Living on a low or fixed income means every cost you incur needs to be deliberate and well thought. A budget helps you to plan financially and ensures you stay out of debt. Through a priority list, you can balance your income to your expenses.
Not only do you get to live according to your means, but a budget also helps you prepare for emergencies and forecast for future expenses. This can be tough if your income is fixed or on the low side but not impossible. Here are a few new year financial resolutions to help you get by.
1. List your Expenses
Create a list of every cost you incur every day. Leave nothing to detail from the least cost to the highest cost. Remember those miscellaneous expenses you hardly ever think about and put them down. Your loans are also an expense to ensure that they are on the list too.
2. Do your Math
The next step is to understand every one of your bills. Analyze why they are amounting to those figures. Find out if there is a way you could minimize the cost of the bill or a way you could remove some of your expenses from the list. For example, you could use your bicycle on the weekends to save on fuel, turn the lights off during the day to save on electricity.
3. Refinance your High-Interest Debt
That mortgage could be taking a toll on your income. Consider refinancing it to a friendlier interest rate. Refinancing helps you to save money with its low monthly payments while it allows you to pay the mortgage faster. Auto loans could also be proving to be a drag for your finances. Refinance your auto loan to a more manageable interest rate.
4. Monitor your Spending
At this point, every dollar matters. Living on a low income or a fixed income means you need to be financially aware of the cash that flows out of your pocket. Avoid impulse buying and try to stick to your budget. Before buying something, you need to ask yourself if you need it first.
5. Save As Much As You Can
With limited finance, you need to spend less and save more. Saving is a habit and a lifestyle. Find ways to save each dollar because it matters. You could opt to cook instead of dining out, use coupons when doing grocery shopping, carry food to work instead of buying food, use the bus instead of a cab.
As you approach this new year, make a financial resolution to live according to your means. Whatever your income level is, the objective is to make the most out of it.