by Maria Papadopoulou

Created on: February 27, 2010   Last Updated: August 02, 2010

While everyone dreams of having millions to spend any way they please, very few people are lucky enough to see that dream become reality. Many people have to make ends meet on a tight budget, not always successfully. Therefore, it is important to learn some basic tips to be able to manage their finances effectively.

How to live on a low income

Set a specific budget

If you are on a tight budget, it is crucial to set a specific budget for your expenses. Write down your steady income per month. Set a maximum and a minimum spending limit for all your expenses on a monthly basis and stick to it.

Set aside an amount of money

When living on a low income, the insecurities of how you will manage to make ends meet in case something goes wrong are too big. For that reason, it is important to set aside an amount of money every month, in case an emergency occurs. While it is understandable that given your difficult financial situation you will not be able to save much, it is definitely better than nothing, as it can give you at least some financial security.

Cash is the only option

Using borrowed money when you are struggling to make ends meet is not a responsible move. It is bad enough that you have to worry about paying utility bills and rent, you do not have to worry about paying your minimum payment on your credit card bill as well. With credit cards it is easy to get carried away to overspend since you do not have to pay the full amount right away, and that is a trap you definitely should avoid when you are not sure if you will be able to pay the minimum monthly payment.

Volunteer to charities

By becoming a volunteer to charities, not only will you be able to help those who are in a worse situation than you are, but you will also be given the chance to attend events such as plays, tea parties or lectures for free.

Forget all about luxuries

When living on a low income, luxuries are out of the question.Cancel any subscriptions to magazines and newspapers as well as memberships to clubs or the gym. You can read the magazines and newspapers you want online as well as exercise at home. If you have cable and you have subscribed to  many channels, switch to the basic package,  at least until you can afford to upgrade.

To reduce your phone expenses, purchase phone cards and opt for pay-as-you-go cell phone service. If you are not at home much, you can cancel your home phone service. Experiment with new cooking recipes using leftovers at home,

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