Do you have a budget for December? Christmas is an expensive time of the year for many families with low incomes. The festive time is a time for joy, celebration, and togetherness. However, it can also be a time for financial stress, especially if you are not careful with your spending. That is why you need to budget on a low income in December to have enough for 2024.
How can I pay for accommodation, food, insurance, healthcare, debt repayment, and entertainment if I make $1,000 monthly after taxes? This might be pretty low for some, as there is much to cover with a small income like this. But the answer to this question is to make a budget.
In the United States, the minimum wage is $7.25 per hour or about $1,218 per month. However, states can determine their minimum salaries above the federal floor level. You can plan for every dollar you have with a budget. It’s not magical, but it stands for greater financial independence and a life with less stress.
How do you budget your money on a low income? Here are some tips that can help:
Prioritize Expenses: Your spending habits significantly affect your financial journey. Being mindful and purposeful about your spending can lead to greater financial freedom. If your monthly expenses are higher than your monthly income, it is time to prioritize the most important expenses to you and cut the remaining. Prioritize your spending based on what brings you the most joy and memorable experiences. Looking at it from the perspective of managing travel expenses, sometimes it’s worth splurging a little on activities or meals that will make your trip even more special.
Make a list of your expenses and prioritize. You can list all the holiday-related expenses, including gifts, decorations, food, and activities. Prioritize the most essential items and allocate funds. Focus on what truly matters and avoid unnecessary costs.
Cut Costs: As living costs continue to bite, you must cut expenses to save money on a low income. Avoid excessive spending and prioritize saving and investing over unnecessary costs.
Create a Budget: When budgeting on a low income, most people never consider creating a budget because they feel there is never enough money to last until the next paycheck. If you find yourself tight on cash, where it’s due to low income, then budgeting can help you get out of your situation. Budgeting on a low income can feel like an uphill battle. But creating a budget doesn’t have to be a stressful experience. Track your income and expenses to understand where the money is going. This will help you make informed decisions and prioritize your spending.
Budgeting sounds more trouble than it’s worth, but it can help build savings. Having a budget opens your eyes to where your money is going.
Budgeting on a low income in December doesn’t mean you must miss out on all the fun. During this time of the year, you must avoid overspending, prioritize your expenses, and reduce stress. It can also help you reach your year’s financial goals.
Save: We are in December. How many months of emergency savings have you saved up? Saving money is the cornerstone of achieving financial goals.
Let’s dispel the myth that saving money on a low income is impossible. Developing a good saving habit can be challenging, but doing that on a low income can be more difficult. While this can be discouraging, no amount is too small to be saved. A well-structured savings plan involves:
- Regularly setting aside a portion of hourly income.
- Creating an emergency fund.
- Working towards short-term and long-term objectives.
Here is a curated list of helpful tips to help you save more effectively on a low income:
- Make a list of your new month’s expenditures.
- Set a spending goal.
- Set a food budget by cutting down on restaurant spending and choosing the most effective one, which is through home meal planning.
- Take advantage of fee-free savings bank accounts.
- Keep looking for a better-paying job and diversify your source of income to widen your financial capability.
- Reduce entertainment costs and find either affordable or accessible entertainment opportunities. Better still, create entertaining opportunities for yourself at home at zero cost.
In conclusion, if you live on a small income, you know that almost no one tells you how to budget with a low income.
Many people do not have a savings problem but an income problem. It is not easy to save money when you have a low income. You have first to meet the basic life necessities before saving crosses your mind. And low income is among the five factors that can ruin your financial future. We advise that you focus on increasing your income, keeping to a budget, building savings, keeping debt to a minimum, buying assets, and living within your means.
