Budgeting Tips When Money Is Tight
One of the most common questions or ideas we hear discussed is that the person cannot budget because they are too poor. The numbers do not add up and on paper, they come up in the red no matter how much they cut back. In these situations, it can be frightening and extremely frustrating to try budgeting, because it looks like there is not a way for things to work out, but it is one of the times when it is even more important to budget and keep track of your finances.
Your budget can help you fix many of your financial problems.
Prioritizes Your Spending
A budget can help you prioritize your spending when you do not have enough money to pay all of your bills. It can help you stop running out of money before the end of the month. It is important to realize what your priorities should be. They should start with a roof over your head, and food to eat. Then basic utilities, like water and electricity. Transportation to your job should be your next priority, depending on where you live this may mean a car, or a bus pass or a bike. If things are really tight, you should try to limit the amount that you use your car and try to walk as much as possible.
Helps You Recognize Where to Cut Back
A budget can also show you areas where you really can cut back. If you write down everything you spend, you may be surprised at where and how some of your costs are adding up each day. Although you may think you are spending money only on necessities, you may be surprised how much the little expenses that do not really count do add up.
Identifies Where You Need to Change
The budget can also show you how you need to change your situation. It helps to have a specific amount in mind when you are considering taking on a second job or looking for a new job or asking for a raise. If you specifically know how much you need to bring home each month to make ends meet, you can determine the best course of action.
For example, if you are only running $100-$200 short a month, picking up a part-time job a few nights a week may be enough to solve your problem. However, if you are closer to $1,000 short a month, you need to take more drastic actions quickly. This may mean working additional shifts or looking for a new job that will pay more.
Gives You a Spending Plan
A budget is really a spending plan. When money is super tight, it is important to have a solid plan in place. If you feel like you should be able to make ends meet, but things do not add up on paper, it can help to have someone else look over your expenses and offer suggestions on things you can cut back. They cannot make real suggestions if they do not have any idea of how you really spend your money.
Don't Stay in This Situation
If you are below the poverty level, you really may be struggling just to cover your most basic expenses with no extras at all. It can be very frustrating because you may be working multiple jobs and still not making ends meet completely. When you are in this situation, you need to look at every expense that you have and make sure it is as low as possible. Instead of renting your own apartment, consider having a roommate.
Sell your current car, and use cash to buy an older car that will get you around. Living frugally in this situation is not optional, and it may take you several years after you improve your income situation to fully recover from being this poor. If you can limit the amount you borrow and avoid using credit cards at all, you will be better off once you begin to make more money. Even though you are struggling, you can still be happy when you are poor.