I’m going to start with the truth: Budgeting on a low income is hard. Really hard. When I lived on my own, I really struggled and often ended up in my overdraft every month!

All those budgeting articles I read? They were full of advice like “cut your coffee shop habit” or “cancel your gym membership.”

Great. Many people on low budgets are unable to afford coffee or a gym membership in the first place, so they often refrain from buying coffee or going to the gym.

They need actual, practical advice for people living on a low income. Not tips for middle-class people who want to save a bit more.

So I figured it out myself. And I’m going to share everything I learned about budgeting when money is genuinely tight. I started doing this when I was on maternity leave and my income dropped.

This isn’t about cutting luxuries you don’t have. This is about making every penny count when you’re barely getting by.

What Counts as Low Income in the UK?

Before we get into it, let’s be clear about what we’re talking about.

The UK government defines low income as less than 60% of median household income. In 2025, that’s roughly:

• Single person: Less than £18,000 per year (£1,500 per month)
• Couple: Less than £24,000 per year (£2,000 per month)
• Family with 2 kids: Less than £30,000 per year (£2,500 per month)

But honestly? If money feels tight and you’re struggling to make ends meet, that’s what matters. The exact number doesn’t really matter.

My Situation: £1,400 living alone.

Let me give you context for where I was coming from.

My pay was £1,400 per month and I rented a flat in Leeds.

My fixed costs were:

• Rent: £550 (back in 2016!)
• Council tax: £110
• Electricity and gas: £90
• Water: £30
• Phone: £45
• Internet: £25
• Petrol: £200
• £200 car payment

That’s £1,250 just on essentials. Leaving me with £150 for everything else for the entire month.

Yeah. It was tight.

But I made it work. And if I can do it, you can too.

Step 1: Know Your Numbers (Actually Know Them)

I know this sounds obvious but loads of people on low incomes avoid looking at their bank balance. I get it. It’s scary.

But you NEED to know exactly what’s coming in and going out.

Here’s what I did:

List every single bit of income:

• Wages (after tax)
• Universal Credit
• Child benefit
• Tax credits
• Any other benefits
• Side hustle income
• Child maintenance

Write down the actual amounts you receive. Not what you think you get. Check your bank statements.

List every single expense:

• Rent/mortgage
• Council tax
• Gas and electric
• Water
• TV licence
• Phone
• Internet
• Food shopping
• Transport
• Childcare
• Debt repayments
• Subscriptions (Netflix, Amazon Prime, etc.)
• Everything else

I used a simple notebook. You can use a spreadsheet if you’re fancy. Or just your phone notes. Doesn’t matter. Just write it down.

The scary bit:

Subtract your expenses from your income.

If the number is negative, you’re spending more than you earn. That’s why you’re struggling.

If the number is positive but tiny (like £20), you’re living with zero margin for error. One unexpected expense and you’re stuffed.

If the number is positive with some breathing room, you’re doing okay, but want to manage better.

Step 2: Separate Wants from Needs (Brutal Honesty Time)

This is where it gets hard.

When money is tight, you need to be brutal about what’s actually essential.

Needs (you literally cannot survive without these):

• Housing
• Food
• Heating
• Water
• Basic clothing
• Essential transport (to get to work)
• Essential childcare

Wants (you’d like them but could technically live without):

• Netflix
• Takeaways
• New clothes
• Going out
• Nice food (instead of basic food)
• Non-essential transport

Now here’s the controversial bit: Some “wants” are important for your mental health.

When I was broke, Netflix was my lifeline. £6.99 kept me sane when I couldn’t afford to go out.

But I couldn’t have Netflix AND meals out AND new clothes. I had to choose.

You get to decide what’s worth keeping. But you need to be honest about what you can afford.

Step 3: Sort Out Your Bills First

Your fixed bills need to be your priority. You can’t negotiate with your landlord like you can with yourself about buying lunch.

Council tax:

If you’re on a low income, you might get Council Tax Reduction. I got 25% off my council tax, which saved me about £30 per month.

Check your local council website. Apply even if you’re not sure you’ll get it. The worst they can say is no.

Energy bills:

If you’re on certain benefits, you can get the Warm Home Discount (£150 off your electricity bill).

Also, check if you’re on the best tariff. Use comparison sites like MoneySuperMarket or Uswitch. Fixed tariffs are usually better than variable ones right now.

Water:

Some water companies offer social tariffs for people on low incomes. It could save you £100-200 per year.

Also, get a water meter fitted if you don’t have one. For a single person or couple with no kids, it’s usually cheaper.

TV Licence:

If you’re on certain benefits, you can spread the cost over the year (about £13 per month instead of £159 in one go).

Or just cancel it if you only watch Netflix and YouTube anyway. You don’t need a licence for streaming services.

Phone:

Switch to a SIM-only deal. I pay £10 per month now with Tesco for unlimited calls, texts, and a data plan. That’s plenty for most people.

If you’re paying £30-50 per month for a phone contract, you’re spending £300-500 per year more than you need to. Some people pay even more.

Internet:

Check if you qualify for social broadband tariffs. Some providers offer them for £10-15 per month if you’re on Universal Credit.

Or threaten to leave. Seriously. Call your provider and say you want to cancel. They’ll usually offer you a cheaper deal to keep you.

Step 4: Food Shopping on a Tight Budget

Food was my biggest variable expense. And where I could make the most difference.

Here’s what actually worked for me:

Shop at the cheapest supermarkets:

Aldi and Lidl. Not Tesco or Sainsbury’s. The price difference is massive.

I spent about £30 per week at Aldi for one adult. That’s £120 per month. When I shopped at Tesco, I was spending £50-60 per week for the same food. I also made packed lunches for work, which was so much cheaper than buying something every day.

Meal plan:

I know everyone says this. But I’m going to tell you HOW to actually do it when you’re broke.

1. Check what you already have in your cupboards
2. Plan 7 dinners using those ingredients plus cheap staples
3. Write a shopping list of ONLY what you need for those meals
4. Don’t buy anything else

Budget meals that actually work:

These are the meals I lived on:

• Pasta with tomato sauce and frozen veg (about £1 per serving)
• Rice with beans and frozen veg (about 80p per serving)
• Jacket potato with beans or cheese (about £1 per serving)
• Porridge for breakfast (about 15p per serving)
• Soup made from whatever veg is cheap (about 60p per serving)
• Egg fried rice (about £1 per serving)

Not exciting. But filling and nutritious enough.

Buy frozen vegetables:

Fresh veg goes off. Then you’ve wasted money. Frozen veg is cheaper, lasts forever, and is just as nutritious.

A bag of frozen mixed veg is about £1 and does 3-4 portions.

Use yellow sticker items:

Go shopping at 7-8pm. That’s when supermarkets reduce things that are going out of date.

I’d get meat reduced by 75% and freeze it immediately. Bread reduced by 90% and freeze it. Vegetables marked down and use them that night.

Saved me about £20 per week.

Never shop when hungry:

You’ll buy loads of stuff you don’t need. I made this mistake SO many times.

Use cashback apps:

I know I mentioned these in my other articles, but they’re genuinely helpful. CheckoutSmart, GreenJinn, Shopmium.

I made about £10-15 per month just scanning my receipts. That paid for a few extra bits.

Step 5: Deal With Debt Properly

If you’ve got debt, it’s making your low income even harder to manage.

Priority debts (pay these first):

• Rent or mortgage arrears
• Council tax arrears
• Gas and electricity arrears
• Court fines
• TV licence arrears (yes, you can be prosecuted)
• Child maintenance

These debts can get you evicted, fined, or have your utilities cut off. They’re the priority.

Non-priority debts:

• Credit cards
• Personal loans
• Store cards
• Payday loans
• Overdrafts

These creditors can’t kick you out or cut off your power. They can take you to court eventually, but it takes ages.

What to do:

1. Contact StepChange or National Debtline. They’re free debt advice charities.
2. Work out what you can actually afford to pay each month
3. Offer that amount to your creditors
4. Don’t let them bully you into paying more than you can afford

Step 6: Make Sure You’re Getting All the Benefits You’re Entitled To

I cannot stress this enough: Check if you’re entitled to any benefits.

So many people don’t claim what they’re entitled to. The government isn’t going to chase you and tell you to apply.

Benefits you might be entitled to:

• Universal Credit
• Working Tax Credit (if you’re not on Universal Credit yet)
• Child Tax Credit
• Child Benefit
• Council Tax Reduction
• Pension Credit (if you’re pension age)
• Carer’s Allowance
• Personal Independence Payment (PIP) or Disability Living Allowance (DLA)
• Employment and Support Allowance (ESA)

Use the benefits calculator on Turn2Us or Entitledto to check what you could get.

Even if you work full-time, you might still be entitled to Universal Credit if your income is low enough.

Don’t be proud:

I know there’s stigma around benefits. I felt it too. But you pay tax when you work (or you will in the future). This is YOUR money.

If you’re entitled to it, claim it. You’re not taking anything from anyone else.

Step 7: Cut the Stuff That Doesn’t Matter

Right, now we’ve sorted bills and benefits, let’s look at cutting the non-essentials.

Subscriptions:

Go through your bank statement and list every subscription:

• Netflix
• Amazon Prime
• Spotify
• Gym
• Apps
• Magazines
• Anything else

Can you cancel any? Can you downgrade any?

I kept Netflix (£6.99) and cancelled everything else. Saved about £30 per month.

Takeaways:

I know they’re tempting when you’re tired and can’t be bothered to cook. But they’re expensive.

One takeaway is £10-15. That’s 10-15 home-cooked meals.

I cut takeaways completely for 6 months. Saved about £80 per month.

Coffee and meal deals:

If you’re buying lunch every day at work, that’s £5 per day. £25 per week. £100 per month.

Pack your lunch instead. Sandwich and crisps costs about £1.

Smoking and alcohol:

I’m not judging. But if you smoke 10 cigarettes a day, that’s about £150 per month.

If you’re struggling to pay rent, cutting back on cigarettes could be the difference.

Same with alcohol. If you’re spending £30-40 per week on booze, that’s £120-160 per month.

Going out:

This is hard, especially if you feel isolated. But going out costs money.

Meet friends at someone’s house instead of at a pub or café. Go for walks instead of shopping trips. Find free activities instead of paid ones.

Step 8: Find Ways to Bring in Extra Money

I know you’re already working or you wouldn’t be reading this. But even small amounts of extra income make a massive difference when you’re on a low income.

Things I did:

• Matched betting (made £600 in the first few months)
• Online surveys (£50-80 per month)
• Selling stuff I didn’t need (made about £200 one-off)
• Cashback apps (£10-15 per month)

That’s an extra £100-150 per month from stuff I could do while my baby slept.

I’ve written full guides on all of these in other posts, so I won’t go into detail here. But they helped.

Other options:

• Babysitting
• Dog walking
• Cleaning
• Ironing
• Car boot sales
• Facebook marketplace

Any extra money goes straight toward building a small emergency fund or paying off debt.

Step 9: Build a Tiny Emergency Fund (Even £100 Helps)

This sounds impossible when you’re already struggling. But even £50-100 in savings can stop you going into debt when something breaks.

When my washing machine broke, I had £80 saved. I could afford to get it fixed instead of putting it on a credit card.

That £80 saved me from getting into £150 of debt (because of interest).

How to save when you’re broke:

Put aside £5 per week if you can. Or £10 per month. Or £1 per day.

Even tiny amounts add up. £5 per week is £260 per year.

Where to put it:

Open a separate savings account so you’re not tempted to spend it. I prefer to use a savings account that is the same bank as my current account, so it’s easy to manage in the same app.

Or just use a jar at home if that works better for you.

Step 10: Free and Cheap Ways to Eat Better

When money’s tight, it’s tempting to buy cheap processed food. But you can eat well on a tight budget.

Cheap protein sources:

• Eggs (about £2 for 15)
• Tinned tuna (50p-£1 per tin)
• Frozen chicken thighs (£2.50 for 1kg)
• Tinned beans (25p per tin)
• Lentils (70p for 500g)

Cheap carbs:

• Rice (45p for 1kg at Aldi)
• Pasta (40p for 500g)
• Potatoes (£1 for 2.5kg)
• Bread (50p for a cheap loaf)

Cheap vegetables:

• Frozen mixed veg (£1 per bag)
• Carrots (50p per kg)
• Onions (60p per kg)
• Tinned tomatoes (30p per tin)

With these ingredients, you can make hundreds of different meals.

Step 11: Free Things to Do (You Still Need a Life)

Being on a low income doesn’t mean you have to sit at home doing nothing.

Free activities:

• Parks and playgrounds
• Libraries (free books, free internet, free activities)
• Free museums (loads in London and other cities)
• Walking and hiking
• Beach trips (if you’re near the coast)
• Community centres (often have free activities)
• Religious centres (even if you’re not religious, many run free community events)
• Parkrun (free weekly 5k every Saturday morning)

Cheap activities:

• Cinema (tickets are £5-7 before 5pm usually)
• National Trust (£6 per adult but you can visit loads of places)
• Swimming (usually £3-5 at council pools)

Step 12: Get Help If You Need It

If you’re really struggling, there’s help available.

Food banks:

Use the Trussell Trust website to find your nearest food bank. You usually need a referral from a GP, social worker, or Citizens Advice.

Don’t be ashamed. That’s what they’re there for.

Fuel vouchers:

If you can’t afford to top up your energy meter, contact your energy supplier. Many have emergency funds.

Also check if you qualify for the Household Support Fund from your local council.

Charity grants:

Some charities give grants for things like white goods, furniture, or clothing.

Try Turn2Us grants search to see what’s available in your area.

Citizens Advice:

Free advice on benefits, debt, housing, employment. They can help you sort out your finances properly.

Christians Against Poverty (CAP):

Free debt advice and budgeting help. You don’t have to be religious to use their service.

The Mental Side of Living on a Low Income

This is the bit nobody talks about.

Living on a low income is exhausting. Not just physically, but mentally.

The constant stress:

Every purchase is a decision. Can I afford this? Should I buy this? What if something breaks?

It’s mentally draining to live like that.

The isolation:

When all your friends are going out for dinner or drinks and you can’t afford it, you end up staying home. You feel left out and lonely.

The shame:

There’s so much stigma around being poor. People assume you’re lazy or bad with money.

Most people on low incomes work really hard. The problem isn’t you. It’s that wages are too low and living costs are too high.

What helped me:

• Being honest with friends about my situation (real friends understand)
• Finding free things to do instead of expensive things
• Remembering it’s temporary (even though it doesn’t feel like it)
• Focusing on what I DID have, not what I didn’t

Budget Planner Template

Here’s a simple budget template you can copy:

Income:

• Wages: £
• Benefits: £
• Other: £
• Total income: £

Fixed expenses:

• Rent/mortgage: £
• Council tax: £
• Gas and electric: £
• Water: £
• Phone: £
• Internet: £
• TV licence: £
• Other: £
• Total fixed: £

Variable expenses:

• Food: £
• Transport: £
• Childcare: £
• Debt repayments: £
• Other: £
• Total variable: £

Total expenses: £

Income minus expenses: £

If that final number is negative or very small, you need to cut expenses or increase income.

Budgeting FAQs

How much should I spend on food per week?

For one person: £20-30 per week at Aldi/Lidl. For a couple: £40-50. For a family of four: £70-90. These are tight budgets but doable.

How can I budget when my income changes every month?

Budget based on your lowest monthly income. Anything extra goes straight into savings or debt repayments.

Should I save or pay off debt first?

Get a small emergency fund first (£50-100), then focus on debt. You need that tiny buffer or you’ll just get into more debt when something breaks.

I’m already cutting everything. What else can I do?

Check you’re getting all benefits you’re entitled to. Look for small amounts of extra income (surveys, cashback, selling stuff). Contact debt charities if debt is the problem.

How do I budget for irregular expenses like birthdays and Christmas?

Work out how much you need for the year (e.g., £200 for Christmas, £100 for birthdays). Divide by 12. Save that amount per month in a separate account.

What if I can’t afford my rent?

Contact your landlord immediately. See if you can negotiate a payment plan. Apply for housing benefit/Universal Credit if you haven’t already. Contact Shelter for housing advice.

How do I stop impulse buying?

Delete shopping apps. Unsubscribe from marketing emails. Wait 24 hours before buying anything non-essential. Ask yourself “do I need this or want this?”

Is it worth getting a loan to consolidate debt?

Only if the interest rate is lower than what you’re currently paying AND you can definitely afford the repayments. Get free advice from StepChange first.

Final Thoughts: You’re Doing Your Best

If you’re reading this, you’re trying to sort out your finances. That means you’re doing better than you think.

Budgeting on a low income is hard. Some months you’ll do great. Some months everything will go wrong.

That’s normal. Don’t beat yourself up about it.

Just keep trying. Keep tracking your money. Keep making small improvements.

It won’t always be this tight. I promise.

I’m not on a low income anymore. I make decent money from freelancing and my blog now. But I remember how hard it was.

And I’m telling you: You can get through this.

One day at a time. One bill at a time. One meal at a time.

You’ve got this.

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Helpful resources

• Turn2Us – Benefits calculator and grant finder
• Citizens Advice – Free advice on money, benefits, housing
• StepChange – Free debt advice
• National Debtline – Free debt advice
• Trussell Trust – Food bank finder

Disclaimer: This article is based on my personal experience and opinions. I’m not a financial adviser. For specific advice about your situation, contact Citizens Advice or a qualified adviser.

Last updated: October 2025