how to save money on low income budget

Budgeting can simply be defined as the act of planning for every money you have before you spend it. That is the most simple way of defining budgeting. When you do proper budgeting, you have rest of mind because your budgeting plan is based on the amount of money that you get monthly. Based on this, your spending is limited within the scope of the money that comes in for you within the month. A budget is talking about the income and expenditure of a person, organization, or country. Budgeting helps you to determine whether you have the financial capacity to do the thing you are willing to do. If your income can not cater for all your expenses at any particular time, budgeting will give you the opportunity to spread the other expenses till a later date when you have more money to spend.

Do you know that budgeting is so important to human lives? I know your next question is to ask me why is budgeting important?

Taking a look at the definition of budgeting, we can see that it allows us to have a proper plan on how to spend our money, and this in essence will ensure that we have more than enough to spend on the most important things and other things that can wait till we get another income. By so doing, you can not fall into debt and if you are already in debt, budgeting will help you to get out of debt by first ensuring that you don’t spend more than what you earn and by so doing, you can use the rest to offset your debt.

Now let us go to steps to budgeting but before then let me remind you to please subscribe to my channel if you haven’t subscribed and also click the notification bell. So, the steps to budgeting are:

1) You need to first know the actual income that you get for a certain period such as monthly. If you are a salary earner, you need to first ascertain your net income which is what they pay you as take home after tax and other deductions have been made. It won’t be proper to think that your gross income is your actual income.

2) You have to choose a particular budget plan but make sure that whatever budget plan you choose covers all your spending. Categorize all your expenses probably based on how important and urgent they are to you. Some will be very urgent that must be attended to quickly and some will not be that urgent and such can wait maybe till another income comes in for you. This is because you are not expected to spend all your income on expenses. You need to save from whatever income that comes in for you within the month. Most financiers will advise that you follow the 50/30/20 budget plan. Under this plan, you allocate 50% of your income on spending, 30% on wants, and the remaining 20% on savings, and probably if you have debt. This in a way will ensure that you have an automated budget system where your savings and other spending and wants are all automated. This step will ensure that you are not indebted and help you to plan for the future.

3) Monitor the execution process of your budget: make sure that you monitor to see if you are truly following your budget plan. You must do this to ensure that you have not derailed from your plan. It is part of the financial discipline.

4) Always revisit your budget from time to time: you need to always revisit your budget from time to time because there are bound to be changed in needs and wants. This might cause you to alter your budget because the new need might be urgent and as such need an urgent answer. Then at this point, your priorities have changed and your budget needs to be changed to accommodate the new need.

You have to follow these religiously so as to ensure that you don’t spend more than what you earn. Financial discipline is the key thing here so that you can have a better future.

DISCLAIMER: This is written for educational purposes mainly. It is not intended to give financial or budgeting advice whatsoever.

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