Are you living on paycheck to paycheck? Or maybe you are living with a disability or on an extremely low income? The fact is, that many people today live on a very low income, and it can be difficult to make ends meet if you don’t know where to start.
If you have a disability of some kind, you are probably receiving some form of disability benefits, but that’s about it. There isn’t much to go from.
It can be hard to manage your money when you are on a low income or have a disability. This can lead to stress and anxiety about future payments of rent and bills.
It’s not easy. Sometimes a disability can make people unable to work, and then you can’t just get that second job to bring up your income.
If you are living on a very low income, you are probably worried about being able to pay your bills all the time. Money is always a stress factor and it is always something that pops up in your brain.
Of course, you get frustrated and scared for your future when you can’t seem to make ends meet in your budget. In this article, I will show you 12 ways that you can get your financial situation under control – even on a low income.
How you can survive on a low income
Apply for additional assistance
Living on social security disability can make it tough to make ends meet. Even covering your living expenses can sometimes be challenging. If you are really struggling with social security disability you may want to consider applying for additional benefits.
This could be benefits such as food stamps, supplemental security income, and medical assistance. These can provide you with something extra during the month.
It’s important to keep in mind that these additional benefits are based on your income limitations and needs. If your household income exceeds the limits established, you will not qualify for these additional benefits.
Go through your fridge, freezer, and pantry
By going through your entire food storage and writing every item down on a piece of paper, you will be able to see which foods you already have, and which meals you can make out of these.
Go through your pantry, your fridge, and your freezer. This way you won’t be wasting any food if you use up what you have already.
Build your foundation
It’s time to put a system into place. If you don’t already have on that is. First thing is to build your budget, second is to pay off debts, and the third is to start a savings account.
Budgeting may seem like something people on a higher income do, but having a budget is even more essential if your income is low. You need to have a way to track your income and expenses. Otherwise, you will tend to overspend.
You need to write down anything you are spending money on. Rent, bills, food, clothes, school supplies, etc. Write it all down. You also need to write down any income you have. This will give you a better overview.
The goal of a budget is to spend less than you earn. Especially on a low income, spending less than you earn is extremely important, as you will go into debt otherwise.
Use the CLARK method for budgeting
If you have never made a monthly budget before it can seem overwhelming. This is where the CLARK method comes in, which is a 5 step system to build your budget.
CLARK stands for:
C = calculate your income
L = list your expenses
A = analyze your spending and set goals
R = record/write down everything
K = knock out debt and build your savings
Step 1: figure out your income
First things first you need to figure out your exact income. Even if you are living paycheck to paycheck. Your income is your salary after taxes, which is what you are able to spend on bills, rent, etc.
Step 2: list your expenses
The next step is to write down a list of everything you spend money on. Start by going over last month’s statements and bills by using categories such as rent/mortgage, groceries, cell phone bill, etc.
You will also want to write down those bills you are paying for annually and calculate what you will have to put aside every month for this bill. This way you will not be caught by surprise, once you have to eventually pay the bill.
Fixed expenses could be:
- Property taxes
- House insurance
- Cable, cell, electricity, gas, water, etc.
- Lease or loan payment
- Vehicle insurance
- Life insurance
- Bank fees
Variable expenses could be:
- Personal care items
- Fuel / public transportation costs
- Clothing and shoes
- Work lunches and snacks
- Eating out
- Car maintenance
- Sports activities
- Other hobbies
- Magazines, newspapers, books
Step 3: analyze your spending
Now that you know how much you earn and how much you spend, you need to plan how you spend your money. In this step, you should set realistic monthly goals for every budget category.
Plan your spending amount by setting an amount of money for each of your budget categories. Categories can be:
- Rent or mortgage
- Debt – student loans, house loans, etc.
- Cell phone
Record your spendings throughout the month. Write down every dollar and penny you spend. This way you will know exactly how much to budget for the next month.
Step 4: record everything
The only way you can know how much money you spend is by recording and tracking everything. You can use a Google sheets spreadsheet, or you can use budgeting apps like Mint and YNAB.
Check your spending habits at least once a week and see if you can find any patterns in your spendings. Adjust your budget as needed.
Step 5: knock out debt and build savings
If you manage to have any leftover money in your budget by the end of the month use these to pay off any debts. This way you will be able to pay off your loans faster.
If you are just getting started organizing your finances, using a pen and paper works just fine. It’s a good idea to keep it simple and write everything down with a name and money amount.
You can also use an excel spreadsheet or a free website like Mint.com.
Get rid of bad habits
I know this is sometimes easier said than done, but it can be the only option you have.
It’s not nice or even polite to tell someone to quit smoking or drinking, as many will feel offended when told this. However, if you live on a disability income or a very low income, you will have to prioritize.
How many cigarettes do you smoke in a day? That’s how many packs every week? Did you go out for a drink after work on Friday? Even if you are addicted to cigarettes, they are not something that you need.
Things you need are stuff like rent, bills, and food. Cigarettes are an extra thing and a very expensive extra thing that you will have to cut out if you want to make ends meet. Everything that is not a need should essentially be cut from your spendings.
It’s a mean circle. Money problems can lead to bad habits, and guess what: bad habits lead to money problems. Ironic, isn’t it?
You need to find a way to understand that the need to quit smoking or at least cut back severely, is essential if you want to save money for your actual needs.
Carry cash on a low income
So many people never use cash anymore. Unless you are paying for bills, carrying cash is a great way to keep track of your money. Paying with credit card only makes you more prone to make those irrational and impulse buys.
A great idea is to carry larger bills, like $50 or $100. Research shows that you are less likely to want to split these bills, and you will rethink your purchase whether it is worth it or not.
Another tip is to carry only what you need to for the day. Split your cash into envelopes for your food shopping and carry whatever food money you have for the week.
Reduce housing costs if you are on a low income
Rent is usually the biggest expense in any budget. Rent can drain a budget very quickly. A general rule is to keep your housing costs or rent expenses below 35% of your salary after taxes.
If you are renting an apartment or room try to:
- Find cheaper housing if it’s available
- Talk to your landlord or landlady about trading work on the property for a reduction in rent. See what options they have.
If you have a house try to:
- Rent out a spare room if at all possible. You can also rent out space in your garage to help cut down on house payment cost
- Maintain the house in order to avoid costly repairs
- Keep an eye on your household bills – switch the lights off when not using them, take showers instead of baths, run full loads of laundry, fix running leaks (like your toilet or showerhead), etc.
Keep entertainment costs low on a low income
If you are on a low income, you simply don’t have the money to eat out several times a week or go for a beer with your coworkers after work. You won’t have the money to go to the movie theatre either. That doesn’t mean you can’t have fun.
Instead, you can:
- Invite your coworkers or friends to your place and ask them each to bring a dish – this way you can have a sort of buffet and everyone has brought something. Of course, you will need to make something too.
- Have movie nights at home – if some of your friends or family members have Netflix ask to borrow their account for the evening (Netflix is something you will have to cut out of your budget too on a low income)
Be mindful of grocery expenses on a low income
With planning, you can reduce your monthly grocery bill by a few hundred dollars. You can save money on groceries by:
- Making a menu plan each week and only buy the items on your list
- Planning your weekly meal menu by seasonal items and what’s on sale at local stores
- Avoid spending extra money on chips, soda, candy, etc.
- Cooking everything from scratch (this will save you tons of money and is much healthier too)
Cut out unnecessary spending
It sounds like a no brainer, but so many people don’t really think about it when they go out for lunch with their coworkers or go out to dinner with their friends.
The fact is, that if you are on a low income, this is something that you cannot afford. You will have to say no to going out.
Save money with coupons, vouchers and discount codes
There are companies like Groupon, vouchercodes.co.uk, and Hotukdeals that offer a wide are of money-saving opportunities when it comes to groceries.
If you have to shop for anything, remember to type in “vouchers” or “discount” after your search to see if there are any sales or deals.
You can also save money on a low income with cashback by using sites like Topcashback and Quidco, which are 2 of the most popular websites for cashback in the UK.
Sell some of your things to make extra money
Cleaning out your closet once a month and selling clothes you are not using is a great way to add some extra money to your budget. Go through every room and cabinet in your apartment or house and see what you have, that you haven’t used in a long time.
You might be surprised what people are looking to buy.
Buy second hand on a low income
Just like people would buy your used items, you can buy other peoples used items to save money on clothing for instance.
You can buy literally anything second hand, though I wouldn’t buy underwear second hand. Maybe some would, but I can’t really get myself to do that.
It can be really hard to create and stick to a budget on a low income. But it is possible. It is important that you don’t ignore your financial situation and start taking matters into your own hands.
It’s extremely important that you learn the difference between what you need in your budget, and what you want. Being able to pay your rent will keep a roof over your head, and that exceeds your want (not need, even though it may seem like it at the moment) for cigarettes (if you smoke that is). At least in my opinion.
By tracking all expenses you will be able to stay on top of your low income.
Are you living on a low income and struggling to pay your bills? What are you doing to make ends meet? Let me know in the comments below…