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How to Budget on a Limited Income

If you have to manage on a low income, you absolutely must work to a very strict budget. We have provided a budget worksheet and some helpful ideas that may help you become successful at meeting your monthly basic needs.

Getting Started

The first thing you should do is sit down and allot set amounts of money to every household expense:

· Telephone (see pg. 144 for discount telephone services)

· Internet connection

· Electric power (Call your local utility company and inquire about their budget plans)

· Gas

· Rates or rent

· Water rates

· House and/or contents insurance

· Car expenses, including insurance, registration

· Health insurance (see pg.

· Food

· Miscellaneous items; anything else peculiar to your household that’s not on this list.

If you are paid weekly, multiply any set monthly payments by 12 and divide the result by 52 to find out how much you need to put away each week. For payments that differ each month (such as electricity, gas, water) you’ll need to average out a year’s expenditure. You might also want to allocate something for clothing; it’s up to you.

Find the cheapest supermarket within a reasonable distance from your home and shop there for all your food.

2. Always work to a shopping list. The list should contain only items that you need and you should stick to it. Cut out such items as sweets, cakes and other baked goodies, magazines, and convenience foods that you can make yourself (pies, pizzas, casseroles, etc).

3. Before you list each item, ask yourself if it’s absolutely necessary to your family’s survival. If it is, but is something you can make, leave it off your list.

4. Compare brand and size prices for the best buy. If your family absolutely hates the cheapest brand, however, don’t buy it; you can’t afford waste.

5. Shop less frequently. Try once a month instead of weekly if at all possible. Limiting the use of your car (especially if fuel is expensive) can save you money. Never go back to the supermarket for forgotten items; do without them until next shopping time.

Don’t succumb to buying something you don’t absolutely need just because it’s “only a few dollars”. Every dollar counts when your income is considerably below the average wage.

Money Tips

Don’t keep money in your purse/wallet (or anywhere in the house) if you can help it. If you don’t have it, nobody can take it from you!
Use your cash card (not your credit card) for all purchases and take careful account of how much you spend and what you spend it on.
Use your credit card only when you already have the money (or at least most of it) for the item you want. Nothing puts people on low incomes into debt as easily as incorrect use of a credit card. You need to be able to pay off the debt without paying any interest, which means the whole amount needs to be paid as soon as it’s due. If you have problems using a credit card so that you don’t pay any interest on it, the only solution might be to cut up the card and throw it away.

Miscellaneous Tips

1. Preferably cut out long-distance phone calls and ask family and friends to call you. If you can’t, at least cut down on the number of calls you make monthly.

2. Don’t gamble, even on weekly lottery tickets. If you spend $5 a week on the Texas lottery, that amounts to $260 a year. You’re unlikely to recoup this in the small wins that are all you can expect.

3. If you smoke, make a determined (and this time successful!) effort to give it up. This is a very costly habit, both economically and heath wise.

4. Cut out alcohol.

5. Limit video rentals, movies, etc, to an ‘occasional’ treat.

We do hope at least some of these tips help you, or, lead you to some ideas of your own for budgeting the monies you have from month to month.

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