How to Budget and Save Money While Living on a Tight Income

Living on a tight income comes with unique challenges. You may find that you’re making difficult decisions about which expenses to prioritize each month. When it seems impossible to save money and budget is when it’s the most important to do so. As a prepaid power company with the cheapest rates in Texas, we understand that saving money can be hard to do. Here are a few tips for saving money when you’re on a tight budget: 

Assessing Your Current Financial Situation

First, you need to calculate your total income and expenses. Some income streams, like rideshare and delivery services, will need to be estimated. For those, use an average. As you’re looking through your income and expenses, look for areas where you may be spending money you don’t need to spend. Pick out the expenses that are absolutely necessary, and prioritize those items. 

Creating a Realistic Budget

Start by determining your financial goals. Set a budget that will help you achieve your goals, whether it’s saving a certain amount toward a purchase or knocking out some debt. In the beginning, the amount you’re putting toward your specific goal may be small. However, having goals will help you stick to your budget. Your budget should include the following:

• Funds for essential expenses, such as housing, utilities and food
• Funds for debt payments
• Funds for savings and emergencies

Cutting Expenses

Figure out how much you’re spending each month, and look for ways to cut those expenses. Here are a few areas that people new to budgeting tend to find ways to cut:

• Entertainment based spending, like streaming subscriptions
• Food-based spending, like going out over cooking at home and buying groceries a few at a time rather than buying in bulk or using coupons
• Overspending on bills that can be lowered, like cell phone plans and electricity
• Transportation-based spending, like taking additional trips in the car rather than planning out routes in advance or overpaying for car insurance 

Accounting for Savings

One of the first steps to take on your budgeting journey is to create an emergency fund. The recommended amount to have in your emergency fund is at least three months’ worth of expenses. If you’re on a limited income, it will take you a while to get there. Figure out how much money that is, and see how much you would need to put away each month to reach that goal in a year or two. If you receive unexpected income, consider adding it to your savings if you don’t need it for other expenses. Saving isn’t easy when you have limited funds, but it is possible, and it can be essential if you have an emergency. 

Managing Debt

Having a significant amount of debt can hinder anyone, regardless of income level. If you’re struggling to keep up with debt payments, look into debt consolidation. In some cases, you can negotiate your debt to make it more feasible to pay off. Creditors may be able to provide a lower interest rate, a better payment plan or even take money off of your balance. 

When you’re on a limited income, finding ways to save money can make your life much easier. If you live in Texas, switching to prepaid power through a company like Pronto Power is a great way to save money. You can monitor your electricity usage in real time and save with the lowest electricity rates in Texas. Call us today at 1-844-621-2852 or contact us online to get started.