Thoughts

Basic Budgeting Rules for Low-Income Earners

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If you don’t earn as much as you’d like to from your job, you’re not alone.

There are plenty of low-income earners out there that are constantly wondering how they’re going to afford all of their bills, and the cost of saving for the future too. 

When you’re struggling to make ends meet each month, it seems practically impossible to find enough money for an emergency savings account, never mind an account where you can save for a future home deposit or similar long-term goal. 

The good news is that basic budgeting can help you to reach your targets much faster than you’d think. Here’s what you need to know.

1.  Track Everything

Knowledge is power. That’s certainly true when it comes to managing your budget. The more you know about the amount of money you have coming in, and the payments you’ve got to deal with going out each month, the more empowered you’ll be. Before you start worrying about how you’re going to cut your monthly costs, begin by making sure that you have a strategy for counting the pennies. 

There are plenty of smartphone apps that allow you to track your budget wherever you are these days. However, some people find that the easiest option is just to make a note of everything either on a spreadsheet in Excel or on a piece of paper. Find out what works best for you and stick to it.

2.Set Goals

Sticking to a budget isn’t easy. There’ll be times when you’re exhausted after work, and all you want to do is order a takeaway so that you can avoid cooking. Similarly, you might be tempted to buy something when you’re out shopping for food, like an extra bar of chocolate, or a delicious barista coffee. 

While it’s tempting to tell yourself that you can “pay yourself back”, it’s these little temptations that end up destroying a budget. To ensure that you stay on track, give yourself a goal to work towards. That goal can be as big or small as you want it to be. Some people prefer to save towards something like a house deposit or holiday. Others just want to save for a new video game console.

3.  Be Resourceful

If you want to really make an impact on your long-term finances, then you need to change your habits with money. That means making sure that you don’t just buy things because you want them without thinking about it. Instead, you’ll need to ensure that you’re comparing your options carefully and making sure that you’re always getting the best prices.

For instance, if you decide that you’re going to take out a loan for a new vehicle, there’s nothing to stop you from shopping around for a great price and a low-interest rate. Remember, even if you have terrible credit, there are many different loan providers out there, which gives you the freedom to compare and contrast a range of options.

4.  Be Flexible

While sticking to a budget is crucial, it’s important to remember that sometimes you need to be flexible. Ideally, after a while following your budget, you’ll have an emergency savings account that you can dive into when you need some extra cash for a broken washing machine or a flat tire. However, towards the beginning of your budgeting strategy, this might not be the case. 

If you need to break away from your plan briefly, don’t give up on your budget altogether. Take stock of where you went wrong and use what you learn to guide your buying and saving behaviours in the future. There’s nothing wrong with making a mistake now and again – as long as you learn from your errors.

5.  Embrace Opportunities

Finally, if you’re struggling to make ends meet as a low-income earner, one of the best things you can do is make sure that you’re embracing every opportunity to make some extra cash. These days, you can find jobs online working as a virtual assistant or writing blogs for big brands. You can even use your car to give people rides to wherever they want to go with companies like Uber and Lyft.

Keep your eyes open for anything you can do to bring extra money into your household. This could even mean talking to the citizens advice bureau to see whether you’re eligible for any government help in the form of tax benefits, child tax credits, and other allowances.

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