August 15, 2021

How to live on a low income without feeling deprived

Want to know how to live on a low income? Well, I have some experience with that. For the majority of our first seven years of marriage, Kendall and I mostly lived on my income alone.

And, no, I wasn’t bringing down the big bucks as a doctor or a software engineer. Instead, I was happily (even if not necessarily gainfully) employed as a pastor.

When we first got married, my monthly take-home pay was right at $2,100. And even at my “peak earning” years, I was bringing home less than $3,000 per month (for a family of four). So, yeah, it was essential for Kendall and me to learn how to live on a low income.

Thriving on a Low Income

But here’s the thing. I didn’t just want us to survive on a low income. I wanted us to thrive.

I was determined that my income level would never keep us from enjoying our life to the fullest. So I went crazy trying to learn everything I could about how to live on a low income without depriving yourself of things that bring you joy.

And guess what? The strategies I share below worked for us. During my seven years as a pastor, we were able to enjoy frequent date nights, buy our first home, save for retirement, and take several vacations.

Did it take a lot of hard work? Absolutely. But I can honestly say that we never once felt deprived or like we were missing out on life.

So how did we do it? I can tell you that it wasn’t by cutting lattes out of our life completely or never eating out. No, it really boiled down to just making a few smart decisions.

7 Tips to Live on a Low Income (Without Feeling Deprived)

If you’re trying to live on a low income, I know it can be tough. But I also know from experience that you can do it! Here are seven strategies that worked for us.

1. Build Up an Emergency Fund.

An emergency fund is important for everyone to have. But it’s especially important when you have a lower income. You simply don’t have as much margin for error.

If you’re bringing in a hefty income, you may have enough wiggle room in your monthly budget to deal with unexpected emergencies. We didn’t. If we hadn’t built up an emergency fund, we would have needed to use credit cards or other forms of debt to cover things like major repairs or medical events.

In our case, we had an emergency fund of three to six months of expenses. But how do you build up an emergency fund of that size when you’re on a super tight budget? In the next point, I’ll share some ideas that worked for us.

2. Handle “Extra” Money Wisely.

When you’re trying to live on a low income, you have to be incredibly judicious with how you spend any financial windfalls that come your way.

For example, we received a few thousand dollars in wedding gift money. We could have used that cash to really live it up on our honeymoon. But instead, we left our honeymoon plans unchanged and used that money to start our nest egg. That immediately gave us breathing room to deal with until we were able to pad our emergency fund even further.

Extra Checks, Bonuses, and Refunds

I mentioned in the intro that when we first got married, my income was right around $2,100 per month. So we based our monthly budget on that income number. But there were several months (for various reasons) that we’d have more money come in than what we had set as our baseline.

For example, every four months I’d get a fifth paycheck. Instead of blowing that extra check, we’d always put it in the bank. We also usually received a refund from our tax return which we would save as well.

Second Jobs and Side Hustles

I already mentioned that we’ve lived on one income for the majority of our marriage. But there were two short periods where Kendall worked.

During our 2nd year of marriage, she worked as an art teacher and daycare worker at a local school.  And during my last year as pastor, she helped to manage my parent’s Airbnb.

Related: The 3 Biggest Pros and Cons of Airbnb Hosting

And here’s the great thing. Since we had already grown accustomed to living on my income, we didn’t change our standard of living during those times when Kendall was working.

So during her first working stint, we were able to save every penny of her income towards the down payment on our first home. And we were able to take her Airbnb income to add several thousand dollars to our emergency fund in preparation for my launching out as a full-time freelance writer.

So by saving my extra checks, our tax refunds, and any income that Kendall brought in, we were able to build more financial margin into our lives over time. That helped keep financial stress out of our marriage.

And once we were happy with our emergency fund, we were able to save our “extra” money towards big purchases that were on our bucket list.

3. Keep Housing and Car Expenses Low.

Ok, so in my opinion, this is the most important tip on this list.

Any number of personal finance blogs will tell you that the key to your financial success is to reduce (or eliminate) a minor expense like dining out or cable TV. And, of course, the Latte Factor will tell you that cutting out lattes will solve all your financial woes.

And let me just say that I’m all for exercising restraint and making frugal choices in every area of life. But what drives me crazy is that not enough people are talking about the two expenses that have the potential to really move the needle for you financially. And that’s your housing and car expenses.

If you cut out cable or lattes, you may be able to save $30 to $120 each month. But if you buy a house that’s $50,000 less expensive, that will generally reduce your mortgage by $300.

Boom! Just being smart about that one expense could make three to ten times more of a difference in your finances than stressing about the brand of ketchup that you buy.

And the same goes for transportation. By purchasing a $5,000 car instead of a $30,000 car, your monthly payment would drop by hundreds of dollars. Or you may be able to pay cash and eliminate a car payment from your life altogether.

How Much of My Monthly Income Should Go Towards Home and Car?

In my opinion, you should try to keep your home and car expenses at or below 50% of your monthly take-home pay. So if you bring in $3,000 per month, you’ll want to keep your car and house payments below $1,500 combined.

By following that rule, you’ll have a full 50% of your income to devote to everything else. And that will be a great feeling. But once you cross the 50% threshold, you can start to feel house and car poor. And that can lead to financial stress and anxiety.

How We Kept Our Housing and Car Expenses Low

In our case, we’ve never had a car payment. We were both given old family cars from our parents when we were teens that we brought with us into our marriage. We still use Kendall’s 2004 Ford Escape today. Four years ago, I bought a 2000 Ford Escort for $1,500. Yep, you read that right 😊.

Related: 2019 First-Time Car Buyer Guide

As far as housing goes, we shopped and shopped for our first apartment. Finally, we found a one-bedroom place for $569 per month.  When we were ready to buy a home, we also shopped endlessly, until we got an amazing deal on a three-bedroom home for $92,000.

Related: How to Buy Your First Home the Smart Way

Our mortgage payment was $595 (it’s since gone up a bit into the low $600s).

So throughout our marriage, our monthly car and home expenses have never risen above 30% of our take-home pay.

I can’t express enough how much I believe this is the key to never feeling deprived when you live on a low income. When you have 70% of your income free to spend on food, utilities, entertainment, and everything else, you’ll be surprised to see how many things you can suddenly afford.

4. Comparison Shop Every Major Monthly Bill.

People will spend hours each week scouring coupons to save 50 cents on cereal or a dollar on produce. And I’m cool with that. We use grocery hacks too. But for some reason, many of us will never spend an hour every 6 months or so to compare car insurance rates.

And I find that strange. After all, one or two phone calls could save you $50 to $100 a month just like that. That seems like a pretty good return on time. Why wouldn’t you want to do that?

Related: How to Save on Car Insurance Under Age 25

While we’ve always tried to be frugal with things like groceries and out-to-eat, we’ve paid extra attention to our monthly bills like insurance, cable, internet, and phone.

Every year my internet provider starts to raise our bill after our contract ends.  So every year I call to say I want to cancel service, to which they promptly offer me a special discount on a 1-year contract (that just happens to be the same price as I was paying before).

Do I enjoy the process? No. But it’s only an hour or less of my time once per year. When you add up the amount of money I save per year by doing the whole “I’m canceling” thing, I’m making like hundreds of dollars per hour on that phone call. And I’m cool with that.

Oh, I’m also kind of a huge “Don’t ever pay full price for cable” nerd. Read my 15 Best Alternatives to Cable TV guide.

5. Avoid Credit Card Debt.

I’m going to make this one pretty simple for you. In order to live on a low income without feeling stressed or resentful towards your job, it’s imperative that you don’t pay bucket loads of interest on everything that you purchase. On a lower income, you simply don’t have any wiggle room to be throwing money down the toilet like that.

All high-interest debt (7% or above) can be a problem, but especially credit card debt. That’s because car loans and mortgages typically use simple interest formulas. But credit cards use compound interest formulas. In other words, your interest is added to your principal on a daily basis.

So with credit cards, you pay interest on your interest.

Plus, the average credit card interest rate is 15%. Remember, that’s the average. But credit cards often charge over 20% in APR. You don’t want any part of that.

Now am I saying that I think it’s wrong to use credit cards? No, as I’ll talk about under point #7, Kendall and I have long used credit cards to help us score free travel. But we’ve never paid a cent of interest. And that played a huge role in being able to win with money without huge incomes.

Related: Should Young People Use Credit Cards?

6. Create Sinking Funds for Irregular Expenses.

Early on in our marriage, we found that certain expenses would bust our budget on a regular basis. These wouldn’t be things like groceries or utilities. Instead, it would be irregular expenses like car repairs, gifts, clothing, vacations, etc.

It just seemed like every single month we had some “unexpected” expense. But the more we thought about it, the more we realized that none of these expenses were really “unexpected.” I mean Christmas arrives at the same time every year, as so do the birthdays for family members. And it’s a fact of life that cars will break down and need to be repaired.

So we started saving for these irregulars expenses each month. Some people would call this creating “sinking funds.” In our case, we just use Mint to keep track of our sinking funds. But you could also create separate savings accounts for each irregular expense. Or you could take out the actual cash for each category and put it in designated envelopes.

Do whatever works for you. But don’t forget non-monthly expenses or they’ll eat you alive. Learn more about how we save for the 5 Biggest Budget Busters.

7. Travel Hack.

If you want to know how to happily live on a low income, you’re going to need to get smart about travel. Why? Because it can be crazy expensive. For a family of four to take a week-long vacation, the hotel alone could easily cost you $700 to $1,000. If you fly, that could add another $500 to $1,000.

And then you have to consider food, attractions, and possibly paying for a rental car. It’s really hard to save that much money for a vacation…especially if you’re saving for an emergency fund or putting money away in sinking funds, plus saving a little each month for retirement.

But being able to take one or two vacations a year was important to Kendall and me. So I was determined to figure out a way to make it happen. And that was when I was first exposed to “travel hacking” with credit cards. If you’ve never heard of it before, the idea is to earn sign-up bonuses on credit cards that can be converted into free hotel stays, flights, or other travel freebies.

That was over 5 years ago and we’ve traveled virtually free ever since.  As I mentioned earlier, you need to be very careful about avoiding interest charges if you use credit cards. But if you pay your statement balance off every month, credit card hacking is a great way to reduce your travel cost!


You’ll notice that this guide focused very little on how to increase your income. And that was on purpose.

I’m all for side hustling or starting a business. But if you’re in ministry, teaching, or public service, you may genuinely love your job. And you may have no interest in starting something new. Instead, you may just want someone to give you hope that you can keep the job that you’re passionate about while still living a full life.

My goal for this article was to give you that hope. If you’d like to learn more about how Kendall and I were able to joyfully live on a low income, feel free to leave questions in the comments below.

About the author 

Clint Proctor

Hi, I'm Clint! I love writing about everything personal finance. In addition to this site, my work has been featured on several major publications including Business Insider, Forbes, Credit Karma, and U.S. News and World Report. My hope is that you'll be able to find plenty of helpful information and inspiration on this site to help you reach your financial goals. Thanks for visiting!

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  1. Loved this Clint. If all could take this and do it it would be great! Your article is so explanatory and will be a benefit to others like it is for you and Kendall. What an example to take after.
    Love you.

  2. Amazing article! I watched you live this article and the we have too! Every word is true and I wish every young couple would read and heed this!

    1. Great question. I loved my work at the church and I’m still heavily involved on a volunteer basis. I still do many of the things I did before…but now I just don’t get paid for it 🙂 Thanks for reading!

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