Stretching a low income involves making hard choices. If you can't pay the bills, you must cut expenses. Successful strategies include deciding what you really need, downsizing extras, and finding alternatives to spending. Use these strategies to ride out your financial difficulties until times get better.
Decide what you really need.
In order to make changes to shrink your budget, you must know where the money is going. Save your bills and make a list of current expenses. Include payments that are charged to your account automatically every month. Keep your receipts and figure out how much you and other family members are spending now.
Divide these expenses into two major categories: necessities (things you must have in order to live), or nonessentials (things you could get by without). Typical necessities may be housing, heat, food, clothing, school, and transportation.
Nonessentials may include things like cell phones, cable TV, subscriptions, or an extra vehicle. It may be tough to decide whether an expense is necessary or only an extra, and you may have to argue over sticky items with a family member. But once your income slides too low to pay the bills, things you once enjoyed may become too expensive to keep.
After all, what's the point of paying for a fancy piece of furniture, if you don't own a living room to put it in? Remember that basic needs take priority over extras. For inspiration, think of our wild birds and animals: they are happy to enjoy merely food, water, and shelter in a safe environment.
Shrink and Downsize
Next, downsize the nonessentials you have identified. This may mean selling a vehicle, cancelling a subscription, switching to a different phone or TV plan, or even moving to a new home.
Also strive to shrink your utility bills, a major chunk of any household's budget. Unplug that second refrigerator, walk or bike instead of driving, lower the thermostat (or raise it in the summertime), and turn off what you're not using. As a plus side, these cost saving strategies will help you to live more green.
In addition, look around you for items that may be turned into cash. What do you own that is costing you money? Is there a big ticket item that you don't really need? Run a classified ad, sell it on eBay, or have a yard sale.
Downsizing also includes applying for outside help, if you are eligible. Low income people may receive help paying for food from the U.S. food stamp program, or from the WIC or school lunch programs. Others may be eligible for energy assistance, or for educational programs, such as Pell grants or an income-based student loan repayment plan.
Find alternatives to spending.
Once you have prioritized your needs and downsized your expenses, you may need to make long-term lifestyle changes. If money is really tight, whenever possible, you should find alternatives to spending. Simplify your life in order to be more frugal.
Consider making it harder for yourself and family members to run up expenses. Don't carry cash that is a temptation you don't need. If you have a credit card, cut it up don't add to existing debt. Cook and eat at home or at restaurants.
Choose free or low-cost recreational activities. Possibilities include hiking or bicycling, enjoying parks or community festivals, using the public library, or simply visiting with friends.
Most of all, don't shop for fun. Unless it's for groceries or household needs, like soap, resist the impulse to shop whenever you feel a need for something. Instead, look around you and figure out how to make do with what you already have or can get for free.
Ultimately, shrinking your expenses to meet an inadequate income can involve making hard choices. To succeed, you must set your priorities, downsize extras, and eliminate spending. But we all hope the hard times pass us by quickly, as I hope they do for you.