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How Creating a Budget with Little Income is Easier Than You Think

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Budgets are Sexy! Or at least that’s the way some portray them to be. Some of us live and breathe to monitor every single penny that comes our way while others let their money pass them by like the time on a clock. Then of course there are others who just can’t seem to make ends meet.

If you fall into the latter rather than the former then it’s time for a financial tune-up on the way that you think about your money. I know, some may argue this point but money is meant to do three things when you take away all of the excess thoughts and principles…
Spent… saved….earned…

Know you income and money should be saved, spent, and earned
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A budget is defined as an account of gains or losses such as quality according to Miriam Webster’s dictionary. Quite frankly… I like to think of a budget as an itemized accounting of where your money goes when you spend it and how much you’re saving. One of the best things about a budget is the fact it doesn’t take any specific amount of income to create one.

1.) Know Your Income

How much you earn each day is different depending on how many streams of income you have. Most people have only one which is their employer-sponsored paycheck. But there are also other types of income such as self-employment, social security, passive income, retirement, or these days unemployment. You can’t get to where you’re going without knowing where your income is coming from.

2.) Determine Your Pay Frequency

It’s true that not everyone’s pay schedule is exactly the same. While some of you are paid at specific times or dates, others get paid a bit more sporadically. Pay frequency can vary and here a few examples…
* Biweekly- Every other week on a specific day like Thursdays…* Twice A Month- On a set calendar date such as the 1st and 15th of each month* Daily – Each day after a shift in some instances* Per Invoice Date- Ranges anywhere between 30 to 180 days apart* Once A Month- Some companies opt to pay on one set day each calendar month

3.) Add Up Your Expenses

Every household has expenses which can typically be divided into two main categories. Fixed expenses are those that don’t change from one month to the next such as a mortgage or rent payment, car note, cell phone bill, daycare, or tuition fees. Variable expenses are those that change from one month to the next like electricity bills, water bills, groceries, gasoline, and miscellaneous purchases. Adding up your expenses can be as simple as putting them into a spreadsheet or budgeting app such as YNAB.

4.) Set Aside A Percentage

Most experts recommend setting aside an absolute minimum of 20 percent of your paycheck for savings. If you don’t have enough funds left over then you can always start lower at 10 percent … even five if the situation warrants it. Any amount that you can save isn’t written in stone and can always be increased according to your income.

5.) Make the Numbers Make Sense

Once you have all of the numbers put together you’ll be able to see the financial picture. All that you have to do from there is allocate a portion of each paycheck to cover a part of each expense. For example, if you are paid every two weeks but your mortgage takes up more than a full paycheck, then you would just assign half of the payment per pay period to cover it. If you do this with all of your bills and expenses not only will you be able to cover everything each month but you’ll gain savings a step at a time as well as avoid living paycheck to paycheck.

Budgeting is an easy task once you get started and will help you feel better about your finances in the long run. One thing that you want to steer clear of though, is leaving all of the money in the same account which can create spillage. You can lessen the chances of this happening by opening an additional account for expenses apart from your regular checking and savings to ensure that the funds don’t get mixed up or you don’t come up short.

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