Living on a low income can be hard. However, there is hope. If you can budget on a low income and make what money you do have work for you. Then it is possible to get more out of your money.
To help get you started this guide will explain some simple ways to effectively budget when you are on a low income.
Create A Realistic Budget
The first step to budgeting is to create a budget! Don’t just look at your bank balance. You need to sit down and work out every expense down to the last cent.
Once you know your exact expenses, then you can create a realistic budget.
When creating a tight budget due to a low income you must prioritize living expenses like housing and food. After that concentrate on using as much as you can to pay off debt.
If there is money left after paying expenses and debts, try to put some into savings and leave yourself something to spend on yourself.
Budgeting is much easier to do these days as there are many great budgeting tools online. Many of them give options of tracking spending which helps you cut out wasteful spending!
Have Financial Goals
It is essential to have a realistic budget. However, to help stick to the budget you need to set some goals. Having realistic financial goals will give you the reason you need to stick to the budget.
Goals might include paying off debt quicker and being able to save more.
Long-term goals might be owning a home, traveling, or giving more to charity.
Creating a realistic budget along with financial goals is a great way of sticking to your plan.
How to Cut Expenses
A big part of budgeting is understanding where your money goes and deciding where you want it to go. There are lots of ways to save money on expenses but here are some suggestions to get you started.
First, check all the subscriptions you have. This could be for things like the gym, Netflix, or magazines. Ask yourself if you really need them? Cancel any subscriptions you no longer need. Doing this can help save quite a bit of money over a year.
Next, check all your bills and see if you could save by switching to another provider. Insurance, energy, cable, and anything else you pay for could possibly be cheaper elsewhere. If you are under contract, make sure to check at renewal if you can save by switching.
Another tip for saving money is to start using the 30-day rule. If you want to buy something, then put the money aside for 30-days. At the end of the time if you still want the item you can get it. Often you will no longer want it and can save the money instead!
A final tip to save money is to try to pay off high-interest debts first. Half of all Americans have credit card debt and 60% only pay the minimum payment each month. Paying off debt in this way should save money in the long run as high-interest debt will grow fast otherwise. If you can see if debts can be switched to lower interest plans. Some credit cards offer 0% interest when transferring a balance. Look for these deals and use them when you can.
Increase Your Income
When you are on a low-income budget, then earning more money can be a great way to boost that budget. Many people these days start a side hustle and thanks to the internet it has never been easier!
In case you don’t know a side hustle is a way of earning extra money on top of your normal income.
Many side hustles can be started for free with just a computer and an internet connection. Ideas include writing, blogging, software development, transcription, and data entry.
If you don’t fancy sitting on a computer you could look into other ideas like driving for Uber, working as a delivery driver, or looking for a part-time job in your area.
There are hundreds of ways to earn money either online or offline. Have a think about your skills, how much time you have available, and what you would like to do. Search online for ideas and start earning that extra money!
The extra cash could be used to pay off debt quicker. build an emergency fund, or for fun spending.
Review Your Budget Regularly
It’s not enough to just create a budget and stick to it. You must review it regularly as well. A regular review is important as overtime expenses change. You might have more or less available money. Especially if you are paying debt down, then you should see an increase in available spending money.
Once the debt is gone you can then start allocating more money to savings, investments, and fun spending.
Checking your budget often will also help catch any spending that has crept in that you hadn’t planned for. Catching it early means you can put a stop to it before it becomes a bad habit!
Reviewing your budget weekly is ideal as it will help you be more aware of your spending and build better habits.
Final Thoughts
If you need to budget on a low income, then it can be hard at first. However, if you follow this advice, create a realistic budget, and stick to it then you can achieve your financial goals.
Author Bio
Hey, I’m Chris. I have a degree in Business Economics from the University of Liverpool, own a small fast food business and run LifeUpswing.com. I will help you to make money, save money, and think about money in a way that will give you back your freedom.
