How to Budget on Minimum Wage

It takes patience to budget when money is tight.

Setting a budget is tough enough under the best of circumstances, but it's even more difficult when you're living on minimum wage. But that's when you really need to make a budget. When resources are scarce, you don't have much room for error and a spending mistake can make your budget totally unworkable. It will take patience and some merciless cutting, especially when there are family members, but it is possible to budget on a minimum-wage income.

Things You'll Need

• Calculator
• Pen
• Paper
• Receipts from your last three months
• Pay stubs from your last three months
• Ledger

Instructions

Sorting Out Spending

1. Go over your pay stubs, separating them by month. Write down the amounts after taxes. Add your after-tax totals by month and write down your monthly wages.

2. Separate your receipts by the month. Go over each and write down the totals, by category. You will want categories for rent, groceries, utilities, car expenses, entertainment and clothing, though you can add more categories as needed.

3. Take the lowest of your monthly wage figures; that will be your working income for creating the budget.

4. Write down the expenses that you absolutely must pay but can't change the amount. These include your rent and car payment.

5. Write down the other expenses that you absolutely must pay but you have some control over the amount. These include your electric bill and other utilities. For now, use the highest monthly payment from the past three months.

6. Write down what you spend per month in these other categories.

7. Add your monthly expenses, and subtract that from your monthly income. These numbers may show you're in the red; don't worry about that now.

Building Your Budget

1. Go over your receipts again, by category. Is there something you're wasting money on? Pay special attention to your grocery receipts; impulse buys and convenience food will blow those numbers up.

2. Prioritize your budget items, separating needs from wants. Housing and utilities will probably receive higher priority than most other expenditures.

3. Rebuild your spending budget, by priorities. Keep adding these prioritized expenses. When you get close to a zero balance, stop.

4. Look for ways to cut costs further. As you do, you can add more budget items from the priority list. Also start looking at ways to increase your income.

5. 

   Watch for expenses that may blow your budget.

   Start tracking your expenses on your ledger sheet. Include small purchases through the day; those can create havoc on your budget. If you spend $5 on incidental expenses every work day, that's about $100 per month. At the end of the month, compare your actual figures against your budget. Make adjustments as needed to the next month's budget.

Tips & Warnings

• If you deal in cash, try the envelope budget trick. Determine what you need to spend from each paycheck, write it on the envelope, and put the cash in the envelopes each payday.

• If you can, leave yourself some relatively inexpensive luxury that you enjoy. It may be premium coffee or a monthly meal out.

• If you have a family, make sure everyone is working with you to keep the budget.

• Leave some wiggle room in your budget for unforeseen emergencies, and try to save something if you can.

• It may take several attempts to build a budget that works.

References

• University of Vermont: Basic Needs Budgets
• Pudget Sound: A Monthly Budget
• Financial Web: How to Budget Your Money On Minimum Wage
• The Digerati Life: Cost of Living and Minimum Budget For A Family of Four

Resources

• Consumer Credit Counseling Services: Household Budget Calculator