Learning to live comfortably on a limited budget and income means taking control of your money. When you have minimal money coming in, the rules of budgeting change. The line between needs and wants is clear, as you have less to spend each month on unnecessary purchases. Although you might not have a lot of money to spend, you still want to set some aside for emergencies and the future.
Things You'll Need
- Bills and receipts
Capture a snapshot your financial situation each month. Review your pay stubs or other proof of income to see how much you earn on average every month. Total your essential monthly expenses, including your rent or mortgage, car payments and insurance, groceries and other bills. Include minimum debt payments in the expenses. Compare the total of these expenses to your after-tax income. Ideally, the expenses total will be less than your income total. If it isn't, determine what you can reduce or eliminate each month.
Set up a savings account at a local bank if you don't have one already. Aim at first to save $500 by putting aside what you can afford each pay period after you pay your essential bills, even if it is as little as $10. As time passes and your income grows, increase the amount in the fund to three months of living expenses.
Start saving for retirement. Ask your employer to automatically deduct a set amount from your check each pay period. If your job does not offer a retirement plan, look into setting up an IRA, either with your bank or with an online broker. Set aside an amount each month, even if it is just 1 percent of your take-home pay.
Learn to shop smart. Pay attention to sales fliers and purchase pantry and toiletry items when they go on sale, using coupons if possible. Don't buy something simply because it is marked down or you have a coupon. If you never consume or use it, you haven't saved any money.
Use cash for as many purchases as possible. Credit cards are expensive luxuries if you carry a balance.