The idea of living on a budget is rarely appealing. If you're a lady, you'd probably dread the thought of cutting back on shopping. As a man, trading in your cherished ride for a cheaper one may be an unwelcome thought. When things are tight financially, you're inclined to bemoan the nice things money can buy. Letting go of non-essentials becomes harder than you thought. And everything in life seems dreary. Surprisingly, thriving - and not just surviving - on a low-income budget is possible. With smart planning, you can learn to enjoy it too!
The idea of living on a budget is rarely appealing. If you're a lady, you'd probably dread the thought of cutting back on shopping. As a man, trading in your cherished ride for a cheaper one may be an unwelcome thought.
When things are tight financially, you're inclined to bemoan the nice things money can buy. Letting go of non-essentials becomes harder than you thought. And everything in life seems dreary.
Surprisingly, thriving - and not just surviving - on a low-income budget is possible. With smart planning, you can learn to enjoy it too!
1. Create a Practical Budget and Daily Expense Diary
Money gets wasted when expenses aren't being monitored. You end up spending on non-essentials without realizing it.
A practical budget helps to clearly identify your needs, wants, and savings.
Create an expense diary (or a spreadsheet) and note your net income first. Proceed with highlighting the fixed major expenditures (your needs): rent (or mortgage), food commodities, utility bills, medical insurance, domestic worker wages, tuition (school) fees, transportation costs (or fuel), loan repayments, etc.
Naturally, your needs would take up approximately 50% of your net income. The major expenditures are your basic must-haves. The essentials for a living; what you spend every month. The only exception is your medical insurance and tuition fees, which are basic needs you pay for annually.
On a separate column, outline secondary expenses such as clothing, car insurance, household maintenance, internet subscription, family vacation, entertainment and recreation, and other personal effects.
Secondary expenses are classified as wants because you can skip a month without them. Commit 30% of your income to these discretionary expenses.
The remaining 20% of your income can be for emergency funds and savings. Consider investing your savings and emergency funds in a fixed deposit account. Withdrawal from such accounts is restricted, which fosters discipline when accessing your ‘rainy-day’ funds.
A smart tip for keeping within your budget is to monitor your daily expenditure. Keep each purchase receipt. File all purchase receipts and categorize them as needs or wants. At the end of each week, reconcile your receipts against the budget.
Make necessary adjustments each month whenever you notice an imbalance or shift in your needs versus wants.
2. Cut Back On Non-Essential Entertainment or Recreation
Do you really need a subscription to Cable TV with 50 channels? Is it necessary to have a drink with friends at the bar every Friday? Can you have a home-cooked meal instead of always ordering takeout on the weekends?
Entertainment and recreation are necessary for a fulfilling life. However, thriving on a low-income budget means prioritizing and being smart about such costly activities.
You need to stay informed of current events, so the TV has its value. But keeping a monthly subscription of 50 channels you probably will never watch isn't smart. And speaking of smart, how about that flat-screen Smart TV taking up half the space on your wall?
You can substitute with a smaller digital flat-screen. Quality entertainment is still possible without indulging in luxury electronics.
A drink at the local bar every Friday to catch up with friends is costly, not to mention unnecessary. A survey of millennials below the age of 35 years old proved how 77% overspend during nights out with friends.
There's also the tendency to be careless with personal belongings when binge drinking at the club. In the same survey, 27% admitted smashing expensive phones (probably during bar fights) and 19% regretted losing their pricey jewelry.
It’s advisable to go on outings with friends occasionally. But take care to only spend within your budget. Determine beforehand how much you intend to spend, and carry cash if possible. Leave your debit or credit card at home. It helps if you know the rates of where you'll dine, and plan accordingly.
Cutting back on luxuries is smart, but don't deprive yourself too much. Remember to indulge a bit. Spoil yourself, you deserve it. It's important to spend some money on "your little piece of vanity"; something to help you enjoy the fruits of your hard-earned cash.
Treat yourself to a day at the spa or salon. Upgrade to that phone you've been saving for. Add a piece of fancy clothing in your wardrobe. Switch to faster internet service and spend a weekend on Netflix.
Your goal is to enjoy thriving on a low-income budget - not just surviving.
3. Seek Out Bargains and Re-Evaluate Your Long-Term Choices
A penny saved is a penny earned. Be a smart shopper by seeking out bargains when making regular purchases.
It calls for effort because it usually involves comparing numerous prices or even shopping in stores away from your neighborhood.
Search online for the best deals being offered in your locality. Take advantage of apps tailored to help you get discounts on your purchases. Most supermarkets have a mobile app to inform customers of the latest promotions and deals.
Use discount codes (or coupons) when paying for purchases. Alternatively, become a registered shopper and redeem your customer loyalty points during checkout.
Consider buying directly from wholesale stores. You can save money by buying some non-perishable groceries in bulk.
Re-evaluate your choices in long-term expenses such as housing, vehicles, and loans. Weigh the cost of living in your current neighborhood or the amount you spend monthly on rent. Consider moving to a smaller house or cheaper neighborhood if possible.
Trade-in your high-maintenance vehicle for a low-cost alternative. A smart tip for thriving on your low-income budget is to use public transportation instead. Leave the private car for emergency situations.
Resist the temptation to take out loans when contemplating major purchases. Avoid living in debt when you have a low income. Repayment with interest may derail your financial management plans. Instead, form a habit of saving to accumulate funds for big purchases.
Many workers are now experiencing pay cuts. A salary reduction means having to survive on a lower income. Such an unexpected change can send you into a financial tailspin.
However, take control by creating an expense budget and monitoring your daily expenses. Cut back on any non-essential entertainment and recreation, but remember to spoil yourself occasionally. Always be on the lookout for bargains and make smart, proactive choices for long-term expenses.
By applying these smart tips, you'll not only learn to survive. You'll actually enjoy thriving on a low-income budget.
The author is a freelance article writer, blogger, and content creator who's passionate about turning ideas into high value-value content.
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