How-to Tuesday: Living on a Tight Budget

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We all know it: living within our means is the key to our financial success. However, simply knowing it does not mean that everyone is easily able to master living well on a limited budget.

A large portion of US residents are currently living below the poverty line, and those who live just slightly north of the poverty line are also feeling the strain of limited funds. Even those people who bring home significantly larger paychecks have acknowledged the importance of living within their means, especially since The Great Recession, which began around 2007.

If you have decided to live within a monthly budget, you have already taken the most important step toward achieving financial solvency regarding your personal finances.

By following a set of rules every month, you will be able to stretch your dollar further and ensure that you will not run out of money before your next paycheck.

First and foremost, you must have a good handle on exactly how much money you are earning each month, how much you will take home, and what percentage of that money will go toward paying your bills.

Make a list of all of your recurring bills that you are obligated to make payments on every month. Once you are sure that you definitely have enough money to cover all of your fixed expenses, you can then take a look at your discretionary spending.

This is where most people can make cuts in order to live a more comfortable life without money stress hanging over their heads making them feel irritable and less likely to enjoy life.

Be sure you take a hard look at all of your discretionary spending. Be sure to separate your wants and needs. Get into the habit of making yourself wait at least 24 hours before making a purchase that falls into the “Wants” category.

Living life on a budget does not mean you can never purchase something you want – but what it does mean is that you will have to decide which “Want” item(s) will make you the happiest. Life on a tight budget means you will not be able to live in the good part of town, in a cute house, with a bunch of children and a houseful of the latest technological gadgets, however, you can probably choose one item from that list. Choose wisely, and be sure that your choice(s) will fulfill you the most.

Once you have your priorities set, you’ll be able to take a look at some items in your discretionary spending that you can do without. Areas where you can cut back include: cable TV, Internet access, cell phone plans, clothing and household items (try thrifting!), and food (stop eating out and go homemade).

As a whole, Americans spend a ton of money on food each month and that doesn’t have to be the case. Even if you hate cooking, it actually pays for you to take the time to learn how to cook some simple recipes at home several days a week, if not every day of the week.

For some simple at-home recipes with inexpensive ingredients that taste delicious, simply click here.
Stay tuned for next week’s edition of How-to Tuesday!

Image credit: Katie Brady

 

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