How to Budget a Reduced Income
Adjusting your personal or family budget when facing a reduced income will help promote sound spending practices and financial stability. When constructing a proper budget, it is important to analyze your current lifestyle and spending habits. Thoughtful considerations with regard to your actual needs and wants will allow you to make informed fiscal decisions, while reducing the burden associated with having a reduced income.
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Instructions
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Gather your monthly bills, banking statements and credit card statements.
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2
Determine the total amount of monthly income spent on your monthly expenditures.
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Create a list of your critical monthly expenditures, in order of importance. This list will include housing costs, utility costs, food, insurance premiums, transportation, toiletries, clothing and child-related expenses.
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Create a list of non-critical expenses, such as entertainment costs, television subscription services, fast food and other items that do not fall within the “Critical” list category. Total the expense amounts for both categories.
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Compare your current income figure with that of the expenditures listed in the “Critical” category. If your current income does not cover the expenses covered in the “Critical” category, consider making adjustments to those items in a way that will reduce costs.
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Purchase food items from discount food stores and consider using widely available coupons for name-brand purchases. Avoid purchasing fast food items and convenience foods that have the potential to unnecessarily add to your monthly food expenditures.
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Reduce the cost of your monthly utility bills by turning off lights when not in use. Adjust the thermostats for your water heater and heating/cooling systems to a more conservative setting. Shop around for lower-cost homeowner, vehicle, health and life insurance, if possible.
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Evaluate the total cost of your “Critical” expenditures, while taking into account the new cost savings. Eliminate non-essential expenditures from your monthly spending budget. Make reductions in your television and Internet subscription services, for instance.
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Consider retaining the extra cost savings for unexpected emergencies and long-term purchasing goals.
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Divide your monthly income and expenditures into weekly or bi-weekly figures. Breaking down your monthly income and spending into smaller allotments will help you keep within your new budget while avoiding month-end shortfalls.
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