How to Budget Money When You Don't Make Enough

Spending that exceeds your income spells financial trouble, especially if you continue without a budget. By identifying all sources of income and your monthly expenses, you are able to calculate the specific shortfall you need to overcome. You also have a better idea of how to cut your expenses to get your spending under control. Instead of avoiding the financial issues you face, confront the situation and follow a specific budget to improve your financial future.

Instructions

1. Save all of your receipts to track your spending beyond your bills. Use these receipts to calculate an accurate number of how much you're spending in different categories such as groceries, cleaning products, clothing and toiletries.

2. Write a list to document all of your expenses for the month. Rank the items on the list from the highest priority to the least important, so you are able to prioritize your spending and ensure the essentials are paid each month.

3. Calculate your total expenses and your total income. Subtract the two to determine how much you're coming up short each month.

4. Review your discretionary spending to identify ways to cut back your expenses, so you have less of a money shortage. Consider eliminating or cutting back on services like phone, Internet and cable.

5. Contact utility companies to determine if they have a budget payment plan where all of your payments are the same every month. This helps you budget on a limited income better because the utility bills won't fluctuate each month. Adjust your use of electricity, including your heating and cooling devices, to lower your bills overall.

6. Call service providers and lenders who hold your accounts if you are past due or cannot afford your current payments. For past due accounts, ask if a payment plan is available to stretch out the repayment of the past due amounts. For your debts, ask if an adjusted payment plan or a lowered interest rate is possible to lower your payments and make more room in the budget.

7. Work an extra part-time job temporarily to catch up on your bills, pay down debt and build a savings account. This gives you more room in the budget going forward.

8. Seek financial counseling if you are unable to get your spending and budget under control. Look for a non-profit counseling service.

References

• "NY Daily News"; Cut Your Household Budget by Up to $500 a Month; Joshua Cinelli; June 2008
• Smart Money; 5 Ways to Cut Household Costs; Kelli B. Grant; March 2009