by Tara Blaine

How to Budget with No (or Low) Income

If you find yourself with diminished income (or none at all), you’re not alone. A sudden reduction in cash flow is stressful—these tools and tips can help you get a handle on your finances and feel more in control of managing your money.
No Income Budgeting

Let’s face it: budgeting can seem intimidating no matter what your financial circumstances are—especially when you have no income! If that’s the case for you right now, you’re far from alone; tons of people have seen their income dry up recently. Trying to start a budget with no money coming in can make you feel like you have no control—but there are many things you can do to get back in the driver’s seat!

Almost everyone finds themselves in a no-income situation from time to time. It’s nothing to be embarrassed about—we’ve all been there! Plenty of situations can leave you with a low income, or even zero cash flow:

  • You’re out of work: laid off, left your job, furloughed, or your company closed down
  • You’re in a predictable gap between jobs, like seasonal work or the end of a contract
  • You’re on unpaid or reduced-pay leave, like parental or medical leave
  • You’ve just graduated and don’t have a job lined up yet

The anxiety of an income gap is real: it’s scary to wonder how you’ll pay the bills this month, and the fear of becoming trapped in a low income situation can be overwhelming. (Business Insider has an insightful article on that struggle if you want to dig into the larger systemic issues that drive the cycle of poverty.)

The key to budgeting with no income is having a plan that works for you—one that makes you feel confident, empowered, and ready to overcome challenges. Read on for tips to help you dig into your expenses, sort out what’s really essential, and get a handle on your finances while you’re in a no-income or low-income circumstance.

Check in with yourself

A period of low income can be really stressful—that’s just human nature! Knowing that your budget is going to have a lot of line items you can’t fund right away can make you feel like just giving up on the whole thing—but that’s exactly what leads to a lack of money management that makes your situation even less ideal. Take a moment to remind yourself that you are not alone, this is temporary, and you have the resilience to handle this. It can help to visualize times when you’ve successfully worked through a big challenge and jot down what strategies have worked for you in the past. This is the time to take a deep breath and say “I got this.”

Sort out your spending

Take a look at where your money is going. How much are you spending, what are you spending it on, and where can you trim down your essential expenses?

List out current expenses

Break out the bank statements! Look through your bank account and any credit card statements over the last few months. List out everything you’ve spent money on and group those expenses into categories (like monthly bills, food, entertainment, shopping—whatever makes sense to you). Make sure you track down all those sneaky auto-debits, and don’t forget those once-in-a-while bills like car maintenance!

Remember, the best way to make a plan is to know as much as you can before you even start.

Decide what’s essential

Now that you’ve got all your expenses laid out, it’s time to decide what’s essential and what’s optional. There’s no right or wrong answer here! You decide what’s necessary for you.

Rent is often an essential expense, but maybe you have the option to move in with a family member for a while. That online yoga subscription might be a must-have if you use movement to manage a health condition or if it helps keep your spirits up. Ordering out sometimes might be crucial if cooking is a challenge. So work your way down the expense list you made, and decide what you truly need to live every month—and what you could cut or reduce for a while.

Identify the optional

A cut to your income will inevitably mean some cuts to your expenses—so you’ll need to make some tough decisions. Take a look at everything you’ve spent money on over the last few months and ask yourself what’s a need and what’s actually optional. Some things may feel easy to let go of, while others may sting. So remember that when you cut those expenses from your budget, you’re saying “not now” instead of “not ever.”

Look for savings

Now that you know what’s essential for your life, it’s time to think about where you can trim costs and still meet your basic needs.

  • Lower your utility costs. You can save by lowering your consumption, getting electronic statements, using LED lights and low-flow showerheads, and taking advantage of the cost averaging that some utility companies offer to avoid big seasonal bills.
  • Trim your phone bill. Look into bundled services, shared plans, competitors with lower prices. You might even consider if you could get by with a cheap flip phone for a while if that works for your life.
  • Corral car insurance payments. If you’ve been with the same company for a long time, shop around to see if you could be saving money! You can also bundle your policies or see if your insurance company offers other ways to save.
  • Audit your streaming services. Netflix, Hulu, and Spotify, oh my! Take a look at what you’re paying for and look for spots to trim (here are some tips on doing that).
  • Defer your debts? You may have the option to defer some debt payments, like student loans. Consider this carefully, because you’ll likely end up paying more in the long run! Check with your lender to see what your options are.
  • See how you’re already saving. In between jobs? You’ll need less money for gas or bus fare. Staying home more? Maybe childcare costs have gone down. By looking for the ways your situation has you spending less in certain areas, you can reallocate that money to other immediate needs.

As you’re trimming, be realistic about what you need to be a functioning human. Everyone needs space in their life for fun and joy and relaxation—and it doesn’t have to cost a lot to have fun on a budget.

If you feel guilty for spending a few bucks on fun, remember that a small amount of planned spending, when feasible, can help you avoid impulse spending and stay on track. Learn more about how to live within your means here!

Gather your resources

While you don’t have a reliable stream of income, you may have resources you can draw on. Raid those penny jars and shake out the couch cushions—let’s get it all out there! Here are some resources you might be able to tap:

Final paycheck and severance

  • If you’ve left a job, make sure you got your final paycheck and that it’s accurate, including severance, if any.
  • If your employer pays out for unused vacation days, be sure you get what you’re owed.

Benefits and reimbursements

  • Do you have benefits from your former employer that apply to your situation, like short-term disability or FMLA?
  • Find out how long your health insurance coverage will last (if you had employer-provided insurance) and schedule any necessary medical appointments before it ends.
  • Make sure you use any money you have in FSA or HSA accounts.
  • Did you have any business expenses your employer should reimburse? Gather those receipts and submit them ASAP.

Government funding

  • Are you owed a tax refund? File your taxes as early as possible so you can get paid!
  • If you’ve been laid off, remember that employers pay unemployment insurance taxes for this very reason. So if you qualify for unemployment, file for it!
  • There’s a social safety net for a reason—and there’s no shame in using it to get through a rough patch. That’s exactly why it exists! There are many government assistance programs for housing, food, healthcare and more. Find out what’s available—the 211 website and Department of Health and Human Services are a couple good places to start.

Savings

  • Take a look at what you’ve got in your bank accounts, CDs, flexible/health savings accounts, and other assets (or in your sock drawer) to see what you’ve got to work with.
  • Have you been saving up for a rainy day? It’s raining! If you have an emergency fund, this is the time to dip into it.

Side hustles

  • Consider the possibility of getting a short-term side gig to help you bridge the gap to your next job. These “bridge opportunities” can take many forms—selling clothes you no longer want online, picking up a side hustle (like a food-delivery gig), or doing some freelance work in your field. Once you have some money in, make some small adjustments to account for your new, variable income.

Build your no-income budget

Now that you have a solid picture of your financial world, it’s time to make a budget. Here’s a budgeting guide to get you started!

A few tips for a better no-income budget:

  • Estimate your expenses a little high and your resources a little low. To give yourself some breathing room, err on the side of caution when planning what you’ll spend on variable expenses (like groceries) and anticipating any possible incoming money (like a tax refund).
  • Add a “miscellaneous” category. It’s hard to leave room for unexpected expenses when you’re on a tight budget, but try to give yourself a little bit of wiggle room if possible. Life happens, and being ready for those expenses, as best you can, will lower your stress level and help you feel more in control.
  • Be cautious with credit. Credit cards may seem appealing to cover your bills, but you can end up with ballooning fees and interest charges—plus a hole of debt to climb out of later. As much as possible, make credit cards a last resort.
  • Make space for fun and self-care. There are lots of free or inexpensive ways to relax and have fun—and the less deprived you feel, the easier it will be to stay on track. You’ve got to live your life, and an inexpensive day trip to a state park or the occasional grocery store treat can make all the difference! Need a weekend movie binge? Sign up for a free trial of a streaming service (and mark your calendar so you remember to cancel it before you have to pay).

Stay on track

Sticking to your budget can be a challenge, especially when money’s extra tight! If you find yourself avoiding the entire endeavor, try these tips to make it easier.

  • Have an easy-to-use system. Whether you track your budgeting in a spreadsheet or use an app, find a system that works for you—and make it as automatic as possible. Anything you can do to make budgeting easier on yourself will make your plan more sustainable and reduce the mental and emotional toll of money stress. If you’re already using Simple, here’s how you can track your Expenses in your app.
  • Watch out for free trials! There’s a sneaky auto-debit coming if you miss the cancellation date, so make sure to set up a reminder to cancel on time.
  • Check your progress. Plan to check in weekly at first to see how you’re doing—make a money date with yourself! This is your opportunity to keep a close eye on how your budget is working in reality, learn what’s working and what’s not, and make adjustments as you go.
  • Celebrate the small wins. Stayed on budget for a whole week, despite some unexpected challenges? Nice work! Stuck with your no-takeout plan and ate some delicious home-cooked food? Well done! Take a moment to give yourself a high five for every little victory; plan a little fun to follow-up every budget session. And when you miss the mark, be gentle with yourself. Just try again next week! You don’t have to be perfect. Remember, this is a process.

You’ve taken the first step in figuring out how to budget with no income—you deserve kudos just for starting! While this can be a stressful time in your life, remember that it’s temporary. Zero income doesn’t have to mean zero control and confidence in your financial life; finding even small ways to feel on top of your money can make a big difference. Your courage, creativity, and resilience will get you through. You got this!

Learn more about managing money during times of uncertainty!
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