justify is buying little cheap toys or treats for their children.
– It’s only a couple of dollars! How can you deny your child this innocent joy?!
Yes, you can and you should! Your kid will be much happier if you spend your time with him or her building a sandcastle or making origami together. Your kid will be much healthier if instead of buying a candy you’ll offer an apple or a banana that you didn’t forget to bring with you on a trip from home.

Another unnecessary expense that many justify is buying little cheap toys or treats for their children.
– It’s only a couple of dollars! How can you deny your child this innocent joy?!
Yes, you can and you should! Your kid will be much happier if you spend your time with him or her building a sandcastle or making origami together. Your kid will be much healthier if instead of buying candy you’ll offer an apple or a banana that you didn’t forget to bring with you on a trip from home.

  1. Accept donations.

You can also save on buying most toys and clothing for your children without depriving your child of these things. There is no shame in asking your friends, neighbors and even strangers for donations. Children grow fast, and there are a lot of barely used clothes and toys in people’s closets. They will be happy to find a good new home for these items and put them to work for other children. People will feel good about themselves knowing that they could help another family. They will even be grateful to you for freeing up their storage space. They may offer some good and useful stuff for adults in your family too. But, your social circle needs to know that you would appreciate the mildly used gifts and won’t be offended. So, don’t be shy to unobtrusively let them know. 

  1. Eat at home.

Cooking home meals are much cheaper, tastier, and healthier than eating out, especially on a tight budget.

  1. Cut down services and get rid of things that are so common that we think they are “must-have”.

If all of the above didn’t help much in reducing your expenses, then, unfortunately, you’d also need to deny yourself some things that seem to be needed but are actually not a necessity. These perhaps could be a smartphone (use a cheap cell phone instead), some cell phone service features (you do need the basic service for the emergency situations), TV service, online paid services for music streaming or other entertainment…  Learn to make small fixes to clothing and appliances rather than buying new stuff. Shoe repair cost less than a new pair.

A side note: you must take care of your mental health. Therefore you need rest, relaxation, and leisure time. Allow yourself 8 hours sleep (learn how important sleep is for your success), have fun and be entertained. If you are in or near a big city, there are always plenty of free entertainment (music concerts, festivals, art exhibitions and more). If you are in the country, find escape in the fabulous places of nature, swim, ride a bicycle, walk, or simply sit outside and read a book for at least half an hour every day.

Now let’s talk about what you can do to increase your income in a short- and long-term.

Gradually Increase Your Income. 

We all understand that a big opening cannot be covered with a small lid.  If your basic expenses are higher than your income, there is no way to balance your budget. Right?

Then let’s look at how you could improve your income situation… Prepare to make many changes within the next 3 to 5 years. Set short-term goals. Your long-term goal should be a well-paid professional job in the field of your interest or your own business that brings you revenue you set your mind to.

How To Budget Money On a Low Income & Importance of Building Emergency Fund - We drive into the future. A diagram to your success.


If you are literally at the poverty line, I hope that you have already applied for welfare programs available in your country/ state. If not, do it now. Be sure to have your mindset right, though… There is no such thing as “government money” – it’s taxpayers’ money. As I said above, I sincerely believe in people’s kindness. Most people would be happy to have their tax money used to support those in need. Then, why do you hear numerous complaints about supporting welfare? That’s because many people misuse public assistance programs. These people are not poor; they trick the system and stay on welfare programs forever. 

Poverty. Homeless.

It’s not a shame to request supplemental income, food and living assistance, health benefits, and help with other living essentials with the set of mind as discussed above: my situation is temporary; I’ll put full-force effort into getting out of it. I will succeed and then pay back by helping others.

When my family and I came to the United States, we applied and received Medicaid for ourselves and, for a longer period, for our child, Social Security Income for our little boy, assisted living for the family and food stamps. We were very grateful for this help. Without it, it would be much harder for us to settle in our new home country. But we had no doubt that we can only accept this assistance temporarily. 

Learning the language and receiving professional education took a few years. I went to a community college on financial aid to learn English. Once I could understand about half of what was said to me in English, I sped up my professional education by taking an intensive software development program in 10 months rather than going back to college. Computer programming wasn’t really my passion, but it was something I knew that I had skill for, and the actual job didn’t require much of English speaking. When I was hired for my first professional job, with no regrets, I reported to the Social Security Administration my increase in income and requested termination of the remaining benefits. It was my turn now to pay taxes and support others in need (I purposely didn’t think about the system cheaters; they were not something I could control). 

Attention: before applying for welfare benefits, do your homework: research thoroughly and know what programs you could qualify for. Do not rely on a clerk in your local social security administration office. Read eligibility rules carefully and consider all your current circumstances, especially your and your family members’ health. When you speak with a clerk, ask lots of questions. Do not accept an answer if you didn’t fully understand it. Ask again. Rephrase your question. Speak back the answer as you understood it. Make sure that you understood it correctly. Appeal the decision if you were denied a benefit which you believe you are eligible for with logical arguments and supporting documentation. Document every little detail when you deal with government administration: dates, names, questions, responses — everything!

Establish Your Source of Earned Income

First low-skilled work. Janitor.

Do you have a job? If not, find one. Any job that you can handle, even a low qualification and low paying job, will do. This probably won’t be your dream job, but you need money, and it’s a first baby-step to your success. Low earnings are better than no earnings at all, and a job for an employer provides a defined amount of money per defined period. Therefore, you’d be able to count on this income when balancing your budget.

If you couldn’t get even a low-paying job despite tirelessly seeking, evaluate yourself. There must be something that you could improve in applying for a job or during the interview process.

Another episode from my current personal experience… 

I am hiring an assistant for my now-adult son, who needs somebody to be with him when he is out and about. In my published ad, I request that the applicant includes his/her resume. It doesn’t matter whether the candidate’s background is related to this job’s requirements. I receive many responses as a one-line email letter written in all lower case with numerous spelling mistakes. Do you think I will invite such an applicant for an interview? Of course, not! I already know that this person does not pay attention to details, unable to follow instructions, is not polite and illiterate. All these qualities are required to work with my son, and I won’t waste my time interviewing people who showed me at our first interaction that they don’t possess them.

Before responding to a job post, read it carefully several times. Pay attention to details and language used in the ad. Reply politely; use some terminology from the ad. Provide all required documentation. Check your spelling and grammar. Format your letter nicely. 

If you do get invited to job interviews but don’t get the job, prepare for each interview better: think about what is appropriate to wear, make sure that you look neat, smell fresh, your nails are clean and either freshly polished or free of the remainings of old nail polish. Prepare solid answers to the most common questions, even rehearse your speech in front of the mirror. One of the most common interview questions is “Please tell me about yourself”. Make your response relative to the position, emphasize similar experience (if any) and/or your strengths related to the prospective job. Pay attention to your body language and facial expressions. Respond with confidence, be polite and positive. Research the employing company beforehand, prepare a couple of questions showing your knowledge and interest in the company. Prepare yourself as thoroughly as you would if this were the job you truly dreamed of.

Some people say that they are so poor that they can’t even afford to get a job. It may sound like a paradox, but it is possible. Commute to work may require a car, which a job seeker can’t afford to own. Or a person may not have appropriate clothing for the work environment and can’t afford to buy it. If you are in this situation, you may want to start with the freelance projects, which I’ll talk about a little later, and use the money you earned towards your employment.

People who can’t work outside of their house due to their own health condition or because they are caring for a dependent should jump to the freelance section as employment is probably not an option for them.

Improve Your Earnings

Once you have a job, you need to start thinking of increasing your pay rate. Working for an employer means that you exchange your time and labor for money. I do not recommend earning more by increasing the time. There are only 24 hours in a day. You need quality rest. Working overtime or getting a second job is not a good solution. While you are young, you may think that you can work double-shift, but that may end as a disaster later in your life. Don’t work more hours, work better and smarter during the regular hours. While on the job, do nothing but the job, and do it very well. Even though you know that this is your transitional job, act like the work you are doing is the most important and favorable work in your life. Learn from more experienced co-workers. Educate yourself about the job and perform it more efficiently. Be friendly with co-workers, offer a hand to them whenever you can. Be positive and never complain at work. Set a goal to be one of the best workers in the 3-months period.

Start climbing up.

At the same time, be smart with your managers and supervisors. Don’t be obvious, but make sure that they know how good you are as a worker. When your managers ask you to go above and beyond your responsibilities, do it without complaints, but drop a very polite and innocent comment showing that you are aware that you are fulfilling another co-worker’s responsibilities, or even of the manager him-/herself. Say something like “Oh, sure, I’ll help you with that! I see that you are busy with… [whatever it is].” Smile and take off to work on the task. 

In about 6 months of your employment, start looking for another very similar job. Once your first interview is scheduled, go to your current manager and request a pay raise. Don’t mention the upcoming interview, but if your manager declines to increase your salary, and the next day or in a day you’ll be taking time off, he or she may have a second thought – nobody wants to lose the best workers.

At your new job interview, you’d be much more confident because

  • If you don’t get hired, it’s not the end of the world: you already have a job and will keep looking for a new one.
  • At this point, you have the experience and knowledge to handle your responsibilities.
  • You made friends among your current co-workers who could give you a very good reference. 

Every position in a medium-size or big company has its salary range. When you were hired for the first time, your pay was probably close to the low end of this range. Find out what the highest pay is in this position, and aim for it (whether in your current job or in a new one), or maybe even apply for a position that is a step up in rank.

One way or the other, you’ll get a higher income without increasing the hours. You’ll need some of these hours to increase your earnings further but in a better and more flexible way. 

Can you make ends meet in your budget now? Your budget is still tight and you are still cutting on your “wants”, but if you can afford your needs, it’s time to get off welfare. Congratulations on your first success! 

Earn a Little Extra by Freelancing

Don’t do freelancing only while you are in financial hardship unless there are serious circumstances that are not allowing you to work for an employer. You won’t be able to make a living from freelance projects. Full-time online business is a different story and I’ll get to it later. Also, the stream of income from freelance work is inconsistent and it’s very hard to budget money on a low and unpredictable income. 

Climb higher. Earn extra on freelance projects.

Freelancing is better than a second job because you have more flexibility in your schedule and in the type of work. You may choose to work from home and save time on commuting. You are in control of the cost of your work. Freelance projects are usually short-term, and therefore your responsibilities are short-term. Thus, you may take a break in between projects if you need time for something else. Freelance work brings you closer to your desired occupation. Now is the time to decide on what occupation you want to build your financial success. If you have several talents, you can test them out on freelance projects. 

You’d need to do your own research to find projects that fit your interests and abilities. I’ll just give you a few ideas…

  1. If you are a writer, you can write articles and blog posts for others.
  2. Research popular trends and sell your best photos on stock photo websites.
  3. If you are really good at photography, take offline photography gigs.
  4. Do tutoring online and offline in the field of your expertise.
  5. Teach English (or other languages) online and offline to the foreigners.
  6. If you are multilingual, take online and offline translation jobs.
  7. Take captioning and transcriptions projects.
  8. If you are good at acting, offer your services in acting in promotional videos or do voice over.
  9. Musicians and other performing artists can find gigs in restaurants, art festivals, perform outside in public places (city permit is often required), and the most needed, reliable and well-paid gigs are in Senior Centers, assisted and independent living facilities, nursing homes.
  10. Complete online surveys.
  11. Take pet sitting and dog walking requests.
  12. Have good gardening skills? Help your neighbors with landscaping.
  13. Artists and designers can design logos, promotional cards, posters, brochures and such for businesses.
  14. Sell your crafts online.
  15. Drive Uber, Lift or similar.

Here are several websites that offer freelance projects (you’ll also find more ideas there on types of work you can offer):

There are also some referral programs that you could earn some money from by doing nothing or almost nothing but spreading the word about them. These programs may not pay you quickly and may not be consistent, but why not take advantage of them if it doesn’t cost you anything?

bUnited is a good cause that pays people to unite. bUnited is free and easy. Read this review to find out more about it.

Kidazzler is somewhat similar and yet a bit different. It’s a new parenting platform and its “Shared Revenue Model” is a brand new concept. Kidazzler’s huge directory of family-friendly businesses is in Beta version now and is anticipating to go live in September 2019. Then, it’ll become searchable and accessible for free providing a great resource for parents

Please be very careful when joining programs online: never provide your financial information and don’t pay any money to anyone until you verify the source and are certain of their legitimacy. There are a lot of scam artists on the Internet, who want to rip you off.

What’s next? 

What should you do with the additional dollars you make as a freelancer? Unfortunately, it’s not time yet to use them for fun. There are still more needs you must cover. 

The first and the most important need after covering your life necessities is an emergency fund. Most people don’t realize it, but you don’t want to be thrown back to poverty in an event of suddenly losing your job, having a health issue preventing you from work or some other misfortune. You need money to live on while recovering from whatever has happened.

The second important need is education for your professional work or funds to invest in your future business.

I make an assumption that you didn’t make a whole lot of money by freelancing, which is common. Therefore, when I say “education”, I mean discounted online courses and books. Investment to start your own business could also be very low if you run your business online.

Building an Emergency Fund

An emergency fund is your savings that can be easily accessed in case of an emergency. There are numerous programs to save money, but many of them have access restrictions either by date, your age, or certain life events. For the emergency fund, you need an account that doesn’t impose such restrictions. Many financial experts recommend to set aside 3 to 6 months worth of expenses to cover financial surprises life throws at you. If on average, you spend $2,000 a month on your living, your goal for the emergency fund should be  $6,000 to $12,000. Of course, on a low income, you won’t be able to reach that goal within a year, but saving a little is better than nothing. If you could save $1,000 in your first year, that would be awesome!

You can keep your savings in a Regular Savings Account, but the interest rate there is usually too low to cover even for inflation.

Some Money Market accounts offer a bit higher interest rate and could be an option to keep your emergency savings.

Certificate of Deposit or CD accounts may offer a potentially higher interest rate. However, you must pay a penalty if you withdraw your money before the maturity date. I personally do not recommend this option.

Another option is an investment. Investment might bring a higher return, but it always assumes risk due to stock and bond market fluctuations. For the long-term savings, you don’t need to be concerned every time the economy swings down, because history shows that it always recovers. But in case of the emergency fund, you never know when you may need to sell, and such need may occur during the downtime. Therefore, most financial professionals don’t recommend investing your emergency fund. It’s a matter of personal choice.

If you want to start investing, I suggest to use Ellevest, especially if you are a woman, but men can invest there too. Ellevest is a robo-advisor designed specifically for women investors accounting the salary gap, longer life expectancy, and life-cycle events such as childbirth. For their male clients, they use a more traditional robo-advisory algorithm. 

Depending on the amount of extra money you earn on your freelance projects and your further plans, you may want to choose more than one goal for your investments with Ellevest. 

Ellevest Investment Goals: Kids Are Awesome and Start My Own Business

Why do I recommend Ellevest (despite your gender)?

  1. Ellivest makes investing easy for beginner investors. 
  2. Goal-focused and gender-specific investing approach.
  3. There is no minimum to open an account.
  4. Low cost: 0.25% annual service fee for Ellevest Digital (your account balance under $50,000)
  5. Referral program: referrer and a new investor receive $20 each.
  6. Bonus: receive $25 when you invested $10K; and $75 for $25K deposit. This promotion is available to new Ellevest Digital clients until October 11, 2019 

If you still live on a low income, it’s very important for you that there is no minimum deposit required to open an account. You can start investing with as little as $1.00 and increase your deposits or make an additional deposit as you get more funds. 

During the sign-up process, you’ll be asked for your personal and financial information. It’s okay to provide because Ellevest is a Securities and Exchange Commission (“SEC”) registered investment adviser. Providing your sensitive information is as safe as when opening an online bank account.

You’ll also be offered to choose your investment goals:

  • Retirement on My Terms – save for the retirement
  • A Place to Call Home – buying a house
  • Kids Are Awesome – family expansion and children-related expenses 
  • Start My Own Business – prepare financially to build a business
  • An Emergency Fund – here you go!
  • A Once-in-a-Lifetime Splurge – save for a special occasion such as a wedding, school graduation, vacation, etc.
  • Build Wealth – long-term investment for whatever comes up in the future.  

Based on the information you’ve provided, Ellevest automated program will select a portfolio for you, calculate and suggest your investment goal amount and your monthly deposit amount. You’ll be given an option to change both as you wish, and also adjust the frequency of your deposits.

Ellevest Emergency Fund.

Ellevest’s Emergency Fund portfolio is 100% cash – so that you can access it at any time. It’s FDIC protected. The interest rate is very low: 0.01%

Why do I still recommend it? 

First of all, because the amount you agreed upon will be withdrawn from your bank account automatically. When your income is low, the urge is high to skip a deposit if you do it yourself. This auto-withdraw will eliminate such urge.

My second reason is the referral program. If you use my invitation link, both you and I receive $20. If you invite your friend or family member to invest with Ellevest, you and he or she also receive $20 each. Just be careful not to use this referral program in the wrong way. Read Ellevest Referral Program Agreement. 

Ellevest Referral Program: $20 gift

Let’s look at some examples (for simplicity, I disregard a 0.01% interest rate and 0.25% service fee): 

  1. Jane joined Ellevest via a referral. She chose to open an Emergency Fund with $20 deposit and add $5 each month. Over a year, she’d have invested $5.00 * 12 months + $20 initial deposit = $80.00
    $20 bonus she received from a friend’s invitation is 25% of her investment. By the end of the year, Jane will have $100.00 in her emergency fund.

    And another example with slightly higher numbers…
  1. Rose joined by invitation and invited one other investor during the year. She set her personal goal for a year at $1000 and received $40 in 2 bonuses. $40 is 4% of her personal investment – it’s still better than the interest rate in most bank accounts.

And the number of referrals is not limited as long as your friends are legitimate investors. 

If you set up more than one investment portfolio, the referral bonus will be applied to the highest-priority goal.

Start Investing with Ellevest
and Receive $20 Start-up Bonus
Click Here to Use My Referral Link

Don’t forget to adjust your budget! Your savings will go to the “expense” category because at the moment, you are taking this money out of your daily allowance.  

Time to Think About Your Financial Success!

Climb to the top. Reach your financial success.

Start preparing yourself for the change you’ve been dreaming about. By now, you must have identified your talent and passion. Decide whether you want to start your own business or continue working for an employer, but as a professional in the field of your interest. 

I do not recommend starting your own brick-and-mortar company if you are just recovering from poverty. Physical business requires higher investment and assumes higher risk. Online business is a better option because it does not require the physical space other than your home office, equipment other than your computer, extra utility bills, insurance, inventory, storage space, etc. 

There are pros and cons in working for an employer, but if that’s what you want, decide what position you’d be applying for. Do your research, read books, find free and low-cost online classes. Work experience in the industry can often replace the college education requirement. Most often I see in the job ads: “Bachelor’s degree or X years of experience is required for the position” or “Master’s degree or Y years experience…” 

If you’ve been doing well with your freelance projects in the field of your desired occupation, your freelance work could provide a solid foundation for your online business or for your future employment. Create a portfolio showing off your work. Make it available online and offline. Bring this portfolio to the interviews or use it to demonstrate your work to your potential clients.

Get professional job of your dream.

If you show your excellence at work, get salary raise at least once a year for more than 3%, yet change your employer one or two times during the next 10 years in order to get a jump in your promotion, you should be able to earn a 6-digit amount in annual salary plus benefits offered by the employer.  

Everything I am sharing with you today is not only theories; it’s all proven by real-life experience – my own life. As I mentioned above, I’ve been through all of it: from poverty to an excellent 6-digit salaried job. I made many mistakes during my journey; I learned from them and moved forward.

4 years ago, I had to quit my profession and start over again. It wasn’t a surprise for me, and I was prepared. I knew that my son, who by then finished all schools (the wonderful Perkins School for the Blind and renown Berklee College of Music) needed me at home. I also must be flexible in my working hours in order to take care of him. 

With the loss of my salary, we lost 2/3 of our household income. By that time, my emergency fund contained over a year of my annual salary in addition to my husband’s earnings. That gave me time to research, decide on my next occupation, learn and start my online business. 

A little over a year ago, I got sick and was unable to work for almost half a year. That threw back my efforts in my first endeavor but opened up another great opportunity which helped me recover from the symptoms of my diagnosis.  I now continue with the business I launched 2 years ago (and this website is a part of it), and build another business from the opportunity I encountered a little less than a year ago. My plan is that they will complement one another. 

If you are in a similar situation to mine and can’t work for an employer, or simply prefer to work from home on your own schedule, be your own boss and build your own wealth rather than work for others and make them richer, you’d want to launch your own business. Your dreams, passion, and skills are different from mine. Therefore, I can only share with you what I’ve chosen to do next, and you either use my experience or go your own way from this point on.  

Online Home-Based Business Ideas

The main difference between freelancing and an online business is in your mindset. When you start a business, you fully focus on its development. You set business goals and make a plan to reach them within a certain timeframe. You don’t try it for a few weeks or a few months. You must understand that any business, online or offline requires commitment and hard focused work. It may take anywhere from several months to a couple of years before your business starts bringing revenue. 

While this is rarely an option with a brick-and-mortar business, an online business could be launched in addition to your employment as you can work on it during your off-job hours. Depending on your productivity and energy level, you’d probably have to stop your freelancing (unless you develop your business from your freelance projects). That’s when your emergency fund might come in handy: to supplement additional earnings you lost from freelancing until your business rolls out. 

You’ll know when it’s time to quit your job…

Online Home-Based Business Ideas

For my future online home-based business ideas, I was looking for opportunities with the most flexibility and minimal investment. I was hoping to build a business that would be in agreement with my interests and utilize my existing skills. I didn’t have any previous experience, skills, and knowledge in entrepreneurship. I knew that whatever I chose, I’d need to learn first. Therefore, my priority was to find a good training first. 

My #1 Recommendation

What I found was absolutely amazing! I couldn’t dream of anything better. I found a platform where I could learn, build my business and start earning simultaneously. 

The Online Entrepreneur Certification course offered step-by-step training in Entrepreneurship and Affiliate Marketing. I didn’t even know what Affiliate Marketing was, but there was a free Starter membership option, and I decided to use it and find out whether this is something that would be of interest for me. I started with taking the first 10 free lessons and learned that I could choose a niche matching my passion, blog about what I know and love, and yet earn as much money as I set my mind to. How awesome is that! 

Online Entrepreneur Certification course. Earn while you learn.
Earn While You Learn

But the awesomeness didn’t end here. I could be paid multiple times for the work I’ve done once. Such residual income is a good support in the curves of life. It can’t be counted on as an emergency fund because it’s inconsistent. However, it’s helpful that your blog continues making money even when you take a break in your work.   

>>> Click Here To Learn About This Amazing Platform. <<<

In my review, you’ll find the links to join for free. As a bonus for being an action-taker, you can get a $30 discount for your first-month membership if you upgrade within your first week. But, if you can’t afford to go Premium right away, there is no time restriction. You can stay as a free member as long as you wish.

My #2 Recommendation

The second opportunity I was invited to join was in a skyrocketing CBD industry. 

Yes, that’s what helped me to eliminate brain fog, loss of focus and concentration, short-term memory impairment, fatigue, and extreme exhaustion, sleep problems caused by my autoimmune disease. With the help of the top-grade full-spectrum CBD oil drops, I felt much better and was able to work again. 

I could have listed this opportunity in the “Earn a Little Extra by Freelancing” section because CTFO invites associates to join for free. When someone joins as an associate, he or she could simply promote CTFO products and when customers order online through his/her link, immediately earn 20% of the cash value (CV) in uni-level commissions. This would add a little cash to the person’s budget. I’d categorize this approach as freelancing. But this free opportunity in a skyrocketing CBD industry with its 4-layer fair and lucrative compensation plan can make one healthy and wealthy if treated as a full-scale business. 

CTFO finest CBD Oil

I joined CTFO as an associate, but in reality, I first became just a customer. Then, I fell in love with many products I’ve purchased from CTFO. I couldn’t hold myself back from telling all my friends online and offline about this natural miracle.

At first, I was skeptical about one herbal constituent that suddenly helps with almost every ailment. Of course, I started learning how it works and its history. While people only recently learned to extract isolated compounds from the cannabis plant, there is historical evidence that the plant as a whole was used for medicinal purposes by Chinese people around 5 thousand years ago. With more learning and understanding of homeostasis and our endocannabinoid system, my skepticism vanished and confidence in promoting CBD products to help people feel better grew stronger. 

As an associate, I was earning commissions from my friends’ purchases. However, I was not treating this as a business and only made occasional sales. I focused on recovering my Affiliate Marketing business, worked on my website and tried to bring organic traffic back to it. At this point, I could say that I used CTFO opportunity as a freelancer and the commissions that I’ve earned helped me offset the cost of my own orders (I ordered a lot, though – health products for the whole family, including our dog, and skincare products for myself).

As my website started receiving more traffic and showing better results, I decided to blog about CBD and CTFO and finally realized that I could link the two businesses and make them complement one another. I’ve now set a goal for myself to turn CTFO free opportunity into a profitable business within the next 3 years using this unique window of opportunity while hemp and CBD are such a hot trend.

Once again, education is the key to success.  Another associate in our team found a deeply discounted (at 97%) Groupon price for an online certification course in Medical Cannabis and CBD oil. Its final cost was only $5.00. As business owners, we want to be educated professionals in what we do. During the past several months, I’ve learned a lot online just by reading news, medical studies, law articles, and watching videos about the cannabis plant, its constituents and their effects on mammals’ physiology and psychology. I thought that this course will be pretty easy to complete. However, it offers a deeply informative material, and I am still learning a lot.  

Running two lines of business simultaneously is a big obligation. One needs to account for personal time and abilities before deciding on taking additional work. At the same time, it creates an additional stream of residual income. The harder I work today, the more financial freedom I’ll have at my retirement. But “working hard” means being more productive and smart in strategy rather than working long hours.

You are welcome to join me and our team either as a customer, freelancer, or a business owner.

>>> Click Here To Read CTFO Review and Join <<<

The Bottom Line

How to budget money on a low income is not really the question. Budgeting is always the same: you calculate your expenses and income and make sure that they agree. There is a limit of how much you can cut down on your expenses, and if your income still doesn’t cover even the essentials, there is no way to balance your budget without making a series of changes in your mindset and in your life.

The real question is how to increase low income so that not only your income can cover your basic needs, but also give you the financial freedom to live your life to its fullest and save money for emergencies, important (and expensive!) life events, and for your retirement.

Idea, Planning, Strategy, Success

I offered you a plan that is proven to work. Whether it works for you depends on how you set your mind and implement it. Of course, there is no hard blueprint for your life path. Your journey will not be exactly as described. You’ll make your own mistakes and encounter your own misfortunes in your journey to success. What matters is how you handle them. Learn, recover, don’t quit! Remember that failure is not an option. You can and will achieve the goal that you defined as success. Best of luck to you!   

Please share your thoughts and ask questions in the comments field below. I’d be delighted to hear how this plan is working for you! Please bookmark this page and come back to tell me about your progress.

20 thoughts on “How To Budget Money On a Low Income & Importance of Building Emergency Fund.”

  1. I really appreciate your pointers on how people struggling financially can make a better life for themselves. Your story is an incredible one and I give you lots of credit. The message here is really positive and uplifting. Adversity is only temporary as long as you keep battling. 

    Your freelance website list is really helpful and I’ll be bookmarking it myself to reference and check out. 

    Thank you!

    • Hello,

      Thank you very much for the comment and for bookmarking my website. I am glad that you found the list of freelance sites helpful for yourself. 

      Plan, strategy, education, and own focused actions result in success. Help must not be counted on, and when offered, should be accepted with great gratitude.

      Best wishes,

      ~ Julia

  2. Hi Julia!

    Very interesting and necessary post! Fortunately, I am not struggling financially in the moment, but I learned a lot from your article if I ever find myself in that situation.  

    You provided so much information and it was very detailed, I hope more people who are struggling financially read this. And I have to agree with you, every big change starts with changing your mindset and education is always key for everything. 

    Besides that, you recommended many ways to earn money online and maybe I will try some of them and become a freelancer. 



    • Thank you, Mariana.

      I hope too that more people with low income read my post… and not only read but believe that jumping from one opportunity to another may earn them a few dollars here and there, but will not improve their overall financial situation. The long-term focus in one field, dedicated work, and strategy to grow professionally is the only way to get financial well-being.

      Ha-ha! Happy freelancing to you!

      I’m glad to hear that your financial situation is good at the moment and wish that you’d never experience hardship. But life is full of surprises and unfortunately, they are not always pleasant. I hope that you’ve prepared for unexpected adversities, are insured, saved for the future, and planned for your retirement.

      Warm regards,

      ~ Julia

  3. This was a very detailed and useful article on how to budget your money even if you have a low-income state. I like too that you built in starting an emergency fund into your advice and guidance. I know that it seems like an impossible task, but I have seen so many do just that.

    In Dubai, you may hear more about the rich and famous people that are in and out of the city, but there are many thousands of workers that keep the city running smoothly. Most are not making a great deal of income but somehow they not only save money, but they also have that small emergency fund you write about.

    The steps you mention are all ones that I too would recommend. Most people can find ways to squeeze more out of their earnings once they analyze the areas where they are wasting money, or perhaps ways they can cut costs for some of their activities.

    Saving a little bit becomes a habit after a while and soon that nest egg will be there, and it can grow over time to a sizeable amount. I have seen a lot of people leave Dubai rather wealthy in comparison to the places they have come from. This suggestions you have included will work!

    • Hi Dave,

      Thank you very much for your feedback and your approval of my suggestions. They’ve derived from my own life; I know they work because they worked for me. I hope my readers will be able to take my advice, adjust it smartly to their circumstances and their own personalities, and make it work for them too.

      The emergency fund is difficult both mentally and in actual implementation. We don’t want to think about savings when we barely cover our bills. People hope that nothing unexpected and disastrous will happen to them; they take this high risk unknowingly while they fear a risk of making a positive change in their lives. That’s sad, and I hope that some of my readers will be able to change their mindset and start saving little by little. I even showed how to get some extra money for emergency savings without taking them out of the current budget. Ellevest’s Emergency Fund with the referral program are a good help: several personal referrals and an initial $20 gift received for using my link will make great ROI for someone who can’t afford invest much out of pocket. This would create the “nest egg” you mentioned. You are absolutely right in saying that after a while saving becomes a habit, and the funds will grow over time to a sizeable amount.

      I appreciate your stopping by and value your opinion. Thank you again and all the best to you.

      ~ Julia

  4. You aren’t lying about high-interest loans.  If I’m not mistaken, the U.S. government keeps trying to get rid of payday loans, making them illegal, but they keep popping back up with a different set of rules that walk the lines of legality.

    Another thing that hurts my family the most is fast food.  I’m a cook, and I cook at home often to save money but the allure of fast food is sometimes too strong.  Next thing I know, I blew half our grocery money on burgers and fries.

    I remember I got really mad at my wife for something she said about our finances.   The reason being, was because, in 2014, I told her that we need to focus on the smaller credit cards first, so we can get rid of them.  She argued that we need to get off the big ones first.  

    Fast forward four years later and she says we need to focus on the small credit cards first.  She didn’t understand why I was pissed.  I SAID THAT FOUR YEARS AGO!!!! We’re still in debt, but we own our cars and have our own home so it’s a great investment, but she drives me crazy sometimes. 

    • Hi Ibrahim,

      Thank you very much for your comment.
      Payday loans are pure robbery! Never-ever anyone should use them.

      I understand how tempting the fast-food could be, especially if one grew up eating it. We love things associated with our childhood. That’s why I started my post with the point that one should have a very strong mindset in order to get out of financial struggle. Your brain should pull your hand back each time it’s trying to reach out for the wallet when your eyes see the fast-food. LOL

      On your argument with your wife, I can only say that it’s not the size of the card that determines which one to go get rid of first… As I said in the article, you should pay off high-interest cards first, and rid of those that don’t offer good benefits such as award points and travel insurance. In the end, keep one or two credit cards and pay off the balance monthly before the interest is charged.

      Keep peace in your family!
      Best wishes,
      ~ Julia

  5. This is an incredible article and resource, all in one. First off, I have ‘Bookmarked’ it for continued reference. I would say that very few who read it will come away having learned nothing, no one is that on top of things. I’m not even sure I will be able to do it justice, in its entirety. Much of what you said rings true and pertains to plenty that has gone on in my life. We have four children all of whom are now close to being young adults in their own right.

    When my wife and I first got together we lived a two-hour commute apart. After discovering we were pregnant with our first child I moved. I came to a city with no job and few qualifications. I did, however, have a resilience and I doggedly searched for work. I was rewarded after using a temp agency and turning up at their doorstep every day to see if there were any vacancies. I was in their face and I know that meant that when an opportunity arose I was going to be in their minds. A three-week assignment turned into six months because I was happy to do whatever I was asked and the company just kept me on and on and on. ‘Make hay while the sun shines’ as the saying goes.

    Budgeting and saving are two of the hardest areas, I found. There was always some expense that came as a surprise and there never seemed to be enough money to put aside. It wasn’t until much later in life I realised it was possible to save if you did it at ‘source’ before any of the other costs were taken out. Take-outs and nights out were not on the schedule and stayed that way for many years. When money is tight, the idea of ‘giving’ it away for something we could do ourselves seemed unthinkable.

    Now we’re at a different point in our lives and over the last few years have started, finally, to make provisions for the future as far as savings and investments. I have found a passion for writing that I was unaware existed before the start of this year. I plan on ‘honing’ that skill and will be looking for ways of monetising it over the coming months. Your list of ‘freelance project’ sites will serve as ‘resource 101’ as I think it’s time to venture out into that world. I cannot thank you enough for this incredible article. While browsing through your site I spotted a review on ‘bUnited’ which is something else I wanted to look into. So much to choose from.

    • Hello,

      Thank you so much for your kind words and for sharing your story.

      I totally agree that savings are the hardest area. But I know it’s possible if only we set our mind to it. When I was young, saving for an emergency just didn’t come to my mind. However, my blind toddler had shown interest in music, and I was confident that any human being needs art in his life, and music seemed like the most accessible art for a blind person. I knew that if there is a talent for music, it has to be supported and developed from a very early age. So, before I found a professional job and could get off some of the welfare programs, I started saving little by little for an acoustic piano. We purchased a mildly used upright piano for $2,000 by the time my son was 3.5 years old, and he started taking lessons soon after. I didn’t have an option to wait until I would earn more money…

      I am so happy for you for finding your passion and your financial stability!

      I hope to see you coming back to my website, thank you for bookmarking it. Happy freelancing! 🙂

      My warmest regards to you and your family!

      ~ Julia

  6. Very useful article for all those people that are struggling financially. Most people have such problems because they simply don’t know how to organize their financial life which is a shame really because it’s not all that hard and you don’t need an expert to do so. Your advice are very good and hopefully they will help those in need. Thanks for such a useful article.

    • Thank you for your comment.
      Organizing your financial life is not easy for those who have nothing to start with. Please don’t diminish the effort. It’s HARD, but it’s POSSIBLE. It’s even hard to get the right attitude and mindset when a person needs to break out from poverty. “Shame” is not the right word for people in need. They need support and encouragement from others – not judging and blaming. 

      ~ Julia

  7. Hello! I absolutely love this.

    I’m myself from a poor country. My family and I struggled for years and years, and it’s been really hard. I remember I was 7. My mom didn’t speak the common tongue at all, but she still managed to make ends meet.

    She’s always telling us that education is the only way to get out of this vicious circle of poverty, and determination is key. I’m now a student living a bit short and these money-saving tips are great.

    I just hate it when people don’t pay attention to their wallet and spend without thinking. How do they even do that?

    Now, I think I can save even more money. I do have an emergency fund but I can’t use it to pay for my student tuition every time. Between the studies and the hustles, it’s so hard to keep track.

    You’ve reminded me of some of my life goals and what I should be saving up for.

    Great article and have a good day!


    • Dear Nick,

      Thank you very much for reading. I am glad that you found my post helpful.

      Your mother must be very proud of you! You seem to make all the right life choices. It’s wonderful that you chose education, even though I know it’s not easy at all when the budget is somewhat tight. I am impressed that you have an emergency fund – that’s very commendable. You are right: tuition is a known expense, not an emergency; keep your emergency saving for something unexpected and unpredictable. Try Ellevest for your emergency savings and recommend it to your friends – thus, you can get some free money to your account and help your friends to do the same.

      Wishing you great success in all you do!

      ~ Julia

  8. Hi, your post is really unique and very helpful to me, I learn a lot from your post starting from the importance of budget and everything. As a worker, I am not always satisfied and therefore I love borrowing. I’ll have to change my ways now that I came across your post.

    There are many factors that part the rich from the poor. Among the points that you have discussed in your post is what can help a low-income earner to survive.

    To help my friend and family I would love them to learn from your story as an immigrant to the USA. You still survived it even without being educated… I will be sharing your post on my social media for them to also benefit from it.

    • Hi there,

      Rich or poor, everyone needs to plan and balance their budget. Only for poor people, it’s even more important to do good recordkeeping because it’s much easier to overspend and get into harmful debts. 

      I am glad that my advice was helpful for you and that you believe that my story could also be helpful for you and your friends. Yes, please feel free to share it wherever you feel is appropriate. 

      Best wishes,

      ~ Julia


  9. How to Budget Money on a Low Income has a lot of very important tips to save cents and dollars for rainy days.

    It is important to note that the article has first explained what type of attitude of a person must be prepared such as mindset, belief in oneself that anything we think we can, indeed we can, like saving money. Overcoming the change we need to implement is truly a daunting task for those who tried keeping more savings.

    It is very specific and straight forward advice, including hidden expenses and a practical way to save more like buying your brewing machine than buying commercialized brewed coffee. It is quite amazing as it was stated that you could save as much as $600 a year just for avoiding brewed coffee.

    I also like the tip on cutting down services and getting rid of things that are so common we think they are must-have, I remember my cleaners twice a week when in fact I could get by myself and save a significant amount in a year. Including the one cleaning my car.

    In addition, the author includes a proactive way of resolving the situation. The author brilliantly opens up my eyes on the other side of the coin that is learning to establish sources of income like my blogging and product review and private tutoring. Improving my earnings is much better than just saving from budgeting.

    A great read for people struggling to break away from living from paycheck to paycheck. I learned to wisely live below my means and expand the sources of my income. I agree that education is the key.

    Great! Amazing!

    • Thank you, Sir, for reading and providing your thorough review of my article. I learned something from your comment as well. I haven’t even thought that someone on a low income would pay for a car wash or hire a house cleaner. These services are definitely not necessary expenses. They are convenient for someone who has extra money, but one can surely do own cleaning when money is an issue.

      Yes, strong positive mindset, education, gradually improving earnings, multiplying sources of income and creating residual streams are the steps to financial stability. 

      All the best,

      ~ Julia

  10. Hi Julia,
    Excellent take. No matter how rich or how poor someone is, the only way to have an understanding of personal finance is to know at any moment in time how much your Net Worth is. Even if someone is dirty-poor, you need to know your Net Worth = Assets – Liabilities. It’s good to have it on a napkin, piece of paper, nice workbook, in Excel, or financial software.
    And you just go for the money in liquid form and to have access to the funds.

    On Assets: Cash/checking/savings, if by any miracle there is some retirement plan somewhere — total everything.
    Liabilities: credit, any loan or medical bill (making payments or not is irrelevant)

    As an example on low-income NW
    Cash Assets = $ 1,250
    Liabilities = $-8,500
    Net Worth = $1,250 – $8,500 = –$7,250

    Even if you have a house as an asset that’s called house poor.
    Check your Net Worth in 6 months
    If your NW = -$5,750 you did something fantastic and Julia did well with this blog.

    Monthly Cash flow.
    Julia’s how to budget, only that advice will make your Net Worth grow towards the plus side.
    First is spending problem. Where does your money go? And why? What value do you get when you spend money?
    Income is not a problem. We all have to work for the money.
    The winners are those who spend less than they make.

    • Dear Emil,

      Thank you for the excellent addition to my post in your comment. I was avoiding financial terminology wherever possible in order to make my article easy to read… But now I see that some readers may find your short visual presentation of the Net Worth very helpful in understanding the concept.

      I also like your advice on the questions people on a low income should definitely ask themselves before giving away their dollars. Getting a tattoo or eyelashes extension is not on the list when the Net Worth is negative!

      Thank you again, Emil. All the best,

      ~ Julia


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