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In a world of constant economic instability. One has to master the art of managing their finances as it appears to be the only way of survival. People are losing jobs every day and income keeps going low either by cuts or inflation and the past year hasn’t been easy with the global pandemic. A global recession is going on and we are yet to be out of it. The rate of low-income earners and low-income families are on the rise. Hence, the simple question is, what do you do if you find yourself on the low-income side? The simple answer to this question is to manage what you currently have until things eventually get better. And they will. The simplest way to get this done is through budgeting. Budgeting is the easiest way to be conscious of exactly what you earn and learn how to live below or according to your means. There are many budgeting tips out there and they are good. However, what you will be learning today are budgeting tips on a low income.
What is Budgeting?
Budgeting means planning how to spend your income. It is a process where you write down your estimated income and expenditure. If you are just starting to budget or want to give budgeting a try then you should know that budgeting is all about conscious spending. Where you work with your income and what it can afford you. You get to balance your income with your expenses.
How to make a budget for beginners
How to make a budget for beginners is pretty basic. Just what you need to know and consider as a budget for a start. So the first step to making a simple budget is:
- Write down your income. Note down every money you hope to earn by the end of the month.
- Then you write down your expenditures. Which are simply the things you plan on using your money for.
- Put a cost to all this expenditure, then you total it.
- If it’s balanced with your income then you are fine. If your expenditure supersedes your income then you need to make adjustments.
By creating a budget this simple you can be able to manage your resources well.
Tips for Budgeting on a Low Income
We’ve understood that budgeting is the easiest way to manage our finances at times like this and we’ve also had an understanding of what budgeting means. let’s look at what it means to budget with a low income and still get the most of your money. These budgeting tips are down to earth and everyone can relate or practice them right away regardless of how much your paycheck is.
Know what your Average Budget is
An average budget simply means what you end up spending every month. For instance you plus or minus one or two your monthly expenditure still revolves around a particular figure let’s say $3000. Remember you must make a budget and keep track of your expenditure for you to know what your average budget is.
When you know what your average budget is, then budgeting on a low budget can become easier for you.
Minimize your biggest expenses
Everyone’s biggest expenses are basic human needs. Food, water, house, energy, healthcare, and the list can go on. To be honest it is almost impossible to minimize these expenses. However, over time through the adoption of frugal living, living below means is possible. It will take extra discipline but will pay off at the end of the day.
You might have already paid for your rent but the time to renew it will definitely come around. You have to sit down and see if the price you are currently paying is within your average budget or not. Also, see if you can find a cheaper housing option. Remember this is only temporal, so that feel like you are lowering your living standards.
Learn how not to waste energy, be it water or electricity. Do simple things in the house that can lower energy bills every day. When it comes to food, wastage is one way we spend so much on food. Buy what you are going to consume not what you think you might consume and the amount of food going into the trash should be minimized.
As this tip might not be directly attached to budgeting tips. However, when you budget you know your income and expenses then you know where the larger portion of your income goes. Then you know how to minimize it if possible.
Save before Spending
Usually saving must not come first as much as it is important. Solving your basic need sounds like the practical thing to do first. However, we are working with earning a low income. Hence, save something first before you spend. Or you might end up getting overwhelmed by your needs you won’t have anything to save at the end of the day.
Make a Shopping List
If you made a budget and what you are to spend a month on groceries is $300. The only way you can achieve that is by making a list every time you go shopping.
A shopping list helps you not to overspend or end up buying what you need. This is one of the best budgeting tips on a low income because it is very practical and easy to implement.
Making a price comparison is essential for you to be able to budget on a low income. When you are working with limited resources you need to put some work into research. Compare product prices of goods you consume and find what price will suit your budget.
For instance, there are many cereal brands, however, you consume the most popular brand because it is presumed to taste better. But what you don’t know is this, that brand with a lesser price might be as good as the regular brand even though the price is lower. What you don’t understand is this, popularity (brand name) also affects the pricing of goods.
The only way to know is by trying out different brand products. You might just discover that a less expensive brand might serve you well and also have good quality.
Emergency funds are a must-have
Anything that can help you stick to your budget is always among the best budgeting tips for a low income. Keeping an emergency fund keeps you away from debts. One of the major benefits of budgeting is that it can help you pay off your debt and allow you to live debt-free.
Hence, an emergency fund is to be treated like other basic needs as it can literally save you from a situation.
If you lack the discipline of putting that money away by yourself. There are many options to help you save. Simply automate your savings. Give your bank the go-ahead to deduct a certain amount of money you approved from your income and deposit it into a savings account.
Make extra money if possible
We have clearly stated from the beginning that people are losing their jobs and paychecks are getting cut. This might make this budgeting tip impractical but the truth is making extra money is always the best option to help you live the life of your dreams.
It must not be a new job, it could be a small business giving that extra hundred boxes every now and then. This extra income can go a long way in solving a major problem or filling the gap in a need,
Is Frugal Living on one Income Possible?
The idea behind frugal living is to be able to manage your finances to the extent that you can live within or below your mean. Frugal living helps you be accountable, therefore it is a lifestyle anyone trying to have value for their income can adopt.
So yes frugal living on one income is possible. One income-earning is one of the reasons frugal living become so popular and is widely practised.
Final Thoughts on Budgeting on a Low Income
Budgeting on a low income is absolutely possible, you just need to be disciplined to achieve it and get the financial result you need. With the budgeting tips, you just got today making a budget even if it is new to you should be easy and achievable. You have to be in control of your income and survive such hard times the world is in today. And to do that you need to learn how to manage your finances and budgeting just made that easy.
If you do have any questions on budgeting with a low income or how to survive on one income. Please drop a comment.