When income is limited, there is only one way to increase the amount of money you have available, and that’s to cut down on some of your expenses. The following are some easy-to-follow tips that will help you save money, increasing margin within your budget, even if your income is currently limited:
1.) Pay Off High Interest Debt First
One way to increase your margin and save money is to pay off your high interest debt. More specifically, this refers to your personal loans and/or credit cards. Aim to pay down the debt with the highest interest rate first, then tackle the others.
2.) Cut Large Expenses
Obviously, when trying to save money, you need to cut down on your most costly expenses. For example, start cooking more meals at home and save on the cost of going out-to-eat. You can also cut out unnecessary expenses, such as your cable. Write down all your current expenses and try to cut down or remove the largest expenses as this will impact your overall cash flow the most. Don’t be afraid to consider moving into a smaller place if your housing costs eat up too much of your income.
3.) Utilize Programs Available to You
If you are considered low income by the government, you might quality for the Earned Income Tax Credit (EITC) on your taxes, this will mean you get a better tax refund, which can go a long way towards helping you increase your savings or build one for the first time (more on this below). Some families can get as much as a few thousand dollars from the EITC. You might also qualify for food stamps or other government programs that can help you get through this tough financial time.
4.) Trim Your Budget
In order to create more margin in your budget, you have to make sure you have reduced your spending as much as possible. Prioritize a few categories in which you want to indulge and then make sure the rest of your budget is as lean as possible. This might mean you have to make sacrifices. That’s okay, though, because you won’t have to do this forever.
5.) Create a Savings
When you don’t have a savings to speak of and something breaks, what do you do? If you are like most people, you charge whatever repair or purchase that is required to a credit card. This only perpetuates the problem you are in, though by increasing your debt. In order to break the cycle, you need to create a savings. Many assume you have to have thousands of dollars available in order to start a savings account, but that’s just not true. Set aside $10 or $20 every week or so for your savings. Eventually, that money will add up. Use your tax refund to get a head start. That way when something breaks, you have money available to use and don’t have to increase your debt. If you currently don’t have any savings at all, you aren’t alone, so don’t feel bad. According to CNN, some 25 million Americans live paycheck to paycheck, meaning they don’t have substantial emergency savings.
The five tips listed above will help you create a little breathing room in your budget, even when your income is limited. Though most won’t be necessarily what you “want” to do, they have been proven effective to slowly help you climb out of the paycheck to paycheck hole. Therefore, they are at least worth trying!