If your income suffered a hit recently, dont panic. Instead, read the advice below and learn how to make some lifestyle adjustments in order to get by.
Adjusting to life on a lower income is difficult and, often, quite depressing. Pay cuts, divorce and health concerns can all lead to changes in your income. Although you cant always control these unfortunate events, you can adjust your attitude.
Focus on finding creative new ways to get by with less money than you are accustomed to. Carefully plan your budget, make some changes in your lifestyle and cut all unnecessary spending. You will see that living on a lower income is not only possible, but also satisfactory.
Planning where every penny is going and adjusting your spending habits will take some patience and organizational skills. However, its the necessary thing to do if you want to avoid getting calls from collection agencies and maxing out your credit. We have some advice on where to start, below.
First off, carefully assess your income and spending. See how much money comes in and where it goes. Creating a budget will give you a clear picture on how much money you need for household bills, insurance and paying some debt off, if thats the case. Also, set 10 percent of your income aside for savings.
After that, assess how much you need to cover your living costs. These include food, transportation and health expenses. Whatever amount you are left with you can use for leisure purposes: going out, eating out, gifts, personal purchases and so on. Here is an example of a low income budget to inspire you.
Cut your spending
A lot of people complain of never having enough money, but pay an impressive amount of cash for cable, an expensive cellphone plan or too many nights out. Once your income suffers a hit, carefully assess if you really need that many movie channels or magazine subscriptions. Consider switching to a prepaid cellphone plan, jogging outside instead of going the gym and pampering yourself at home instead of booking a day at a spa or an overpriced hair salon.
By refinancing your mortgage you can benefit from better home loan interest rates and a lower monthly payment. If thats not the case, maybe you will be able to make the switch from an adjustable-rate mortgage to a fixed-rate one. At least this way you will know how to properly budget your payments and you wont be affected by the fluctuation of interest rates in the next years.
Plan your meals
Save up on your grocery shopping by creating a meal plan and sticking to it. Always take a list with you at the grocery store. Do your best to avoid impulse purchases. Take full advantage of coupons and sales. Pay with cash and pay attention when the cashier scans your purchases so that there are no mistakes.
Cut your credit cards
This might be the toughest change to implement. Credit cards create the illusion that you have a safety net in case you run out of money or in case of emergency. Its better to set up an emergency fund instead. If youre not ready to cut your credit cards, at least leave them at home so you wont be tempted to use them.
Living on a lower income doesnt mean you wont be able to enjoy going out or buying a new pair of shoes. As long as you plan and budget all of your purchases you will be able to enjoy a satisfactory lifestyle. Good luck!