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Budgeting on a Low Income

Budgeting on a Low Income Posted on December 6, 2011Leave a comment

There are quite a few people who stress over how they’re going to pay the bills or even their mortgage payment each month. In a majority of situations like this, money problems arise due to a lack of budgeting. A better financial standing is obtainable, even for those that depend on low levels of income. Below are essential steps that everyone should consider, even those that depend on low income levels.

  1. Consider other income sources – When the current budget is impossible to balance, it would be a good idea to consider other sources of income. If earning overtime is not an option, it may be time to look at a job that pays more or locate a second job.
  1. Request extensions – If the mortgage payment and timing of all the household bills have hit all at once, it is possible to ask for extensions. Most all utility companies will work with existing customers on the balance owed with an extension. By extending the date these bills are due, it makes it much easier to pay rent and mortgage payments on time.
  1. Obtain stability before saving – While every person would like to stash money in a savings account, this is not feasible in all situations. It is more important to first create a workable budget that will successfully decrease debt. Once debt begins to decrease, then it’s time to start focusing on savings.
  1. Negotiate rates on credit cards whenever possible – Most people are unaware that some credit card companies will negotiate a lower interest rate, especially for customers with good credit. This is a move that can make it much easier to plan a budget that will work. When companies refuse to negotiate lower rates, switching balances to credit cards with lower rates is also a wise decision.
  1. Bill priority – Prioritizing monthly bills is an extremely important element required for successful budgeting. Bills that must be paid immediately should be listed on the budget first. Payment schedules for all other bills can then be planned according to remaining paydays.
  1. Review spending habits – Reviewing a history of spending can be very helpful when budgeting on a low income. This makes it easy for a person to know exactly where adjustments may need to be made.
  1. Eliminate expenses that are not necessary – When excess spending is noticed in specific areas, it is important to eliminate these expenses. The extra money that is saved can then be used towards bills, debts or through the month so money isn’t so tight.
  1. Journal spending – Journaling can be a huge benefit to those that have trouble sticking to a budget. This is done by simply making notes of every dime that is spent all throughout the month. This is a step that is often easier when money spent is broken down into categories.
  1. Spending adjustments – Many people find after journaling their spending for once month that minor adjustments need to be made to their budget. It is important to make sure basics are included.

By following these simple steps, people who are on the smallest of incomes will soon find that budgeting is possible and one of the best ways to keep finances on track.

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