My family has never made a lot of money, we have typically always been a low income family. We tend to manage by saving money where we can and holding out for nicer amenities at a later time. We still have things most people have, a reliable vehicle, computers and wireless internet, cell phones, and the like, we just have to manage our money really well and wait a while in many cases.
Here is how we breakdown our budget:
70% of our income goes towards the basic bills, the mortgage, vehicle payment, insurance, and additional bills.
20% Goes to food and other necessities that we usually have to buy weekly, due to the fact that we don’t have a large amount of money to shop at the larger stores that stock bulk quantities of items. This actually is quite useful to our budget because depending on what we need, we can budget around it better and don’t buy things we don’t need or won’t end up using before the expiration date.
10% Goes to gas and extra expenses like cleaning supplies, light bulbs, anything like that. We save a pretty good bit here, we don’t use our own ink and paper if we can avoid it, we keep the lights off to avoid buying more bulbs (also saves on electricity) and we don’t spend money on clothes and other non-necessities at all.
Okay so, now you’re saying, it’s easy to put down percentages and say that you spend this much but how does that really work? Well let me break it down one more step.
Say you have an income of $1000. By my definition you would spend $700 on bills. This is pretty easy because the bills for my family are pretty much the same, with slight fluctuations in the electricity and water/heating bills. Generally if the electricity goes up, we subtract money from what’s left over after buying groceries for the week. Yes, this may mean that we rotate light bulbs around or we don’t fill up the tank on Monday, but it keeps the bills paid.
The tricky part is the food budget. Basically what we do is figure out what is on sale, through local ads, and buy what we will eat that matches what is on sale. We buy enough for that week and don’t waste time on extras or specialties. If we won’t eat it or it will end up being thrown out we don’t buy it that simple. Beyond that, we always look for coupons, buy 1 get 1 deals and anything else to keep the food budget together. If the price of our normal bread goes up, we switch brands or wait until it is on special. It also works out cheaper to buy meats from one store and basic groceries from another, which may be the case for other families who have a local meat market or a grocer who tends to run specials on particular projects.
The “extra 10% left over goes towards general upkeep of the house and ourselves, so like I stated earlier we spend that money on cleaning supplies, light bulbs, batteries, anything incidental. If however, the bills or food budget spills over this is what catches the spill. You should always plan on overages even if you budget is pretty much set in stone. If there is money left after we purchase whatever we need for the house, we save it. By saving only what is left after every need has been met, there is no need to worry about where the money could have gone.
Tips and Reminders
Regardless of how low your budget is, there are several ways to stay on track with a budget.
1. Determine what your bills are and set that amount in stone. You know that at the very minimum you have to have money to pay those bills and eat. If you have bills that fluctuate from month to month, find your high point and estimate that to be your average. This helps to prevent you from misjudging your monthly expenses should the bill be high one month and low the next. If you expect it to always be high then you will save money when it’s not.
2. Estimate what it will cost for each person in your family to eat for a week and then shop to fit that budget. If your food budget tends to be too high, try coupon clipping and shopping for things that are on sale and that everyone will eat. Switching brands and looking at how much you’re getting for the price is always key. Shop around when buying different kinds of groceries. Your local bakery may be cheaper for bread or a butcher may have meats cheaper. As always, don’t buy what you won’t use, even if it is on special.
3. Always put back a little money in case of overages. It is always good to try and prevent things from going over your budget, but, sometimes the inevitable happens. If you budget that extra 10% for entertainment or extras, you’ll be hating yourself when your water bill spikes $20 or your electric bill goes out of control. Instead, create yourself that “just in case” budget and if everything is fine that month, then by all means save that money for that new car you’ve been wanting. It is better to know you’re covered now than to wish you were later.