Living La Vida Broka?
How to Make a Budget
It may not always seem easy, but you can still live a healthy and content life while learning how to budget and watching your pennies! Embrace budgeting as an opportunity to get creative with what little resources you have.
With good decision-making skills, saving money from your salary and careful planning, having financial stability is more than possible – it is within reach for anyone who puts their mind to it!
Having a steady and high income is great, but it is not the only way you can stay afloat! If you are living on a lower income than most people, there are still plenty of ways to help stretch your budget so that you can achieve financial stability.
Check out these creative tips to save money without self-deprivation!
You will not believe how much of an impact cutting out just ONE expense from your lifestyle can have. I am going to save the best for last and reveal this one at the end.
The 24 Hour Rule
It is easy (too easy!) to go online and browse through Amazon at 2 a.m. and shop for new shoes, or head over to Bed Bath and Beyond and look for some cool holiday decor.
But if you ask yourself whether you need that top or those new decorations, can you confidently answer, yes? For example, let’s say you buy a new blender for $60, but you have only used it three times since you bought it, a year ago. That means that blender costs you approximately $20 per use.
It can be hard to tell what you really need and what you do not. I mean, you are certainly not buying something because you think you do not need it! Even though many times you don’t. So, how do you know anyways? Well, the closest thing you are going to get to a ‘magic 8 ball’ when it comes to shopping, is the 24-hour rule!
When you are thinking of making a purchase (especially if you have a habit of making bad ones or you are constantly buying items that you simply do not use) the “24-hour rule” is that invisible magic 8 ball that I want you to take shopping with you, every single time.
If you still desire the product after 24 hours, then the chances are it is something that you are really going to use. You will be surprised at how much less you are going to buy and how much more money you will be saving that can be put to better use. I do this all the time, and it never fails!
How to Budget Groceries
There is no shortage of restaurants that have extensive menus with tasty items on them. Not only are there commercial restaurants like McDonald’s, Subway, or Taco Bell, but there are local restaurants that specialize in unique flavors and dishes from all over the world. With this much choice, it is easier to get takeout than to make your own food at home. And while 10 to 20 dollars a day is not a big deal for a high-income family, that is not the case for low-income families.
With that in mind, it is time to put on an apron, sharpen your knives, and learn how to cook your own food. There are tons of tutorials and recipes online that can show you how to replicate your favorite takeout meals for a fraction of the cost.
Not only that, but it’ll be much healthier, and you may even get to a point where you enjoy the taste of your dish even more.
As an extra bonus, since you know exactly what ingredients you will need for your meals, you can make your grocery list extremely specific and only buy what you need, lowering the overall cost of your grocery bill. Learning to cook your own food is necessary to live on a low income. Check out my frugal living tips, they truly are life changing – but you have to follow them!
Ways to Avoid Debt
Most people know that debt is a dangerous thing to deal with when it comes to finances. Let’s say you want to buy a new car, but you do not have enough finances to get it, so you take out a loan.
This one debt may not be important, but let’s say that something happens to your car which needs to be repaired.
Unfortunately, since you have the loan to pay back, you do not have enough money to fix the car with cash.
So, you must get another loan. This debt cycle continues onwards and onwards, making it extremely difficult to live and have financial stability. It is important to avoid debt as much as possible on a low income. This will ensure that all the money you spend is indeed the money you have and that you are living within your means.
Reduce Transportation Costs
Transportation is the second largest expense that an average household must deal with. It is no surprise that cars are not cheap, and neither are the costs of using them.
Between loan payments, gas, insurance, general maintenance, and emergency fixes, it can be difficult to keep up with payments.
In fact, Credit Karma says that the average car costs about $568 a month. Which may be doable for people with higher incomes, but it can be a challenge for those with a lower income.
Well, a good start is to see if you can get rid of your car altogether. It can be much cheaper to walk, bike, or take local transit to get where you need to go.
However, if you do need to have a car for regular use, then consider getting a reliable used car. This way, you do not have to worry about high insurance costs or depreciation.
Also, with a good used car, you can get many years out of it if you are committed to regular maintenance.
To make the most of lowering your transportation costs, try to make multiple stops on a trip and avoid driving when you can. This will ensure you can continue to build wealth, even if you have a low income. Also check out my blog about how to save money at the gas pump. Some real good tips over there!
Spend Analysis
Picture this. You are opening your mobile banking app to make some bill payments. However, when you log into your account, you notice the amount in your checking account is low. At this point, you are wondering where it all went.
If you relate to this story, then you need to figure out where you are spending it. Creating a budget for your income and expenses is something that benefits both you whether you are low-income or high-income.
However, it is especially useful for low-income families. It is the only way to know how much you are spending every month and if you are living above your means.
Fortunately, it is extremely simple to create a budget.
First, start by figuring out your monthly income. If you have a variable income, such as someone self-employed, then figure out your average income over your business’ lifetime. Once that is done, add up your fixed monthly expenses.
These expenses are bill payments like mortgage, rent, car payments, insurance, phone bills, and any other expenses that stay the same every month. After you have figured out your fixed expenses, add up your variable expenses.
This could range from eating out to grocery shopping, gas payments, etc. Once you have figured out all your income and expenses, you will clearly see where most of your money is going and how to fix it.
By doing this, you can make it much easier to live on a super low income.
Lower Electricity Costs
Energy is one of the most used commodities of any household. Most of what we use in our homes is powered by electricity. So, it is only natural for energy to be one of those major expenses. A necessity for most of us!
With a low-income, high-energy costs can be seriously detrimental. But there are lots of little ways to lower your consumption, so you can continuously build wealth on a low income.
For instance, you could find out what time of day energy costs are the cheapest. During those times you can do your laundry, run your dishwasher, and use your thermostat.
With a little creativity and thought, you can drastically reduce your energy usage and pay much less for those bills.
Budget Activities
There are tons of fun activities that do not require much spending at all, but many people will often take the expensive route when hanging out with friends.
For example, a regular day out with friends could mean eating at a nearby restaurant, going shopping at the local mall, and grabbing a frozen yogurt.
While the outing may have been lots of fun, it can easily cost $100 per person or more, and that is not sustainable if you have a low income.
Instead, opt for fun activities that don’t require spending, such as going to the park to play Frisbee with friends, or having a picnic at a nearby wildlife conservation area. Or, if you like dinners, have you and your friends take turns to host at their homes, while everyone brings their own food and drinks.
This way, you can keep having fun socializing with your friends, without having to empty your wallet.
How to Get a House for Free
It should not be a surprise that the largest expense anyone can have is their house. By eliminating your largest expense, you can free up tons of money every month, making living amazingly easy.
But how can you live in your home for free if you have a mortgage to pay?
The easiest way to do this is by renting out parts of your home to other people. For example, if you have a large home with spare rooms, you could rent out the rooms and use the payments to pay your mortgage and bills.
Another option could be renting your parking space for people to use. My friend’s husband said you can also make money renting out your RV. So, if you just happen to have one, you should think about putting it to use when it’s not….in use!
Lastly, renting out storage space is also an excellent way to make the most of your home so that you can live there for free, or close to it!
By getting rid of your biggest expense, your life will change for the better because you will have so much more income to build wealth. For a low-income household, getting rid of the biggest expense will change their lives completely.
While you have learned some of the smartest frugal living tips to live on a low income, there are many more tips, tricks, and habits to observe.
So, if that interests you, consider looking at our other blog posts where we go into this more in depth. This has been hugely profitable for many people. This is often in the form of an Airbnb.
Have you ever stayed in an Airbnb before? Would you consider renting out an Airbnb yourself? Let me know in the comments below!
There are ways to start a AirBNB business without money believe it or not, and more and more people are making bank off this little side hustle.
Personally, I absolutely love the whole concept of Airbnb’s and my daughter, and I have had so much fun staying in them. It is such a great alternative to a hotel.
This side hustle is ridiculously HOT right now, and it is not stopping any time soon! So, if you are able, I highly recommend hosting an Airbnb if it is something that interests you simply because of how profitable it is!
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