Are you looking to cut down on your expenses? Have you been trying for months to build up your savings? Do you still face cash shortfalls? Expenses are limitless but income is fixed. You oftentimes find yourself in a tight spot when you need money urgently. Whether you are deep-pocketed or you are badly off, you cannot shy away from learning money management tips.
Financial health is one of the important aspects of your life to keep the wolf from the door. If you continue to have your money down the drain, you will start relying on financial institutions for your livelihood, and soon you will fall in never-ending debt.
From the very beginning, you should keep tabs on your spending to ensure your finances remain stable. Taking out an unsecured loan in case of emergency is not a bad idea when you do not have enough savings to dip into, but you must have the capability to pay off your debt on time.
Here are some budgeting tips if you are a low-income earner.
Create a budget
More often than not, you find making a budget is tedious and annoying. On the surface, it seems like a burden of financial exercise especially when your financial condition is excellent. A good budget can help to keep your spending on track and unveil hidden expenses.
You may have several reasons to fling from making a budget such as you are not good at calculation, you do not have time, and it torments you. It is all about to prepare yourself to create a budget on either a paper or a spreadsheet.
You do not need to brainstorm the calculation. Just hot down all expenses, household bills, building maintenance, rent, food, drinks, clothing, travel, entertainment, and the like.
With the help of budgeting, you will have a big picture of cash inflows and outflows. Monitor your expenses regularly so that you do not overspend money. When you make a budget, first off you will set aside some part of your salary or monthly revenues for a rainy day.
Take a look at the budget format:
|3. Interest on investment|
|4. Rental income|
|5. Any capital gain|
|1. Interest on debt|
|2. Utility expenses|
|3. Medical bills|
|4. Food and drinks|
Calculate the cost
Now that you have an idea of total spending you will make throughout the month. Make sure that no minor expense slips through the cracks such as magazine and newsletter subscriptions, eating out for no obvious reason, and so forth.
Every expense from buying a needle to buying a refrigerator, you will note down in your spreadsheet. At the end of every week, you add up your total expenses to get the idea of how much you have got to spend. This will keep you from overspending.
When you get a salary, transfer a fixed percentage of your income to a savings account, at least 10%. You will have your one-month salary soon if you make a habit of it. The best method is set up an automatic transfer mode so that funds get transferred to your savings account every payday. Automatic savings ensure that you are saving money to build up your emergency cushion. You will also receive interest on your savings.
If you have a debt to pay out, set aside that amount as immediately as you receive your salary and all of your rest expenses will be made out of the available funds.
Temptation is one of the biggest reasons that you fail to meet your financial goals. Buy things only when you need them urgently. Many people walk into the shopping complexes to avail discount offers. It may seem like saving money but at last, you will struggle to pay out your debts and other important expenses.
Credit card bills are also additional cost you should add in your expenses. Avoid the use of credit cards as long as you can meet your expenses with cash and if you use them, you should pay out all your bills within the grace period.
Check where you can whittle down
The month is over; now is the time to have a look at what you have spent and what you have saved. If it is your first experience, you may have spent over the limit you decided. Peruse your monthly expenses to check if you have made non-essential expenses. Since you are a low-paid employee, you should not make unnecessary expenses.
You can cut back on the following expenses:
- Stop paying the subscription for magazines.
- Make your own coffee instead of ordering takeaway.
- Do not use cars to cover short distances.
- Purchase goods from wholesale market.
- Pay all your bills on time to avoid penalty.
- Buy unbranded products.
- Eat home-cooked meal.
- Compare utility deals and choose the one that fits your budget.
- Use public transports to go to your workplace.
- Cancel your gym membership.
- Do not let lights and fans on when you are not using the room.
- Pay for things with cash only.
- Stay fit to avoid the visit to the doctor.
- Cut down on smoking and drinking.
- Avoid night outs regularly.
- Clear out unwanted things to get extra pounds.
Money management is crucial to avoid being strapped and the only right way to do is BUDGETING. In the beginning, you may have difficulty sticking to it, but at last, you will have a good amount of money set aside. Set a financial goal and put all your efforts into achieving it. Pay all of your expenses including debts on time. Do not yield in temptations.
The more frugally the money you spend, the more savings you will have. Once you have built up your emergency cushion, you will not want to apply for the loan for your unexpected expenses.