Budgeting on a Low Income

Budgeting on a Low Income

Ways to Help You Budget on a Low-Income

Introduction to Budgeting on a Low-Income

This e-learning course will teach some effective ways to budget for those living on a low income. This course will include best practices for those who live alone as well as in a family environment. The purpose of this course is not only to help you with spending less, but also instruct you on how to have enough money after spending on necessities for leisure. 

Getting Started

What you need to know to start budgeting

Getting Started With Your Monthly Budget

Before getting started with writing out your budget, it's important to know why you want to budget because it takes an extended amount of dedication. It's a true commitment that will definitely make changes in your current lifestyle and you must be prepared to make those changes. Once you understand why you are budgeting, then you will need to know how to prioritize your needs and wants.  This will ultimately help you with having more money in your pocket. Once that is prioritized, you will move to making a savings goal list

Needs Versus Wants

What is a Need?

Needs Versus Wants

What is a Want?

Watch the short video below that will help you differentiate between your personal needs and wants.

What's Next?

Making a goal list

As mentioned before, it is very important to know why you are budgeting. It is very difficult living on a low-income. It's tougher to accomplish things like buying foods that you want to eat, getting transportation, finding a decent place to live, and paying bills on a low income. So you have to ask yourself what is it that you want to save for? Are you saving just to have extra money in your pockets? Are you saving for a new car? A vacation? A new house? How much do you want to save each month? You have to first learn to prioritize your spending and activities, then your next task would be writing a goal list for your savings.

Prioritizing Your Spending

Starting a new budget can sometimes be overwhelming because you know that you have to save but you just don't know how. But it doesn't have to be so overwhelming. After sorting your needs and wants, it's best to examine your activities, especially the ones where you spend the most. Once those activities are examined you will need to prioritize by either reducing those activities, replacing them with more affordable ones, or cutting it completely out of your spending. 

Prioritizing Your Spending (Short Quiz)

Select the answers below that will help you save the most.

  • You spent $60 per week on gas, so you decide to the bus for half the week
  • You canceled your Hulu subscription that costs $10 per month and kept your Netflix subscription costs $8 per month
  • You are using fans in your home this month instead of using the air conditioning
  • You have been cooking a lot so you decide to eat out every day this week
  • You go out with your friends every weekend.
  • You get tired of washing dishes by hand so you use the dishwasher after every meal.

Setting Your Financial Goals

Savings Goal List

Try to compose at least 3 personal budgeting goals for the next month. In these goals, list how much you want to save this month for each goal. For example, if you have been spending $60 per month on fast food, a good goal to save money would be $30 for fast food this month and you save $30. Creating monthly budgeting goals will help in accomplishing bigger long-term financial goals; i.e. buying a car or home.

Writing Out Your Monthly Budget

The Math in Budgeting

Before you get started with writing your monthly budget, you need to understand how to calculate your budget. Basic computation will give you your savings. The simple formula is Savings = Monthly Income - (Needs + Wants). In order for the calculation to be precise, all of your wants and needs should be added, including unexpected expenditures. It's mandatory to include space in your budget for unexpected expenses.

Below is an example of a monthly budget that includes Monthly Income, Expenses (Needs and Wants), Total Expenses, and Savings.

Short Budgeting Quiz

True or False

  • It is mandatory to insert your Monthly Income on your budget in order to calculate your savings.
  • Savings is calculated by adding all of your monthly expenses.

Time to write you own budget!

For the next 10-15 minutes write and submit your own monthly budget. The budget should include your monthly income, your prioritized wants and needs, the amounts for each monthly expense, total expenses, and savings.

Complete the Post-test to show what you have learned.

Drag the matching Need and Want on the right to the correct terms on the left.

  • Groceries
    Need
  • Gasoline
    Need
  • Movies
    Want
  • Concert Tickets
    Want
  • Electricity
    Need
  • Insurance
    Need
  • Vacation
    Want

Of the items listed below, which one would definitely be a WANT?

  • childcare
  • transportation
  • electricity
  • movie night
  • water

Sam has noticed that his electric bill is at its peak during the summer months. To maximize Sam's savings, what would be his best option?

  • Pay more each month so there will be a credit on the next bill
  • Keep the air conditioner on 70 degrees all summer and never change it.
  • Purchase fans and use them instead of the air conditioner

Fill in the blank with the correct savings amount.

If someone spends $100/month on childcare, $200/month on groceries, $300 on utilities, $60 on transportation, $150/month on miscellaneous expenses, and their monthly income is $2000, their monthly savings would be  

True of False

  • A WANT is something that is essential or required.
  • A good example of prioritizing your spending for maximum savings would be cooking at home instead of eating out.
  • A new cell phone can be a want or a need.

Rank the items below according to what would save you the most (top to bottom) using the 'June Budget'.

  • No video games in June
  • No sporting events in June
  • Go grocery shopping 3 times instead of 4 times in June- Saving $35
  • Spend $20 less when going out with friends
  • Purchase fans instead of using A/C- Saving $15