Write this number down as “monthly income. "
If you spend cash, keep the receipt and make a note of what you bought. Write this number down as “monthly expenses”
Fixed Expenses: Do not change month to month, but are due every single month. Including rent, car/loan payments, etc. Essential Expenses: These can’t be avoided – food, transportation, utilities – but can potentially be cut down through careful budgeting and saving. Non-Essential Expenses: This is your entertainment, fun, and everything else fund. More often than not this is where you will be able to save the most money. If possible, take a look at your last 12 months of bank statements and credit card statements so that you can take into account your fixed income expenses and variable expenses such as eating out or your credit card bill.
Entertainment: Everyone deserves to have fun, no matter how much money they make. Having low income doesn’t mean you don’t get to enjoy yourself. However, you need to be careful about spending your limited income. Having an “entertainment budget” will help. Debt and Loan Payments: Debt adds up quickly, and the faster you pay it off the more money you ultimately save. You should always have an eye on paying off debt with spare money. Whenever possible, pay more than the “minimum payment” to avoid growing interest. Savings Accounts: Even low-income workers need to save – as it is an essential safeguard in case of an emergency like a layoff or injury. You want at least three months of expenses covered, if not six. [2] X Research source
At the end of the month, compare how you did in reality to how you planned in your budget. Find the places where there are differences and think about how you can fix it.
Fruits and vegetables Canned tomatoes and beans Ground turkey Peanut butter Whole-wheat bread Tuna Eggs, milk, and plain yogurt Oatmeal Seasoning to make different meals with similar ingredients. [5] X Research source
If you’re willing to clean or fix up objects a bit you can often get them for next to nothing. Don’t ignore lightly worn or dirty items. Be ready to bargain. This doesn’t mean you have to be harsh – let people know your situation and a decent compromise and most people will give you a discount.
Unit price, the small “price per pound/ounce/gallon/etc. " at the bottom of the price tag, is essential when buying in bulk. The bigger the item, the lower the unit price.
Join a group or adult team to get weekly fun for almost nothing. Many cities have websites devoted to free activities, like San Francisco’s SF FunCheap. com. Do some online searching to see what’s in your area. [8] X Research source
Search online for “Cost of Living Comparisons,” which provide up-to-date information on prices across the country. Aim for rent to be no higher than $600, and much less when possible. This is a good financial cap for a $20,000 a year job. [10] X Research source
Even cutting these habits in half can make a big difference and is a great starting point. Find alternative, cheaper habits whenever possible. Whenever you get an urge (smoking), fill in your new habit (taking a walk around the block) as a replacement. [11] X Research source
Know your rates and how they can change. If confused, call your bank and make sure you understand your terms and interest. Pay more than the monthly minimum whenever possible, as this decreases later interest payments. Stay within 30-40% of your credit card limit. You never want to be reaching your limit, as the interest will become exponentially worse. Staying at our below 20% is a good benchmark for cautious spenders. [12] X Research source
Multiply your monthly essential & fixed expenses by 3 or 6 months to get a good number for savings.
