How to Budget and Save Money on a Low Income

A guide to budgeting and saving money on a low income

Managing money on a low income can feel challenging, especially when essential expenses continue to rise. However, developing strong budgeting skills can help you better understand where your money goes, make informed decisions, and reduce financial pressure over time. A clear budget can also help you prepare for irregular costs, build savings gradually, and feel more confident about your financial choices.

This guide explains how to budget on a low income in a practical, easy-to-follow way. You’ll learn how to track income and expenses, identify areas where adjustments may be possible, understand government support options, and explore realistic budget examples for Australian households. The information is designed to improve financial literacy and help you make informed decisions based on your own circumstances.

Any references to products or services are general in nature and provided for information only.

How to Create a Budget on a Low Income: Step-by-Step

Step 1: Record your income

Understanding exactly how much money comes in is the starting point for any low-income budget. Clear records help you avoid over-committing and make your budget more realistic.

• List all income sources: wages, Centrelink payments, child support, casual or gig work, side income, or other regular payments
• Calculate an average income: if your income varies, use an average from the past 3–6 months
• Include government payments: such as JobSeeker, Parenting Payment, Youth Allowance, Family Tax Benefit or Rent Assistance
• Allow for fluctuations: seasonal or casual work may change throughout the year

This step provides a stable foundation for building a budget that reflects your real financial situation.

Step 2: Track and categorise your expenses

Tracking spending helps you understand where your money is going and highlights areas where adjustments may be possible.

Ways to track expenses include:

• Mobile banking apps with transaction history
• Budgeting apps such as MoneySmart, Frollo or Pocketbook
• A notebook or printable worksheet
• A simple spreadsheet or Google Sheet

Group expenses into categories:

• Fixed expenses: rent, utilities, insurance, phone plans
• Variable expenses: groceries, fuel, eating out, entertainment
• Essential vs non-essential spending: a useful framework for prioritising needs

Review your spending for patterns, such as recurring subscriptions, frequent takeaway meals, or higher-than-expected utility use. Identifying trends can help you understand how small changes may affect your overall budget.

Step 3: Create your budget plan

Once income and expenses are clear, you can begin setting spending limits that align with your priorities.

• Set realistic limits that reflect your actual habits
• Prioritise essential expenses such as housing, food, transport and health
• Allow for irregular or annual costs like car registration or school expenses
• Include any existing debt repayments
• Add a small savings category, even if it’s a modest amount

A sustainable low-income budget focuses on consistency and awareness rather than extreme cutbacks.

Step 4: Implement and automate your budget

Automation can make budgeting easier to manage and reduce the risk of missed payments.

You may choose to:

• Use separate accounts for bills, spending and savings
• Set up direct debits for regular bills
• Schedule automatic transfers to savings
• Explore bill-smoothing options with service providers

Using digital tools such as banking alerts, budgeting apps or calendar reminders can help you stay on track and monitor progress over time.

Check Your Eligibility for Australian Government Assistance

Many Australians are eligible for support payments or concessions that can improve cash flow and reduce essential expenses.

Federal government payments

Depending on your situation, you may be eligible for:

• JobSeeker Payment
• Family Tax Benefit Parts A and B
• Parenting Payment
• Youth Allowance
• Disability Support Pension
• Rent Assistance
• Energy Supplement

Helpful resources include:

• Services Australia Payment and Service Finder
• Australian Government payment guides
• Department of Social Services program listings

State and territory government concessions

Each state and territory offers additional assistance, which may include:

• Utility and energy rebates
• Transport concessions
• Health-related discounts
• Emergency relief or cost-of-living programs

Examples include:

• NSW Cost of Living Rebates
• Victoria Utility Relief Grant
• Queensland Energy Rebate
• South Australia Cost of Living Concession

Eligibility and benefits vary, so it’s important to check current criteria.

Track Your Current Spending

To gain deeper insight:

• Track every expense for at least 2–4 weeks
• Review spending weekly
• Highlight avoidable or discretionary costs
• Re-categorise expenses to identify trends

This process supports the development of a personalised low-income budget.

Create a Realistic Budget Framework

A structured approach may include:

• Recording all income accurately
• Listing fixed expenses first
• Setting clear limits for variable expenses
• Treating savings as a regular budget item, even if small
• Using a “pay yourself first” approach where possible

Automate Your Budget Management

Automation can simplify ongoing money management:

• Separate bank accounts for different purposes
• Automated bill payments
• Automated savings transfers
• Bill-smoothing arrangements

This can be particularly helpful when managing a low income with limited flexibility.

Low Income Budget Examples for Australians

The following examples are illustrative only and are intended to demonstrate how a budget might be structured.

Sample budget for a single person on a low income

Assumed weekly income: $700

This example prioritises essential living costs, includes savings, and accounts for irregular expenses and debt commitments.

Sample budget for a family on a low income

Assumed household income: $1,300 per week

Common approaches may include bulk grocery shopping, using concessions, planning school-term expenses, and reviewing discretionary spending regularly.

Adjusting Your Low-Income Budget When Circumstances Change

Situations that may require changes include:

• Reduced hours or job loss
• Unexpected expenses
• Temporary increases in living costs

When income improves, you may choose to rebuild savings, reduce outstanding debts, or reassess spending categories.

How to Save Money on a Low Income

Saving on a limited income often involves gradual changes rather than large sacrifices.

Reduce housing and utility costs

• Compare energy providers
• Apply for concessions
• Monitor heating and cooling usage

Manage food and grocery spending

• Meal planning
• Buying generic brands
• Reducing food waste

Review transport costs

• Use public transport concessions
• Plan trips efficiently
• Maintain vehicles to reduce long-term costs

Reduce debt-related expenses

• Review account fees
• Be cautious with short-term credit products
• Access free financial counselling if needed

How to Build Savings with Limited Income

• Set small, achievable savings goals
• Track progress regularly
• Explore additional income options if appropriate
• Use community resources and free services where available

Crisis Management for Low-Income Households

Building an emergency fund

Many people aim to build savings gradually, starting with small milestones and increasing over time as circumstances allow.

Support services

If financial hardship arises, support may be available through:

• National Debt Helpline
• Free financial counselling services
• Community and emergency relief organisations

Need a Personal Loan? Choose Responsible Lending

In some situations, people explore personal loans to manage essential expenses such as car repairs or unexpected bills. Any borrowing decision should be carefully considered, taking into account affordability, fees, and repayment obligations.

Credit24 offers personal loans with:

• A simple online application
• Fixed repayment structures
• Clear loan terms and fee disclosures
• No requirement for collateral
• Responsible lending assessments

All applications are assessed individually, and loan approval is not guaranteed.

Apply now

Disclaimer

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is general in nature and does not consider your objectives, financial situation, or needs. Lending criteria, fees, and charges apply. For product details, eligibility requirements, and full terms and conditions, visit www.credit24.com.au.