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Last Updated on January 6, 2021 by NandiNN

How to budget money on a low income

Reimagine your budget using our easy steps below.

What do we mean when we say reimagine your budget?

It simply means working your budget so that it makes sense for me. 

By now, you should already know that just less than 4 years ago, I was fired from my job and I had also just found out I was 4 months pregnant. 

After crying for 1 week, I decided to do something about my situation. 

The first step was to take a hard look at my expenses, reevaluate and make the necessary changes quickly. 

And since you have gone through all your income and expenses, and you have a much clearer idea of where you stand financially, you can now move on to this next step with confidence.

The next step requires you to reorganize, reduce, and even eliminate things from your budget for survival during your financial crunch.

These are the exact steps I took as soon as I found out that I had lost my main source of income.

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Over the years, I have encountered so many that are having a hard time making their budget work for them. 

But if you take a hard look, you will always find something that you can reorganize, reduce and completely eliminate. 

After you finish organizing your finances, go through the list and look at what you need to adjust. 

As you go through this process, you’re going to be creating cash to use for living and getting by in the most beneficial and healthy manner for your situation.

Before we get started on the steps to help you reimagine your budget, we did want you to follow us on Facebook for more awesome ideas on saving or making more money. You can also follow us on Instagram for more tips. 

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Here is how to reimagine your budget:

The second step after organizing your finances is to set up your income and expenses. 

Focus on the income you know for sure you are going to have and the expenses you know for sure you must pay to keep a roof over your head, food on the table, and pay for life-extending mandatory medical care like blood pressure meds if you suffer from this or anything else.

Here are a few categories in your budget that you can reorganize, reduce and or eliminate:

Here are tips to reimagine your budget1. Housing Situation

When you are budgeting, include whatever it costs you to live in your home including your rent or the mortgage you pay.

You can get this information by looking at what you spend by checking your bank statement (remember to print out the last 3 months of bank statements)

If you do have a mortgage, you can call your company to find out if you can stop payments for a certain period of time and put them at the end of your loan.

You can also eliminate private mortgage insurance if you have paid off enough of your home, and find other measures to take to reduce the payment if you call your loan provider.

If you do rent, can you downsize into a place that is smaller and less costly? 

Do you have the option of getting a roommate to share your rent?

This can significantly reduce what you spend each month on housing. 

2. Food Costs

Guys, I have spent so much on food last month. 

Yes, it was the holidays but I find that the amount of money I spend on food each month is pretty ridiculous. 

You will want to set a fair budget for this if you have never budgeted before on food, as this is an area you can easily overspend.

Trust me. 

My statement says it all, I spend too much on food.

I am in Canada so I spend an average of $300 and sometimes $400 on food weekly.

The US government says that for a family of four to eat healthy food, it will cost between $150 and $300 per week. But then again food waste is a huge problem, so this is an area you can find savings.

Here are the best ways to save money on food if you are short on cash. 

3. Transportation Needs

If you need your car to get to work and back daily, to the store and back, or for other reasons, then you should keep it even during hard times, if possible.

When I found out I was pregnant, my first thought was to get rid of the car.

But I needed it to get to my appointments and since I had a rough pregnancy, a lot more trips to the doctors were needed.

So we kept the car (think of car loans and insurance)

However, if you really don’t use it or need it, you might want to consider selling it during a hard time to avoid the extra expenses.

Cars can be really expensive.

If you must have it, consider only buying value vehicles, used, for cash that gets excellent gas mileage.

4. Monthly Utilities

There is no getting around the fact that you have to pay your electric bill every month.

You can get on a budget billing plan in some areas depending on where you live.

This makes the bill almost the same each month to help you in this area. If you have programs like this in your area, consider applying for them. 

Did you know that you can use less power by insulating your home and cutting down how much heat and air conditioning you need?

Find ways to reduce your monthly utility bills.

  • Find out if your phone company can reduce your monthly bill
  • Negotiate your internet bill if you can
  • Cut out monthly subscriptions such as cable/ Netflix

If you can, consider grabbing my No Spend Workbook Challenge to find more areas and ways you can save money each month. 

No spend planner for those wanting to save money each month!

5. Cost of Insurance

Insurance is another cost that you need to budget for.

If you can reorganize, reduce and eliminate something go for it. 

This is a good time to actually do that. 

Health insurance, car insurance, home insurance, rental insurance, and so on are all needed expenses that you should not cancel if you can avoid them.

The only time I will suggest cancelling is if you do need it any more.

For example, you sold your car and you no longer need it.

Other than that, you can call up and try to find better insurance deals.

If your income does reduce and you are currently getting insurance through other affordable means, contact them again to negotiate more.

6. Child Care Expenses

I pay for child care, and I am not sure which part of the world you come from but it is extremely expensive.

And if you work, there is no getting around this.

You need child care so you can go about your business to provide for your family.

So this means, this is an expense you can not go without.

But if you only pay for daycare just so your kid can have the opportunity to socialize (I don’t blame you), but this becomes more of a want than a need.

Find out if you can go for in-home care, have a family member look after the kid or work out a plan.

7. Loans, credit cards and others

Most of us are stuck with loans and credits that are just chewing up a large percentage of our income every month.

If you have loans, especially unsecured credit card loans, you should try to switch to only minimum payments when you are going through a financial crisis to give yourself more cash for other important necessities. 

And for other loans such as student loans, you can call your loan provider to ask for a discount in payments or even a deferment to alleviate yourself from paying some loans temporarily.

My partner did that when I lost my job during my pregnancy. 

And so as you can, go back to paying that debt. 

The goal is to completely eliminate that debt as quickly as you can. 

Find out how you can save money while paying credit card debt right here and more tips on how I paid off $10, 000 of debt fast here. 

8. Other Personal Expenses

Do you have personal expenses that need taking care of?

For example, if you have your own business, don’t forget to figure out the min amount you need to keep your business going and running.

This is extra money that can potentially save you.

Think of all your business expenses.

You have software tools, banking, contractors, and so forth that are all required to keep your business moving in the hope of succeeding.

Knowing what the minimum is that you need to keep running is essential.

As you continue to go through your expenses, you are going to know right away in your own mind if it’s something that can be reorganized, reduced, or even eliminated – even if only temporarily – so that you can get through the crunch.

You will end up with a break-even number that you must bring in to make it on this survival spending plan.

There you have it, our best tips to help reimagine your budget!

Which of these tips will you be following and implementing?

We would love to hear from you. 

And if you need more tips on how to survive with little to no money, this ebook is packed with amazing tips to make your money worries a little less stressful!

Learn how to survive with little to no money

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Here are tips to reimagine your budget

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Reimagine Your Budget: Reorganize, Reduce, and Eliminate