Budgeting Tips For Low-Income Earners

The “B” Word

When income is on the low-end, you have mouths to feed and bills that won’t be going anywhere anytime soon, budgeting can be very daunting. Let’s look at some really practical and feasible options for budgeting on a low-income.

Track Your Expenses

The first step when you are creating your budget is to gain an awareness of where your money goes. Similar to tracking your food when attempting to lose weight and make better eating choices- where do you start if you aren’t aware of the choices you’re making now? Commit to putting pen to paper (or fingertip to touchscreen) and track all of your expenses. Get detailed with it and know that having a clear starting point is going to make all the difference with your budget strategy.

Negotiate Your Bills

After beginning a log of your expenses, where can you negotiate a change for the better? Are you spending more than 30% of your total monthly income on housing? Have you sought out a more affordable cell phone plan for you and your family members? Have you noticed any wasted produce in your home that you could have avoided? These are all questions that will absolutely help you get to that peaceful easy feeling with finances.

Create an Emergency Fund

So you’ve tracked your expenses and negotiated your bills (and other costs of necessities) and you’d like to know where you can continue to chisel away at your lean budget. The next major step would be to strongly consider an emergency fund. It always seems that life happens right as we set new exciting goals, doesn’t it?

We say we’ll cut spending, meal-prep, and change our data plans, which are all fantastic things to do. But then we have to consider that we don’t live in a perfect world, and sometimes we get sick. Maybe we don’t have as much work opportunity as we did a month ago, or perhaps we get into a fender-bender. All of these things are simply wrenches thrown in our plans that have the potential to be devastating if we let them be.

However, creating an emergency fund is a wonderful way to lessen the blow. Consider setting a goal of at least $1,000 in an emergency fund. If you’re wanting to reach for the stars, increasing that emergency fund to 3-6 months of living expenses would be ideal. When you tackle that goal, you not only have $1,000 in the bank, you have peace of mind. This helps you continue to make more logical choices with your finances, instead of feeling like every decision you make has to do with choosing between one need and another.

Look for Ways to Earn More Income

If you can get creative with multiple streams of income and you have taken the above steps to creating a functional budget with tangible actions in place, you will win at finances. It sounds too simple because we aren’t discussing retirement, investments, loans, and other complex topics in the world of finance. But with regard to living within your means, making a good life for your family, and having peace that your needs will be met, simplicity is the key.

How can you reach your budget goals faster, and what stream of income can you generate to get there? That solution is usually in the form of your natural talents. Do you have a great temperament with dogs and enjoy being outdoors? Why not post an ad on Facebook to see if someone out there is too busy for their furry friends to get the exercise they need?

Do you bake? Are you crafty? Can you teach/tutor on a favorite subject of yours? There are a plethora of ways you can use your gifts and talents to make a little extra income and change the pace at which you knock your budget out of the park. Just think of the things you enjoy and ask yourself how that particular hobby/skill/knowledge can serve someone else.

The “B” word doesn’t have to be daunting for you and your family. If anything, it is the most powerful tool for you to have in your arsenal. Be encouraged that these practical steps are fool-proof and you have everything you need to start today.

*This article is opinion only and should not be taken as financial advice. The information is general and has not taken into account your objectives, financial situation, or needs. Check with a financial professional before making any decisions.