One of the most common financial mistakes that individuals make is failing to budget because they don’t feel like they make enough money to make it worthwhile. In reality, it doesn’t matter how little income you make – it is always a good idea to have a basic budget in place that outlines your spending.
By using a logical budget to control your spending, you might find that you can make your money go farther than you once thought. It doesn’t need to take very long to put together a basic budget outline, but that plan can go a long way toward improving your financial future.
Start with the Basics
No matter how small your budget might be, it will need to include the basics such as housing and food on a monthly basis. Whether you own your home or rent a place to live, that expense and everything that goes with it (utilities, etc.) should be at the top of your list.
A monthly food budget should also be established to give you a goal to shoot for when you are doing your grocery shopping. Other basics include a cell phone, gas and maintenance for your vehicle, and so forth. The key here is to be reasonable about what you’re spending and then you can find ways to save or cut back on those expenses.
Specifically Define Entertainment Spending in Your Budget
One place that many people go wrong when it comes to controlling their budget is the amount of money they spend on entertainment each month. This should be an important part of your budget that you do your best to stick to.
While your budgeted amount might seem limiting at first, look at it as an opportunity to find more affordable activities to enjoy on weekends or whenever you aren’t at work. Remember, you don’t have to necessarily spend a lot of money to have a good time.
Make Sure to Save
Regardless of how little income you make setting aside some money for savings each month is something that you should not ignore. Even a very small amount of money going into your savings account on a regular basis will add up over time and help you make more expensive purchases down the line.
As part of your budget, set a monthly saving goal that you do your best to reach. Over time, try to gradually increase that amount so you can start to see a significant amount of money available to you in the bank. In fact, you should even try to automate your savings if you can. We do that with our Discover online savings account so we don’t even feel the money coming out.
Don’t Be Trendy
Chasing the latest trendy brands and other items that you don’t need is a quick way to create some serious budget leaks. Following trends will only lead you to spending more money than you can afford on products that could have either been purchased for less – or not purchased at all.
Don’t allow others to influence your buying decisions, because it is your money. Stick with your budget, and only make purchases when you are sure they are the right decision for you and your financial situation. Over time, this strategy will make a big difference in your financial outlook on a monthly basis.
What tips do you have for budgeting on little income? What challenges did you face when you first started budgeting? What’s one area of your budget that needs help?
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