How to Create a Low Income Budget
Countless Americans are learning to live on less, and some of the choices you are forced to make can be harsh. You might not be able to take all the sting out of budget shortfalls, but with some smart budgeting, you can minimize their impact.
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Instructions
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Create a Low Income Budget
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Find out where your money goes. Review bank statements, credit card statements or receipts you have. If you don't have those, make a list of absolutely everything you spent money on, from your rent or mortgage to a stick of gum, over a 30-day period.
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Determine the difference between needs and wants. Look carefully at all your expenses and determine whether they are absolutely necessary. Areas where many find substantial savings are convenience foods, fast food, banking fees, cigarettes, cable television, cell phones, liquor, auto insurance and coffee. Only you can decide which things are most critical to you and whether you have the disposable income to keep them.
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Negotiate with creditors to reduce interest rates on your loans or credit card balances. You might consider asking a non-profit credit counseling agency to work with you. Many of those agencies have tremendous negotiating power. Be very careful to ensure that you are dealing with a reputable agency that has your best interests at heart.
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Call 2-1-1, United Way's helpline. Ask them to help you find resources for which you might qualify. They are a great resource for food, medical care, emergency shelter and transportation. Anything they can help you find for free will make your money go further. Check with federal agencies as well.
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Look at recommended percentages for spending. Now that you understand your spending habits, have streamlined your debt and have looked for resources to lighten your financial burden, you are ready to look at what to do with the money that you do have.
Typically, you will need to allot 30 percent of your income to housing, 12 percent to food and 5 percent to health care. Determine what other expenses you have (child care, clothing, utilities) and allot the remainder of your income to cover those costs.
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Resources
- Photo Credit All: Microsoft Clipart
