How to Create a Realistic Budget for Low-Income Households?

When you don’t have a lot of money coming in each month, budgeting is key. It helps you take control of your finances, even when things feel tight. You can create a plan to spend smarter by following a few simple money management steps.

Track All Income Sources

You need to know where all your money is coming from if you want to budget properly. You make a list of every place you get money so you know exactly what is available to spend each month.

Start by writing down your main job’s salary and check your pay slip to see your take-home amount after taxes and other deductions. You can add any regular bonuses, commissions, or overtime pay.

Next, list any other jobs you have for extra income. Many people drive for a rideshare app, do odd jobs, or sell homemade goods to bring in a bit more. You include infrequent sources, too, like if you clean houses during the holidays or help with a neighbour’s yard work seasonally.

Don’t forget money from the government if you receive any benefits, child subsidies, or pensions. Also, write down cash gifts, allowances from parents, or a working spouse/partner’s earnings if they contribute to the household.

Once you’ve noted every pound coming in, add it all up. That total is what can realistically be budgeted each month. Having one master income number makes it easier to plan spending then.

Prioritise Essential Expenses

You need to spend your money on the most important things first when you’re on a tight budget. You pay your rent or mortgage and bills for water, electricity and gas before anything else.

Next on the list is food. You can visit the supermarkets and shops with the lowest prices. You buy whatever fruits, vegetables and other groceries you’ll need for healthy meals. You may have to cut down on takeaways, brands or special treats. But getting enough nutritious food matters.

Also, budget for transportation, whether it’s petrol for the car, a bus pass or train tickets. Getting around is vital – to work, school, appointments or errands. You calculate realistic fuel and fares costs monthly.

There may not be much left after those basic needs expenses. You try saving a small emergency fund for urgent costs. But extras like dining out, video games, clothes shopping or gifts will need to wait. Stick to simple enjoyments that are low-cost or free. You go to the park rather than the cinema. You can borrow library books instead of buying them. Invite friends over to play games you already own.

Cut Unnecessary Spending

Reducing what you spend on stuff you don’t really need lets you save more money or use it for important things instead. You start by looking at any subscription services you have. Do you watch all the shows on Netflix and Spotify? Or do you mainly just browse options? Downgrade or even cancel ones you don’t use much.

Also, think about how often you dine out, order takeaways or go to the cinema or concerts. These nights add up fast. You cook tasty meals at home more often. Have friends over to play games you already own instead of going to the arcade. You can check your local area for free festivals, museums, or community events to enjoy.

It’s sensible to cut things that you signed up excitedly for at some point but now forget about. You can look for unused gym memberships, old magazine subscriptions, box delivery services or apps you downloaded but don’t really need. Save that monthly fee.

Making little changes here to save £5-10 on things you won’t miss much lets you put that money towards better uses. Building up your savings, treating yourself to something special on occasion, or paying an important bill are all smarter ways to spend money previously frittered away.

Set a Fixed Amount for Savings

Putting away even small amounts of money regularly helps it add up over time into decent savings. Try to set aside some of each paycheck, gift money or cash you earn from jobs like pet sitting or helping neighbours.

You can ask your bank to do a monthly transfer of £10 or £20 to start. Then, let that savings build up slowly. In a year, you’ll have over £100 saved without much effort.

If an emergency does come up and you need money fast, you could also consider a no guarantor loan. These loans are for people with bad credit who struggle to get approved for normal bank loans. You can apply for no guarantor loan with bad credit from lenders and banks. You provide details on your income and expenses. If approved, the loan gets paid to your account often on the same day, letting you cover whatever bills you urgently need to pay.

Just be sensible with the loan amount borrowed so that you know you can pay it back. And keep adding to your regular savings over time. Having an emergency fund means you won’t need to resort to pricey loans as often whenever unexpected costs pop up.

Find Ways to Boost Income

Bringing in some extra money helps when cash is tight. See if you have any talents or skills that could earn you payments from odd jobs. Are you creative? You sell homemade cards or knitted scarves. Good with animals? You offer dog walking or pet sitting. Have a keen eye for fashion? Help friends revamp their wardrobes for some pounds.

You clear out stuff you no longer use, too. Old toys, games, clothes and books can be sold on sites like eBay. Every little bit extra allows you to save or spend on important things.

Can you take on more hours at your current job or find a part-time weekend/evening job? Waitressing, shop assisting, or cleaning offices are other options. Or do delivery driving for takeaways or parcels to make money in your free time.

Also, check if you qualify for any government assistance programs. These help cover costs for groceries, housing bills, medical expenses or school meals for those facing hardship. You can apply to access whatever support is available so money stress feels less overwhelming.

Getting creative with earning opportunities takes effort but pays off. An extra £100-200 each month makes a real difference. And you might discover a new talent or skill you really enjoy that keeps giving long-term.

Review and Adjust Monthly

Going over your spending plan each month helps you stay on top of your money situation. First, gather any new bills or payment notifications. See if your income or expenses changed significantly.

For example, maybe you started a dog walking job and earned extra cash. Or your mobile phone bill went up. Update these amounts in your budget.

If you overspend your clothing budget because of a special event, look for another category to cut back on to make up for it. You stick to actual amounts – don’t fudge any numbers. Being realistic helps for next month.

If a big expense like replacing a broken laptop blows your budget completely, you may need to borrow money to get by. A no guarantor loan with bad credit could give you a few hundred pounds quickly, even if your credit score is very low or you have past financial troubles. The lender confirms your current ability to repay and often deposits money the same day.

Just be wise with the loan and pay it back on schedule. And going forward, try setting aside small savings for unexpected emergencies like this so you don’t scramble for money.

Checking your budget every 4 weeks lets you make changes needed. This keeps you on track towards your saving goals and avoids getting overwhelmed by money going out.

Conclusion

Making ends meet is challenging when money coming in doesn’t seem enough to cover everything going out. However, creating a budget tailored to what you can realistically spend allows you to balance your low income properly.

Stay positive by reminding yourself that small, consistent changes do make a real difference over time, even if it doesn’t happen overnight. Learning money management skills now helps set you up well for achieving future financial goals and dreams, too!

Related Stories

Recommended