There’s no doubting that the events of 2020 and 2021 have had a significant financial impact on the majority of us. The global economy is in a depression, and the UK entered recession for the first time in 11 years in August.
If you’re one of the many people who has had their income impacted by pay cuts, furloughs, or even redundancy and job loss, you’re probably still reeling and trying to find out how to manage your money on this new, lower income.
Please don’t give up. There are ways to get by. We took a look at budgeting on a low income.
Budgeting On A Low Income – Don’t Ignore The Problem
The worst thing you can do is act as if you aren’t in this predicament and go about your business as usual.
It’s tempting to attempt to maintain the lifestyle you’ve grown accustomed to, but it’ll only end in disaster. I understand how difficult it is to move from having wonderful things to needing to make sacrifices. To seeing your pals still having fun and going on vacations.
Don’t wallow in self-pity; this circumstance won’t persist indefinitely. Also, don’t fall into the trap of thinking you should “treat yourself” since you’re going through a difficult period. You will quickly spiral into debt if you try to maintain your previous earning lifestyle – and debt is much simpler to enter into than it is to get out of.
Prioritise Costs
What are your budget’s absolute must-haves?
Household Bills (Mortgage/Rent)
Expenses for food, fuel, and travel (to get to work)
Once you’ve figured out what you need, get rid of the remainder.
Stop subscribing to magazines, cancelling expensive gym memberships, and eating out. Decreasing the non-essentials should give you the breathing room you need in your budget, but if you’re still in the red at the end of each month, you’ll need to focus on cutting these essential costs.
Monitor Your Situation
You can reintroduce the fun stuff if your budget is on track and you’ve become acclimated to handling this new, lesser income. Budgeting isn’t about starving yourself; it’s about making every penny work for you.
Budgeting On A Low Income – Track All Spending
It’s simple to examine your Direct Debits and determine where the majority of your fixed expenses are located, but what about variable spending? Food shopping, a quick trip to B&M for a £1 cleaning product and leaving with £70+ worth of trash, and the occasional takeaway coffee.
These costs mount up quickly and aren’t always something you’d think to plan for. Make sure that little leaks aren’t sinking your budget, and keep a close check on every dollar.
