Tips on Living on a Tight Budget

Tighten your budget to pay down debt faster.
Tighten your budget to pay down debt faster. (Image: Cash image by Greg Carpenter from

Living on a tight budget can be straining for both families and individuals. Setting financial goals and creating a budget are great starting points to making things work on a tight budget, but just as important is developing healthy and smart financial habits. Overspending often adds more stress; the key is to live below your means to give yourself more financial freedom. You can do a variety of things to live on a tight budget.

Create a Budget

Creating a budget is not always the easiest or most pleasant thing to do, but it is a vital step to keeping finances in order. Provide as much detailed information as possible on the budget sheet in order to see where money is coming from and where it is going. Include all bank and investment statements, recent bills, and income statements, as well as any other paper containing income or expense information. If some numbers vary each month, use a monthly average. Keep and revise records of income and bills. Break the expenses into two categories, fixed and variable, to give a clear idea of what is an essential expense, like mortgage, rent, car payments, bills and credit cards, and what will vary monthly, like groceries, eating out and entertainment. Your goal is to get the budget sheet to have more income than expenses. This will most likely take some budget adjustments over a few months. If you have a surplus, you can put that money into savings or investments.


Food is an essential part of life, yet is often one of the first things people cut back on when on a tight budget. The key to smart food budget management is smart shopping. Coupons and sales are a great start to minimizing the budget, but do not waste food, either. Plan the menu and make the grocery list according to your weekly menu. Also, properly handle the food by freezing it or consuming it before it goes bad, and know what lurks in your pantry and refrigerator that should get eaten or no longer purchased. Buying in bulk can also save a bundle and mean fewer trips to the store.


Developing healthy and smart financial habits is the key to making things work on a tight budget. Pay bills on the day the money arrives. Meeting deadlines will not only prevent annoying phone calls and service interruptions, it will also save money on late fees. Set up a direct deposit account or pay bills online automatically to ensure bills are paid on time. For other expenses, set up an “envelope system” that will help keep you from overspending on various expenses each month or pay period. An envelope system is when you designate a letter envelope monthly expenses, like groceries or entertainment, and put a set amount of cash for each category into the envelopes. When the money is gone for a particular category, you have to wait until the next paycheck to replenish and spend in that category. That way, you spend only what your budget allows for in that category.

Basic Money Saving Tips

Stop spending on fancy coffees, expensive lunches, entertainment, and all other items or services that are not a necessity. This might mean canceling the cable, unplugging the satellite, cutting back on cellphone features or even cutting off the phone line entirely. Read books, borrow movies from friends or the public library, obtain a basic satellite receiver and pack a lunch every day.

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