How To Effectively Manage And Save Money On A Low Income2 min. read
Many Filipinos struggle to make their means work for their expenses. It’s understandable that a number of people are not able to come up with a savings account because they think their income is either sufficient or lacking. This is what you need to understand: As long as you have an income, it’s possible to manage and save.
Below are tips you can follow to make your budget work even on a low income.
Make an estimate of your income and expenses. Start by categorizing your expenditures into two: fixed and flexible. Fixed expenses are much easier to budget because the costs are constant. For flexible expenditures, you have to fix a cap since the costs in this category are fluctuating. Next, list your financial resources and indicate how much you are getting for each. This includes your monthly salary, loans, support from parents/relatives, and other sources of income.
Set up a budget and stick to it. After establishing your expenses and sources of income, create a budget plan. Review your past expenses and see if you have spending patterns. When composing a budget plan, cross out the trivial and miscellaneous expenses from the list. This step also includes monitoring your cash flow and checking where your cash goes.
See related topic: (Five Offbeat Ways College Students Can Save Money This Back-To-School Season)
Prioritize the basics. Create a hierarchy of expenditures. Put food, rent, water, electricity, and transportation on the top of your list. Cable, phone, internet, shopping, travel, and other leisurely expenses can be placed on the bottom. Review and analyze the hierarchy of your expenses, and figure out which of them can be adjusted or dropped.
Lower your expenditures. The most challenging part, as this step will greatly affect your lifestyle. When it comes to utilities, remember that you should only pay for what you need. Unplug appliances or gadgets when not in use. Doing so can lower your monthly electricity consumption. Also, check your water pipes and faucets for leaks. Take a look at the lower part of your hierarchy of expenses. Cross out the items you can otherwise do without, such as gym memberships. Find more cost-efficient alternatives for expenses that are outside your basic needs.
Set an investment goal, or put up a savings account. Now that you have dropped your non-essential expenditures and you’ve made adjustments on your monthly expenses, you now have the capacity to stretch your budget and save some cash. Investing and saving are important if you want to increase your wealth and stabilize your finances. Put savings and investment on your top priority. It is also important to come up with an emergency fund. This will be your safety net in case of accidents, medical emergencies, or job loss.
Choose economic when shopping. If you are in the low-income earner zone and you want to save, you can maximize your paycheck by choosing cost-effective products, waiting for seasonal sales, hitting the outlet shops, or buying secondhand quality items.
IMPORTANT ADVICE: If there is a significant difference between your projected expenditures and your income, making extra money is the ultimate way to go. Find profitable gigs, sell stuff online, or put your old items up for a garage sale. Make money from your hobbies and skills. Don’t hesitate to ask your boss for a raise if you think you deserve it. Just keep earning, no matter how big or small.