Is your paycheck struggling to keep up with your expenses?
You’re not alone. As inflation rises, the value of the dollar gradually decreases. Although your fixed expenses like rent might remain unchanged, it’s consumer goods and services that will put your disposable income to the test. As the prices of these goods go up, you’ll start feeling like your income has been reduced, even though your salary hasn’t changed.
Increasing your income is the ideal option, but that’s easier said than done. In the meantime, it’s important to learn how to get by on a lower income. Continue reading for a couple of tips.
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Reduce Your Primary Expenses
A big chunk of your income goes into primary living expenses like housing, food, and healthcare. If you’re in a position to reduce any of these expenses, do it.
If you’re renting, for example, you can relocate to a smaller house or a cheaper neighborhood. Shaving even 100 bucks off your monthly rent can go a long way in easing your money problems.
If you have a mortgage, explore the possibility of renting it out and moving to a cheaper house. Just ensure that the rent is higher than your mortgage payment and that the tenant is reliable.
When money is tight, it’s prudent to reduce your trips to restaurants. Preparing meals at home will save you money.
Cancel Unnecessary Subscriptions
The average consumer in the United States spends about $133 each month, such as video streaming services, cable television, and home internet.
When times are good, it’s easy to rack up several subscriptions without noticing. And when the hard times roll around, it’s time to start canceling some of those subscriptions. Heck, you might even realize that you have active subscriptions that you haven’t utilized in a long time.
While most subscriptions can be canceled with a few clicks of the mouse, some require more work. For example, if you’d like to cancel a timeshare contract, it might not be as easy as calling up the property manager and asking them to rip up your contract. You will need to hire a timeshare cancelation company.
Draw a Monthly Budget
After cutting some of your expenses, you’ll have freed up some of your income. However, you need a budget to ensure the money is going to the right places.
Try to stick to the 50/30/20 formula. This means you shouldn’t spend more than 30 percent of what’s left after you have paid your basic expenses on secondary expenses like travel and entertainment. 20 percent of what remains should go into savings.
Speaking of savings, when you’re on a lower income, the last thing you want is emergency expenses catching you unprepared. You might go into debt if you’re unable to pay an unexpected bill.
Lower Income Calls for Financial Prudence
Whether you’re feeling the pinch of inflation, lost one of your jobs, or your business’s income is declining, a lower income needn’t get you stressed. With a simple reorganization of your lifestyle and priorities, you can get by on a reduced income.
Explore the business & finance section of our blog for more money tips.