It seemed as if I became even more broke after I got my first job. I was an intern in a prestigious insurance firm but only getting a stipend for my lunch and commute.

It was one heck of a commute. Enter debt for necessities.

The only advantage I had was that I was living with my aunt who did not charge me rent but I had to pitch in on things like groceries.

All this while, I was supposed to be saving up for my own apartment.

Then I discovered budgeting.  Seeing the actual numbers before my eyes helped me to wake up and see that I was getting deeper in debt.

I started freelance writing in order to have some runway. I think if I had never made a budget, I may never have actually gotten a real view of what was happening to me financially. 

Budgeting is making a plan for your money. It is having a clear view of how much you earn, spend and owe.

It helps to give you a clear view of where you are financially. Instead of wondering where your money is going, budgeting enables you to tell it where to go.

Budgeting can help you enjoy your life even when you are earning very little by relieving the stress that comes from never knowing where your money is going.

Budgeting is not only for the rich and comfortable. It is even more important right now when you are earning a low income. 
You will be surprised at how comfortably you can live when you reduce impulsive spending and cut down on unnecessary expenses.

Here is a 5 Step Effective Budgeting plan for a low income earner:


First you need to get all your facts straight.

Get the data on your income, all your expenses, all your debts, taxes and any other category.

It is not enough to just do the math in your head. Actually write it down or type it out to have the bigger picture.  

In the first month or months that you begin budgeting, it will do you good to track all your spending.

Get down to the minutiae. No expense is too small to be put down. Record every dollar that comes in as well in form of salary, profit from your side hustle, gifts, paybacks etc. 

You are doing this to collect accurate information about how you are doing financially.

I personally use an app called iSavemoney. It is not the most popular or sophisticated app but it is easy for me to use.

It enables me to quickly key in every expense. Even when I buy coffee, because I have done it so many times, out of habit, I reach for my phone and input the cost to the App.

You do not have to keep doing this once you already understand where your money is going. 


Having tracked your spending for a week or a month, what do the numbers reveal.

In my case, I realized that although I took three buses instead of my car to cut on costs, I often spent all the money I saved on gas, buying instead of cooking my own food.

In the end, I was wasting almost as much as I was saving.

I also realized small things like I could not afford living to move out because my salary was too little to cover rent, commute and living expenses.
Look at the numbers and let them speak to you.

How much money is coming in? Is it more than money going out?

Are there unnecessary things you are still paying for like that gym membership. Is all your income going to Sallie Mae or rent? 


Using the data, you have assessed what needs to go and what needs to be prioritised. 
Ideally you want to reduce spending  and to increase debt repayments and savings especially if you are earning a low income.
On the adjustments that needs to be made is also thinking about ways in which you can increase your income.

When it comes to budgeting, you need to be realistic from the onset.

There are certain things that you cannot do without so do not try to skimp on them. In the long run, you will have to buy them and break your budget then feel so bad you will go overboard again and again.

Be practical. Trim out all the unnecessary expenses but account for every dollar that you will actually need to use.

Give yourself some leeway for unexpected events and also some wiggle room for fun. 

Prioritize paying all your bills, then paying off debt, then savings, then giving and a little fun.

Under savings, the first thing you should be saving towards is an emergency fund.


If you have read any of my other blogs you know I am a member of the focus on increasing your income instead of just making budget cuts squad and Ramit Sethi of I Will Teach You To Be Rich is our captain. 

If you are going to save money, attack your biggest bills. That is probably your rent.

Yes, rent can be negotiated.

You can also negotiate your cable (why do you still have cable), your phone plan, your gym membership and many other bills.

Learn the art of negotiation and you will earn back a few hundred dollars every month. 

The next thing you need to negotiate is your salary.

I wrote an entire article on salary negotiation and how it is possible for anyone.  Negotiating your salary will enable you  to make a higher income. 

Finally, you can increase your income by getting a higher-paying job or starting a profitable side hustle. 

For example, I started working as a freelance writer to make ends meet. Side hustling does not need to be hard.

Leverage skills you already have, invest in providing value for others and learn a few marketing basics.

To learn how to make extra income as a writer online click here


Debt is like a noose around your neck that gets tighter every moment.

Do not ignore it. Make sure you prioritize getting a repayment plan to deal with your student loans if you have them and to pay off all your credit card debt.

Your credit score is very important so please do not ruin it.

If you are just out of college and are struggling financially, this is not the time to get a new car and have big car payments.

Get your finances in order before you get deeper into debt.


 An emergency fund is amount of money you keep aside for a rainy day.

Put aside enough money for necessities for about three to four months. This will come in handy should you ever be out of work.

It took me about six months after I started working to build an emergency fund with three months worth of living expenses.

Often, I would spend my salary on living expenses and then saved the money I made freelancing to my emergency fund.

You can always dip into your emergency fund if your car breaks down, your roof begins to leak or something else happens.

Once you have spent money from your emergency fund, always work towards refunding the account.

Determine what is and what is not an emergency. Do not trick yourself into wasting this money.

After an emergency fund, you can continue saving and investing even with a low income.

I know that I have been able to improve my financial position even when I seemed to be making close to nothing.

In the position that you are in right now, the most important thing is to progressively clear your debt, repair your credit score if it has taken a hit and save some money to invest in yourself and your future.

You may not be able to save enough money to become a millionaire, but you can save a little money to invest in learning skills or starting a small business that will get you there.