Budgets are a tricky thing. No one really likes them, but everyone needs one. A common thought is that budgets control your life and prevent you from doing the things you want. That really is not true. You just have to change your mindset a little bit. Budgets can help you take back control. Budgets allow you to be aware of your money and spending and control it. I know some of you are thinking, "Yeah right, I barely have enough money to pay my bills. What is there for me to budget?" While you may feel that is true, I am willing to bet there are some ways you can cut your spending.

You are probably spending money on items that you do not even realize. It is possible to create a budget on a low income. You just have to be willing to make some sacrifices. I know, I know, no one wants to hear that. However, if you are willing to make some sacrifices upfront, you can really begin to save money. Then, you will have more money to spend on the items you want.

What Is a Budget?

For you to be able to create the best budget for yourself, you have to fully understand budgeting. I am going to take it back to basics to make sure we all understand. I believe the best way for you to make decisions is to be as knowledgeable as you can be. When you have all the information, you are better prepared to make a good decision. 

Your income drives your budget, it has to because you cannot create money that you do not have. You should have your goals in mind before you sit down to create a budget. Is your goal to get out of debt? Is your goal to save money? Is your goal to save for a specific purchase? Perhaps it is all of the above.

That is all a good start. Your goals should be your own personal goals. They should not be driven by someone else. If you create your own goals for yourself, you are more likely to stick with them. The real truth is creating a budget is only part of the battle. The real test is sticking to it. If you do not stick to your own budget, then you will not be able to reach your goals. It is even possible to budget on low income. This may come as a surprise to you, but even with a low income, you may not see a huge difference to your everyday by creating a budget. 

Why Do I Need One?

According to Forbes magazine, a budget is one of the most important steps to financial independence. Forbes also mentions that budgeting is a stop people commonly skip. They believe that investing and pay off debt is a better way to find financial freedom. Those are important aspects, however, budgeting should not be overlooked. 

• You need a budget if you want to own a home.

• You need a budget if you are underpaid or your income fluctuates.

• You need a budget if you do not already have one.

• You need a budget if you have no idea what is happening with your money.

• You need a budget if you know your money is not growing.

Basically, everyone needs a budget. You should take the time to create one for yourself. You can even create a budget on low income.

I Have No Money, So How Do I Even Start?

Knowing where and how to start can be difficult, especially if you have never considered creating a budget before. There are many financial applications and websites you can use to help jumpstart your budgeting.

Key Points To Creating a Budget

Once you have gathered all this information and see it in front of you, you are probably thinking "now what?" I have a huge stack of paper that is making me feel even more stressed. Now, comes the organizing and prioritizing of all those bills. This is important for all budgets, but especially for a budget on low income.

Organizing

You must categorize the bills into essential versus non essential bills. For example, rent or mortgage is an essential bill. You need a place to live. A car payment may or may not be an essential bill. Do you live in an area where you can use public transportation? Do you have more than one car? Do you need this car to get to work? Depending on the answers to these questions dictates if the bill is essential or not. 

PRIORITIZING

Once you have put everything into a category, it is time to prioritize those bills. Before you take this step, you should add up all your current bills and determine your total expenses by adding them all together. Once you have added them together, you have a clear idea of how much everything costs compared to how much income you have. Hopefully, you earn more money than you spend. If you do not, when creating your budget is the time to start making cuts to the money you spend. This is really important when creating a budget on low income.

Budget Building Tip #1

I am going to share some of the best budgeting tips to help you create a budget on low income. As I have stated it is important to focus on how much money you have to spend each month. If you are spending more than you earn, you are already putting yourself behind. I am going to provide you tips on how to cut some of your spending while focusing on the best budget for you.

One of the best things you can do for yourself is to closely monitor your money. You should keep receipts and make sure they match up with the amount of money you budgeted to spend. If you cannot reduce the money you are spending to fit into your budget, you may need to change your budget limits. A great example of this is your utility bills. You may have done as much as you can to reduce those bills, but you still cannot make them fit in your budget. Tracking your receipts is a great way to make sure your budget lines up with spending that is somewhat out of your control. You can download an app on your phone so you do not have to keep all the paper. 

You should focus on saving money before you spend it. You should determine ahead of time how much money you want to save per paycheck. Then you have that set amount of money sent directly to a savings account before you even have a chance to spend it. The money that you have left can be used to pay for all expenses. You could even set your income amount to be what it is after you save money. That way you never even factor it in to your budget at all. 

Budget Building Tip #2

One key item that you should pay attention to when creating a budget on low income is that it is doable. If you create a crazy budget that you can never maintain, you are setting yourself up for failure.

Make sure it is something you are capable of handling. You must stay within your income. If you have created a budget that falls outside of the amount of money you actually bring home, you cannot afford it. This means you fall further into debt. You also should not create a budget that does not allow for the items you need. This is not a smart way to address a budget. 

You should focus on paying off debts. Anything that has a high interest should be your first focus. Those debts that are high interest make it really hard for you to catch up. You should focus on paying those off as soon as you can. Typically, your credit card debt is something on which you want to focus first. Try to avoid loans as much as possible. You do not want to add more debt. 

Budget Building Tip #3

When you are starting your budget on low income, now is the time to remove items from your spending. This is when you have to make the tough choices. There are things that you need, such as a place to live, clothes on your back and food to eat. Anything else you should spend as little as possible.

Your focus should be saving and paying down debt. Anything that does not allow you to do those things, should be removed from your budget, for now.

Once you have your debt under control and your savings in place, then you can begin to spend more. It is time to cancel all of those things you are not using like that gym membership you have not used in 6 months. You probably are not going to go, so cancel it.

Any subscriptions you have now is the time to cancel them, also.

Take a look at your cable and phone bill. There are probably ways you can reduce or eliminate them. You should start eating meals at home and eating out less. Now is the time to be aggressive with your budget. Walk when you can instead of using your car. You will be surprised at how much money you can begin to save.

Make a list for when you go shopping. Do not buy anything that is not on the list. This helps you stay on track with what you are buying and keeps you within your budget. You should start shopping for items when they are on sale. Possibly buying in bulk may be a good solution for you for some things. Be smart when you buy and make sure you put thought into it. You should not be buying anything on a whim. Remember, you remain in control of your spending. That means you have thought about every item you are buying. 

Budget Building Tip #4

It is important when creating a budget on low income to make sure you set proper goals for yourself. You should also reconsider your goals every few months.

You want to make sure your goals are in line with what you want. If your budget is too strict and does not allow you to get the things you want, you will not stick to it. You may have goals in addition to getting out of debt and creating savings. Perhaps you want to save for a car and you do not want a car payment. You can create that as a goal and begin saving towards it. Maybe you just want to have enough money saved for Christmas so you do not have to use a credit card. 

You may want to consider another source of income. You could either find a new primary job that pays more money, or find a side job to get you some extra money in the short term. You could get a second job that has flexible hours and you can do it on your time. You could do freelance work. You can do a search and find something that you would enjoy doing. Get a job doing that. You can make some extra money and maybe it could become your full time job. 

Budget Building Tip #5

When creating a budget on low income, you may have to make some extreme choices. For example, you may want to consider moving. If you can find a place that is cheaper to live, you might want to consider it. You need to factor in the cost of the move and any upfront costs, but it may be worth it to you in the long run to pay less money in rent.

You could also consider getting a roommate. A roommate can help you split the expenses and help you save money without you adding the cost of a move. Another consideration is do you need your car? Is it possible for you to walk or take public transportation to wherever you need to go? Perhaps you could get a cheaper car. Maybe your current car has a car payment but you can sell it, pay it off and buy a car outright. You may not be driving the latest model, but it would be cheaper for you. 

In all this talk about saving money, I do want to caution you. For the sake of saving money, you may decide to buy a cheaper product. This may be good initially because you have saved money. However, cheaper is not always better. Sometimes, the products have a cheaper cost because it is just a worse product. This may end up costing you more money in the long run. It may break on you and then you have to buy the more expensive product anyway. Do your research when deciding what product to buy. Make sure you know everything about all your options and make an informed decision. This is more beneficial to you.

Budget Building Tip #6

When creating a budget on low income, it is important to be prepared for what might come your way. You will not always be able to predict times when you will need a gift. You absolutely will not be able to predict when emergencies arise. While it is good to have money saved, you do not always want to dip into that when these events pop up.

You could create two different types of savings. One could be for long term savings, such as retirement, and you do not touch that money. The other one could be for short term savings and something you can dip into when the unexpected arises. You should have somewhere between 3 to 6 months of your expenses saved up in your short term savings. You cannot always predict these times, but you can be prepared. 

Another caution I would like to provide to you is leasing a car. There are two different thoughts on leasing a car and whether or not it is a good idea. When you are trying to save money and create a solid budget for yourself, it is not always a good idea. You are essentially renting a car. You pay a high monthly payment for a car that you just have to give back to the dealership. Most of the time, you can buy a used car and have a lower payment for a car you can own than for one you can rent. You have to spend a little time and do some research, but it will be worth it when you are saving thousands of dollars. 

Budget Building Tip #7

We all want to go out and have fun. I certainly do not want to put a damper on your fun, but remember you are working towards a goal. When you are creating a budget on low income, you have to be a little more creative.

There are many events that cost a ton of money and they may not be to your advantage. Now is the time to really think about your goal and what you want to achieve. There are plenty of activities that are free and still fun. You can look for free events and take advantage of them as much as you can. This allows you to get out and enjoy yourself without breaking the bank. You have to change your mindset when it comes to spending. You must think first, remember your goals, and spend last and less. 

Budget Building Tip #8

When you are creating a budget on low income, really on any income, you should use 50 percent of your income on your needs, 30 percent goes to the things you want and the last 20 percent goes to your savings. You should take your savings out of the mix first and act like it is not even there. This way there is no temptation to spend the money you put aside for savings. 

This may sound like an old school way to save money but you can go back to basics with cash in an envelope to spend money. You put your money in the savings account and you withdrawal the cash that you want to spend on your other needs. You can have an envelope for food, clothes, and miscellaneous. When you have spent all the money in the envelope, then you have no more money left to spend for the month.

I am an advocate for having money automatically go into your savings account. This happens for you. You do not have to remember to do it. You do not question maybe you need that money for something else. It is already in your savings account and you do not touch it. You can open a new savings account just for the purpose of having money deposited there automatically. 

Conclusion

Please keep in mind, you should focus on creating a budget that you can maintain. Your budget should be personal to you and fit your needs. Your budget can change over time. I have listed many budget tools in the article to help you get started towards creating a budget on low income. It is important that you change your mindset about budgeting. If you look at it as just one more thing you are being forced to do, you are not going to do it. Who wants to be forced to do anything? I certainly do not and not when it comes to my money. 

Remember the intention of a budget on low income is to put you in charge. It gives you control over your money and not the other way around. It puts you in a position to save money so you do not have to live paycheck to paycheck. It allows you to pay off your debt. It puts you in a better position to afford a house, or a car and all of the other things you want. It teaches you how to work for the items you want. A budget provides you the opportunity to think about something before you buy it and determine if you really need it. Creating a working budget for yourself can change your life for the better.