For most people, it is not a great challenge to manage money when you have enough of it. These people usually follow a systematic way to cut down expenses and spend only that amount that they can, so that they don’t run in trouble. The real challenges come when you are having to live on a very limited amount of income and still try to make ends meet. There are some key elements to making a household budget work when the money comes in small amounts.
Never take on debt.
Debt can kill your finances at any level. Even millionaires declare bankruptcy when debt gets too high. Do not add to any debt that you may already have. It can be painful, but delaying purchases until you can pay cash is the easiest way to keep a bad situation from becoming worse. Learning to save and earn interest instead of spending and owing interest can keep you from paying tomorrow for today’s mistakes.
Establish an extremely detailed family or personal budget.
Budgets can help everyone. When you are tight financially, a budget can be your savior. It allows you the ability to test out how you want to spend your money before you spend it. You can look at your budget on paper and move money from one area to another until it works. Without a budget, you can easily spend the money in an area that is less important and later realize that you made a mistake after it is too late to fix it. The budget eliminates most of these mistakes by giving you a spending plan that helps you achieve your family financial goals.
Learn to negotiate for better prices.
Items that cost a lot of money can usually be bargained for. Refrigerators, washers, dryers, and other things almost always have some room for negotiation in their listed price. You have to learn to ask for a better price.
Be careful about negotiating too much for things that are not already made. Vendors may reduce quality to achieve the lower pricing. When you negotiate for something that is ready to take home, you know what you are buying and the seller knows how much profit is at risk. This makes for a more straightforward negotiating process with less risk to the buyer.
Make coupon clipping a family project.
When you are on a low income budget, saving is the name of the game. Coupons are one way that many families have successfully trimmed the budget for food and other personal and household items. Over the course of a year, you may be able to save hundreds if not thousands of dollars if you are diligent about coupon clipping. You may want to recruit others to help you locate coupon sources.
Ask creditors for more favorable terms so you can pay off debt.
It never hurts to ask for concessions from your creditors. The worst case scenario is that they will tell you no. An interest rate reduction of five or ten percent can amount to a large savings over the term of an unsecured loan. With a low income budget, you need to reduce expenses and better credit terms on existing debt is an excellent way to start. If they will not reduce the interest rate, you might get them to give you a better payment structure that reduces your monthly expenses.
Sell items that you do not use or need.
People have a tendency to throw or give away things that they no longer need. Look for ways to sell these items if they still have value. You can sell them to friends and neighbors. List them with one of the many online auctions. You can take them to a flea market or consignment shop. The list of ways to move items like this is long. Pick the ones that work best for you and what you are trying to sell and raise some cash from your junk.
Learn to say no to yourself and others.
Self-indulgence and being too generous can cost you dearly. Avoid justifying how much you or someone else deserves what you are buying. Leave it on the shelf and save the money. If you have a spending addiction or just like the good feelings from giving something away, you may have some pain when you first start saying no. In the long run, this will be good for you and your budget.
Cut or reduce any expenses that you can.
Take advantage of all of the clichés when looking to reduce or control expenses. Turn off lights. Set the thermostat at more energy favorable levels. Avoid leaving doors and windows open if the air conditioner or furnace is running. Prepare leftovers at the end of meal in such a way that you can eat them later. Find cheaper places to buy food and get services.
Look for sources of potential extra income.
This one will allow you to change the size of your budget and maybe get a little wiggle room for emergencies. Any consistent source of income can be a good thing even if it is small. Extended over the course of a year, $20 per week becomes a thousand dollars. Use this money to build a fund to cover budget-wrecking emergencies.
Learn to do your own repairs.
You cannot learn to do everything. It is possible to find out how to change a tire or your oil on your car. Small repairs around the house like fixing a faucet are easily within the range of what most people can master. Other small jobs that can cost $100 or more to have done can be learned. These repairs can save you a lot of money over time.