The majority of Americans want to save money, build a nest egg and have financial plans for the future. They have goals such as traveling, retiring early, or purchasing a dream home. That being said, when living on a low income, all of this can seem impossible. When living on a tight budget, putting food on the table and providing all the necessities is the number one priority; once this is accomplished the focus can shift towards bigger saving goals. Here are seven survival tactics when living on a low income.
1. Take Advantage of the Benefits You’re Entitled To
As a low-income family, you may be qualified to obtain Earned Income Tax Credit (EITC). This is a substantial refund on your taxes, which allows you to keep more of what you earn. In fact, EITC’s may save you several thousand dollars in taxes. You may also want to look into a 401K at your place of employment to see if your company will match a percentage of your contribution. If they do then take advantage of it, as it is essentially free money.
2. Keep Track of Your Expenses
Before you’re able to maintain a realistic household budget, you have to know where the majority of your money is going. Try keeping track of your family’s spending for a couple of months before creating a budget. Although it may be a hassle at first, ask your family members to keep their receipts for every purchase. Analyze these receipts to get a good feel for where your family’s income is going. There are many free personal finance trackers online that you can take advantage of to keep track of all your expenditures.
3. Create a Budget
Implementing a realistic budget if you don’t already have one is one of the most critical things you can do as a low-income family to get control of your funds. Try including your whole family in the budget process, as every family member will be impacted by it. Additionally, having more than one opinion on what can’t be spared and where you can tighten your belt is always helpful. If everyone in your family has a voice in creating the budget, they will more easily stick to the budget.
4. Cut Down on Big Expenses
When living on a low income, you may feel like you’re just scraping by and have nowhere to trim the fat. However, you’d be surprised by all of the areas you can reign in your expenditures. For instance, forgo your cable bill and even cut back on your phone bill by cancelling your data plan. Additionally, look into cutting down on your biggest expenses, such as your rent by considering downsizing to a smaller apartment or home. If you own a home, then look into whether or not refinancing your mortgage to obtain a lower interest rate would be advantageous. You may also consider renting out a parking spot or room in your home to make some extra income.
5. Find A Side Job
If you are unable to find any areas of your budget that you can cut back on, then you may want to diversify your income stream by making additional income on the side. Besides your full-time employment, you can look into getting a part-time job on the side that gives you supplemental income. Many side jobs can be completed in the comfort of your own home during your spare time. Consider the things you are good at doing and what sort of hobbies may bring in extra income. Easy side jobs include data entry, freelance writing, and pet sitting.
6. Take Advantage of Coupons
When doing your grocery shopping, try couponing as this can add substantial savings to your weekly grocery bill. Moreover, use incentives like buy-one-get-one-half-off that many stores offer their patrons. However, keep in mind that using coupons for luxury items that you don’t need is counterproductive to saving money and so you should only use coupons on necessitates. Additionally, it’s a good idea to buy long-life grocery products in bulk such as rice and pasta as these things tend to be cheaper when purchased in large quantities. This applies to detergents and cleaning products as well.
7. Save Energy
Household energy bills are always increasing as energy providers always inflate their prices. Due to this, it’s critical that you make sure that you’re utilizing appliances correctly. For instance, when you’re washing clothes ensure that wait until you have a full wash and use cold water whenever it’s possible. Additionally, line dry instead of using an electric dryer to save even more energy. During the wintertime, it may be tempting to make your home or apartment cozy by cranking the heat, but this can rack up a large energy bill, and so it’s best to just bundle up instead.