She was used to living on a small income.

Literal

She [topic-は] little income [with-で] living [nominalizer-こと] [to-に] was-accustomed.

少ない収入で ('with a small income') uses the instrumental で to mark the means of living. 暮らす (くらす, 'to live, to make a living') focuses on livelihood rather than residence. The ~ことに慣れていた pattern shows she had already become accustomed — the adaptation was complete in the past.