Managing a Low Income Budget
If you are on a low-income budget, you should have a family or household budget. Living on a specific budget may seem to be a bit constricting, but it will definitely work. Having a workable family budget is actually quite liberating and simple. It makes you in charge of your money, than allowing money to control your life.
Monitor Your Expenses – Before you can create a workable household budget you have to know where your money is going. Every member of the family should get a receipt for everything being purchased. Use these receipts to get a clear picture of how and where you spend funds. Create a personal finance tracker can help you monitor your expenditures; you might find some obvious expenses you can cut right away.
Write a Monthly Budget – Implement a workable budget is an important thing in a low-income family, to get control of the funds. Getting a consensus from every member of the family will help in leaving out budget items. Every member of the family is affected by the total family budget, so it should be a family “affair”. Having extra sets of eyes on your budget always helps if everyone has a say in creating the budget, they are more likely to buy into maintaining the budget.
Sufficient Budgeting – Making your household budget work is ensuring it is sufficient for your needs. Be sure to set an amount for each expense, i.e. food, bills, transport/gasoline, loans, etc… This is the time in the budgeting process where you may need to make some tough decisions, particularly if your income isn’t sufficient to meet all of your needs, much less your wants.
Work On Some Adjustments – If your budget exceeds your income, it is important to make some adjustments. You only have two options: cut your expenses or increase your income. Increasing your income might not be an option and cutting your expenses could take some time. You may need to find a cheaper home or apartment but breaking your lease is expensive, so you might be better off moving after your lease is up. You might need to sell your high – gasoline consumption car and buy a more fuel-efficient car.
Emergency Fund – Common wisdom says you need three to six months’ worth of living expenses saved up for a rainy day. When you live on a low income, every day is a rainy day, so saving that kind of money might seem unrealistic. But unexpected expenses come up in everyone’s lives — regardless of income level — and having a few hundred dollars in an emergency fund can meet those needs without wrecking your budget and forcing you into difficult choices. Noel suggests making your emergency fund a top priority, right after creating your budget.