How to Adjust Your Budget for a Lower Income

If you’re used to a certain salary, adjusting to a lower income may sound daunting. However, it’s possible to have a similar quality of life with less money and a little bit of planning. Whether you’re retiring, took a lower paying job, are assisting family members or something else entirely, we’ve compiled a list of six strategies to help you plan expenses and tweak your budget to fit your new income.


If You’re Retired

Retirement may not always mean you have the same income as before, or the ability to take on a part-time job.


1. Determine Your Baseline Expenses

If your income has been reduced, your old spending and saving plan may no longer be sustainable. The first step to living on a reduced income is setting a realistic budget. It’s important to live within your means, which may mean adjusting spending in all or most spending categories.

In any budget, there are a likely a few required expenses that you have to pay every month. Determining your baseline budget can help you decide if your expenses need to be further reduced. Consider any outstanding debt and other monthly payments, which may include housing, transportation, utilities and other necessities.


2. Look for Cheaper Alternatives to Everyday Expenses

Once you have an idea of your required expenses, you can figure out what spending categories have some leeway. From housing and transportation, to food, clothing, and entertainment, you can likely find ways to lower your spending on everyday needs. Though this may take some research, the long-term benefit to you is having more wiggle room in your budget. This list can help you get an idea of places where you can reduce costs:

Consider lowering your housing costs: While moving is not an easy task, reducing the biggest monthly expense can go a long way to help ease your budget. Or, you may want to rent out an additional room in your existing home to earn passive income each month.

Search for the lowest price online: Retailers compete with each other in order to drive sales. Before making a purchase, search for coupons, sales and promotions to find the lowest price available. Or, you can use online tools such as Honey, a free browser extension that automatically searches the web for potential promotional codes on any website.

Stay vigilant of seasonal discounts: Shopping during off-season months can also help you secure lower prices for everyday needs. Though it may take a bit of planning, you can find end-of-season deals on anything from clothing and household items to entertainment, technology and other goods.


3. Explore Public Aid and Government Assistance Programs

Depending on your specific application criteria, you may qualify for income- or age-related financial assistance. While such programs may depend on the area in which you live, it’s always a good idea to find out what’s available to you. You can head to the SpringFour benefit locator tool or visit to learn more about government benefits.


If Your Hours or Salary Have Been Reduced

While you should look into the first items on this list, you may also qualify for additional government benefits if your work situation has recently changed.


4. Explore Unemployment Benefits

In addition to the items listed earlier in this post, it’s a good idea to see if you qualify for unemployment benefits if you lost a job or experienced a loss in income. Though such financial assistance is meant to help people manage temporary periods of unemployment while they look for a new job, it can help you bridge the gap in income and get you back on your feet. The U.S. Department of Labor can help you determine if you’re eligible for unemployment insurance.


If You Have an Irregular Income 

Though an irregular income can make planning expenses more difficult, you may be able to help manage your budget with the following strategy.


5. Save Cash Windfalls for a Rainy Day

Whenever you find yourself with a little extra money in your pocket, whether from a bonus, side gig, tax return, overtime wages or something else, aim to put it in the bank for a rainy day. Saving extra money wherever you can is a good strategy to help pad your emergency fund and make it easier to manage periods of low cash flow in the future.

Though having an irregular revenue can make it more difficult to budget, you can use the average cost of your expenses over a longer period of time to create a new financial plan on a lower income. For instance, look over your expenses for the past several months roughly six months or so to build a general “budget forecast” in order to see where you may be able to cut down and reduce costs.


If You’re Financially Helping Family Members  

While it may not apply to all situations, financially supporting a family member can lead to tax-related savings.


6. Ensure That Your Tax Filing Status Is Accurate

Officially taking on a family member as a dependent can mean that your tax situation has changed when it comes to file taxes. In order to determine whether you can claim a family member or child as a dependent, visit this IRS tax guide.


The information in this article is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial, legal or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.

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