For many, living on a low income is a necessity, not a choice. For others, it’s a case of wanting to embrace a more minimalistic lifestyle and taking back time. But in either case, having a low income doesn’t mean you can’t be good with money. If anything, it necessitates the need to be especially careful with your money to avoid a potentially dire financial situation. The following strategies will help you survive and thrive on a lower income.
1. Create a Budget That Accounts for Emergencies
When you are on a low income, budgeting becomes an essential practice. But the last thing you want is to live paycheck-to-paycheck. So as tight as cash may be, you still need to leave yourself some breathing room at the end of the month to account for unexpected expenses or emergencies. That means saving some money back to create an emergency fund and eventually some savings.
When creating your budget, look through your financial statements, figure out where your money is going, and look for areas where you can cut down. At the very least, you should look to put 10% of your overall earnings aside into a high yield savings account. That said, be realistic with what you can do. Otherwise, you’ll quickly become dismayed.
When you are happy with your budget, the important thing is to make sure you don’t go over your budget. One technique you may find helpful here is taking out money set for planned expenses, such as food and hobbies, in cash. That way, when you go shopping, you can’t accidentally go over without realizing on your card.
2. Look Out for Free Events and Activities
You still need to have fun when living on a low income. After all, your mental health will only suffer if you just stop seeing people or doing anything. Such is especially true if you’re in this for the long haul. But at the same time, going out and socializing doesn’t need to leave you broke at the end of every month.
Take a look online or in your local paper and see what free events are happening in your local area. You may be surprised by how much is going on around you, from free festivals to art shows to museum exhibits. There are plenty of free-to-low costs hobbies you can pick up too, not to mention all the joys of nature and the great outdoors.
3. Be Mindful of Your Spending
When your earnings are low, you’ll need to quickly learn to know the differences between your wants and needs. The problem is that we often conflate the two. For example, you might need a new phone to keep in contact with friends and family. But, some people might use that as an excuse to get the latest model. Likewise, you might need a decent computer for work, but you probably don’t need it to come packed with the newest hardware and the ability to play the latest video games.
Whenever you consider a new purchase, ask yourself, will this improve your life, or is it just going to give you a quick dopamine hit of excitement? When in doubt, give it 24-48 hours and see if you still feel like you need the product in question. Ultimately, your main goal should be to prioritize the most important things to you. And often, that means making sacrifices elsewhere. For example, if your priority is to move house, you may need to sacrifice some luxuries such as subscription services for a while.
4. Learn to Cook
When times are lean, being a resourceful cook is imperative. After all, it’s how people got through the great depressions and war rationing. Unfortunately, today, it’s all too easy to order something when you’re tired or be lured into an expensive restaurant when with friends. But cooking from home instead will save you a considerable amount of money in the long run. You don’t need to become as good as a chef to benefit from home cooking. Learning a few simple staples can keep you and your family healthy and fed.
To save on time, reduce food waste and make life easier, you can also try batch cooking. Batch cooking typically involves planning out your week’s meals over the weekend and then cooking and refrigerating/freezing them.
5. Avoid Debt
Avoiding debt may seem like an obvious suggestion, but taking out credit can be too enticing when you’re struggling to afford things. But whether it’s in-store credit, small loans, or credit cards, even if you think you can quickly pay it back, it’s rarely worth the risk when money is short. After all, the last thing you want to do is make things tighter for yourself next month. And again, you should always consider that your future circumstance may change for the worse financially.
6. Save Money Around the House
Some household expenses, such as your rent or mortgage, are non-negotiable. However, when it comes to things like your energy supply or internet contract, there are often plenty of opportunities for saving a few bucks either by switching providers or renegotiating for a better deal.
You may also want to lower or cancel your cable and streaming services. Another way to lower your household bills is to reduce your energy usage. For instance, you could try installing CFL or LED lights around your home or installing better insulation if that’s an option.