How to budget on a small income
Budgeting can be difficult to set up and stick to especially if your monthly income is small. If you are trying to save, have noticed the rising prices or just need to cut down to decrease your monthly outgoings then these tips could help you to budget.
• Plan ahead
When you have birthdays and special occasions coming up you may feel this take a hit on your finances. You could start prepping for these days’, months ahead. The January sales at the start of the year is a great way to scoop things up on a great deal and keep them hidden away until the day. Another way is to start saving a few months prior, putting small amounts away so you can treat your loved ones without the worry.
• Try the 50-30-20 rule
50% of your income goes on your needs which includes rent, bills, childcare etc. Anything you could not go without should be paid for with this.
30% of your income will go on your wants. This will be any clubs you are a part of or a fun day out with the family.
20% of your income is your savings. This allows you to put money aside each month in a realistic way.
If you need to adjust this to suit you, whether your list of needs is longer or you would rather save more then cut down the percentages and make it work for you.
You can figure out your proportions with this rule calculator.
• Try a budgeting app
Keep track of your finances with a budgeting app to help you stick to a tight plan. An app can help you visualise what you need to do and they can help you figure out where your money could be cut down and where is it necessary.
• Take cash to do the food shop
The weekly food shop is a huge financial taking and this could be what you struggle to budget. Inflation for food shopping in January 2024 was at 7% and inflation for restaurant and cafés had risen to 8.2%. People across the UK have noticed their food shops being much more expensive whilst trying to fill the same trolley. The average weekly food shop in the UK has been reported to be roughly £129 for a family of 4.
You could try to cut your weekly food shop spending by £10 at first, getting rid of anything you don’t need or swapping branded items for the cheaper version. Switch up your food shop to cut down the price, this might mean only having one luxury item a week, or some weeks going without.
A great way to stick to this could be taking the money in cash, if you set your budget to £115 for the shop, get this out in cash and only take this. Leave your cards and apple pay at home and make sure your trolley remains in the budget.
• Sell and buy second hand items
If you have any unwanted items, things your kids have grown out of or that you no longer want then try selling them on Facebook, eBay or vinted, You may not make much but something is better than nothing. This money could go into a pot to use for a treat or a fun day out.
Equally, if you need something then try and find it on these platforms second hand or go to a charity shop. You will be able to find something great at a much lower cost than going brand new. If you struggle with impulse spending cutting into your budget then try these tips.
