For people earning a low income, Budgeting can be challenging, but it's definitely possible with careful planning and strict consideration.
Here are some steps to help anyone to budget effectively:
Calculate Your Income
Firstly, you will need to determine exactly how much money you are earning or receiving each month. This may not just be the wage/salary you earn, any benefits or assistance you receive, and any other sources of income should be included.
List Your Expenses
Create a comprehensive list of all fixed and possible monthly expenses. Examples of fixed expenses maybe like rent fees/mortgage bond repayments, municipality bills, transportation, groceries, and any debt payments.
Possible expenses also seen as irregular expenses such as the occasional car maintenance or licensing fees that could happen in a month should be estimated and included.
Realising Between Needs and Wants
Differentiate between what budget items are essential expenses (needs) and non-essential ones (wants).
Your needs are things like housing, food, utilities, and transportation. Wants might include dining out/take out costs, entertainment, or non-essential clothing purchases.
Prioritise Your Spending
Once you have listed your expenses, prioritise them based on what you find is essential. You can then prioritise the most important expenses to be covered first.
Set Realistic Goals
It is important that you set realistic financial goals based on your income and expenses. Financial goals could be anything from paying off debt, building an emergency fund, or saving for specific expenses like education or a holiday or a new car.
Track Your Spending
Keeping track of every cent you spend, will help you identify areas where you can cut back and ensure you are in the means of your budget.
Cut Costs Where Possible
It is always good to find ways to reduce your expenses. The possibilities to achieve this may involve negotiating lower repayment rates, giving up on non-essential expenses, or considering the price of products before buying them especially things like groceries or entertainment.
Utilise Assistance Programs
If you qualify, take advantage of assistance programs like food stamps, housing assistance, or utility bill assistance programs. These can help alleviate some of your financial burden.
Build an Emergency Fund
Even if you can only afford to set aside a small amount each month, having an emergency fund can provide a financial safety when unexpected expenses arise.
Review and Adjust Regularly
Budgeting is an ongoing process. Regularly review your budget to see if it's working for you and make adjustments as needed. Your financial situation may change over time, so your budget should adapt accordingly.
Remember, budgeting on a low income requires discipline and commitment, but it's a powerful tool for taking control of your finances and working towards your financial goals.
