When you’re living on a tight budget, it’s easy to feel like there is no way out. But with a little planning and discipline, anyone can get through a cash-strapped period without having to sacrifice their future financial security. Regardless of how much money you have at your disposal, financial planning should be a priority for everyone. That way, if something unexpected happens (like your car breaking down or needing to buy new glasses), you won’t have to worry about not being able to pay the bills later on. However, even if you understand the importance of planning for the future and keeping track of what you spend in the present, that doesn’t mean it’s easy when money is tight. Here are some tips on keeping your finances in order when money is tight.
Know Where Your Money Is Going
Start by keeping track of your spending. If you don’t know how much you are spending, or where you are spending, it will be very difficult to get your finances in order. This doesn’t have to be an elaborate process. All you have to do is keep track of what you spend each month. This can be as simple as printing out your bank transaction statements each month or using an excel spreadsheet to write down every cash purchase you make. Once you have a better idea of what you are spending money on, it will be much easier to start cutting back where you can.
Estimate Your Monthly Costs
After you have a better idea of what you are spending each month, the next step is to figure out which of your monthly expenses are essential, like bills, rent, course materials, groceries, fuel, etc, and which expenses you can cut back on. To do this, write down all of your expenses and separate them into fixed versus variable expenses.
Set a Budget and Stick to It
It may sound daunting at first, but creating a budget is actually a lot easier than many people think. After you’ve tracked your spending and determined what your fixed monthly expenses are, you are ready to create your budget. To do this, you’ll also need to know how much money or income you’re generating each month. If your work hours vary each week, you’ll most likely have to adjust your budget each month.
Once you’ve determined your income for the month, deduct your fixed expenses, and whatever is remaining can go into different variable categories such as entertainment, savings, fast food/eating out, etc. Budget each category and only allow for funds that you can count on. Never include bonuses, or extra cash received from side hustles if they are not a part of your regular income.
Find Ways to Cut Back on Spending
If you still have expenses that you need to reduce, you may have to find ways to cut back on spending. For example, a simple trick is to simply eat out less. Cooking for yourself every single day may not be ideal, or even possible. This is where meal prepping comes into play. Buy groceries once a week and spend one day each week prepping and/or cooking your meals for the week. This will reduce the temptation to buy fast food for every meal, which will allow you to spend less money, and it’s likely the healthier option. You can also sell items you don’t need. You can sell old clothes and accessories on sites like eBay, Facebook or Craigslist. You can also sell old books, CDs, DVDs, and video games that you don’t use anymore. Another option is to find free or low-cost ways activities to enjoy. Many cities offer free or inexpensive entertainment options, and most colleges have several club or athletic events throughout the semester. Attend as many on campus events as possible! These are most often free with an ASB card, and usually come with free or inexpensive food!
You may need to make some sacrifices in the short term in order to get your finances in order, but doing so will make it easier to live within your means in the long term
You can keep your finances in order when money is tight by knowing where your money is going, estimating your monthly costs, setting a budget and sticking to it, and finding ways to cut back on spending. Once you have your finances in order, it will be much easier to stay on track and keep yourself out of debt.