The economic crisis has left plenty of people reeling. Up to today, a lot of people are still trying to budget their money just to meet their basic needs. If you need a low income budget, here’s how you can create one that is tailored to your particular needs and income.
- Determine your income. The first step is to determine exactly where you get your money. Do this by listing all of the sources of income, including your investments and the stocks where you may be receiving some earnings. If you are creating a low income budget for the entire family, you should also include the income of the other earners in the family, and the other people who regularly contribute to the family budget.
- Determine your average expenses. Once you know how much cash gets into the household coffers each month, the next step is to determine where you actually spend your money. Do this by taking a notebook and listing down all of your daily expenses for an entire month. Include all the expenses, starting from the rent, the bills, the utilities, transportation and fare expenses, food expenses, and whatever else you spend your money on.
- List down the basic necessities. From the complete list of expenses, you should start identifying the items that are unnecessary. For example, if you spend a lot of money on books and magazines, list this down. If you spend a lot of money from eating outside, list this down. If you spend a lot of money on hair care or massages and spa session, or from the gym, also list this down. Then, look for alternatives. If you like eating at the local Italian bistro, for instance, consider buying your own pasta and making your own Italian food. If you spend a lot of money on the gym, consider buying your own weight set. If you spend a lot of time in cafes, consider buying your own coffee maker and buying your own favorite coffee blend.
- Interest rates. Next, try reducing the cost of your loans. A lot of people today have debts in one way or the other. A great way to reduce your debts is by negotiating with your creditors about the interest rate that you are paying. A lot of people think that the interest rates are set in stone, and are non-negotiable. In reality, however, you can actually talk to your creditor and explain your circumstances. Usually, a good creditor will allow you to tweak the interest rate a bit, which can help you reduce the interest you pay in the long run.
- Percentages. Finally, try creating percentages for the budget. For example, instead of simply allotting a specific sum of money for each type of expense, consider using percentages instead. You can set 20 percent for savings, 20 percent for bills and utilities, 40 percent for food, 20 percent for rent, et cetera.
After you have made your low income budget, make sure that you stick to it. With these steps, you should be able to create a low income budget that you can live with.