How to Manage Your Money on a Slim Income

There are thousands of reasons you could be living on a really slim income. Maybe you and your spouse are both attending school and you each have part-time jobs. Or perhaps you chose to follow your dream of being a writer, but your income is nothing to brag about. It’s really okay if you don’t make a lot of money. If you want to be better than poor, though, you have to be serious about managing your finances so one day you can worry less about money.

© chayathon2000 / Dollar Photo Club

My husband quit his job a year ago. What a year it’s been. When he quit his job, he actually didn’t have the intention of starting his own business, but a few months later he was filling out the business registration application and pretty soon he was working for himself.

All while this was happening, I was working hard on my blog, to build it up as a business and always improve my writing and content.

Our budget has been incredibly tight as we’ve pursued our dream jobs. When starting a business of your own, you should really have all your ducks in a row beforehand. That just wasn’t the case with us. We started our businesses with little to nothing to our names, and we still have little to nothing to our names. But, that’s okay, because it has made us work harder and be more grateful for what little we do have.

How to Manage Your Finances on a Slim Income

For whatever reason you are living on a low income, you need to know how to manage that money. If you deal with your money willy-nilly, it will be much harder for you to get ahead and ultimately find a way out of your situation. These are the steps you need to take to manage your money when you are living on a slim income:

Prioritize Expenses

Take out a piece of paper and write down all your expenses. Once you have them written out, go through and put the most important one first and write down others to follow. Cross out expenses that are not necessary.

The only expenses we currently have are our mortgage, utilities (gas, electric, water, sewer, phones, internet, and trash), food, and gas. Nearly everything else is treated as a luxury, except for something the girls might need like diapers.

Stop Spending Money

You must go on a spending freeze if money is tight. Spending money will only jeopardize your ability to pay the bills that you just prioritized above.

We have been doing a pretty strict spending freeze over the past year. While it’s been extremely hard, it is one of the main reasons we still have some savings left.

Lower Your Expenses

Getting your high priority expenses as low as they can go will be a challenge, but you have to do it so you can save that money and pay for your other bills.

Most utilities can go lower if you work hard at it. For example, your electric bill might be low, but maybe you always forget to unplug unused chargers or turn off your computer when you aren’t working on it. Those things can save you some real cash over time.

Be sure to do this step after implementing a spending freeze. It doesn’t make any sense to lower your expenses but then continue to spend money.

Insure Yourself

You can’t afford to live without insurance. Home, auto, and health are probably the three that you need to have no matter how much money you make. If you were to have a terrible auto accident and you were without both auto and health insurance, your financial picture would only get much worse. Be sure when you are going through your expenses that insurance is listed as a priority.

Pay Off Debt

If you are drowning in debt, you will want to put this expense as a priority in the first step. Otherwise, pay the minimum each month on your loans and/or credit card debt. If you can afford to pay more, do it. It can be even harder to pay off debt when interest has been adding up all along.

We had some debt on a shed that we bought before my husband quit his job. The shed was on a no-interest financing plan for 12 months, so we had until April of this year to pay it off. Let me tell you, even though we weren’t paying interest on it, the shed was really hard to pay for each month. Any money we had to pay towards it meant that we had to spend less elsewhere.

Save

Saving a certain amount of your paycheck should become second nature if you are not making much money. You will continue to live paycheck to paycheck until you can build up your savings. You should start by putting money into an emergency fund and then move onto saving for future purchases, such as a home or a car.

Make Extra Money

Making more money will help tremendously when you are not making much. If you have time, do a side hustle or get a part time job to help increase your income until you can reach a point where you are no longer struggling to pay bills.

If you’re on a slim budget because of a business, you might think that you can take money from the business to pay for what you need. But most businesses take time to reach a point where you should take a salary. It is smarter to continue to invest in the business than to take money for your bills.

Invest

Investing is an important tool to building wealth. You make the call how much you invest, but the sooner you start the better. Even if it is just a few cents here and there, it could add up in the long run. Check out this review of the Acorns App to see if this kind of investing makes sense in your situation. You should also take advantage of a company 401(k) match. It’s free money.

Find Ways to Give without Money

It might be easy to say, “I’m not making enough money to give or donate right now, but as soon as I am I will give a lot.” Don’t ever say that! Do what you can with what you have and always try to find a way to give back.

You don’t have to give in monetary ways to make a difference. You could volunteer or give a helping hand to a neighbor. If you are only thinking of yourself and your situation, it can make things so much harder. By reaching out to others less fortunate or in need of some company, you will see just how blessed you are.

Living on a slim income can feel like you are in a tunnel with no light in sight. But as soon as you decide to manage your money according to the above steps, you will see the light at the end. There is a better way to live, you just have to be diligent to get there.

I am not a financial professional so this should not be considered financial advice. It is for your information only.

Linked to: Frugal Friday

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Charlee Flaminio

I'm a mom of 3 on a journey to feed my family nourishing foods. Personally, I believe you can cook healthy food and still have time for your loved ones.

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