Another way to improve your current machine without breaking the bank is to install a newer hard drive. More hard drive space will keep you from running out of room for video and image files or newer applications, which are only getting larger and larger. Internal hard drives can have hundreds of gigabytes or even a few terabytes these days. They start at about $50 (or even lower) and go into the hundreds, so it's possible to vastly improve the amount of storage space for a reasonable price. Most new hard drives also allow for faster data retrieval than their older counterparts, so upgrading could improve application performance.
As you might expect, you must research what type of hard drive your motherboard supports and purchase accordingly. These are usually Integrated Drive Electronics (IDE) or Serial Advanced Technology Attachment (SATA) drives. Once you have a compatible hard drive, you can either replace your old drive entirely, or, if your computer has an extra slot available, add the new one and keep the old one for extra storage. You will also need to copy your data from the old drive to the new one. If you're able to keep both drives in your machine, or if you buy a special USB adapter to attach your computer to the old hard drive, there are various software tools available to directly clone one drive to another. Other software tools allow you to save an image of your original drive onto a second machine, an external hard drive or multiple disks, allowing you to move the image to the new drive after installation. Software can be found online, but might also come with your newly purchased hard drive.
One possibility you might want to consider is upgrading from a traditional hard drive to a solid-state drive (SSD). They don't tend to have as much storage space as hard drives, and they are more expensive, but they allow for much faster data retrieval, resulting in better application performance. With all the cloud storage and music and video streaming options we have today, most people could easily forgo some of their storage space in favor of performance benefits.