Are you reading this wondering how you’re going to pay the bills?
It’s a truth more people than ever face as unemployment rises. But with people worldwide living with little income, it’s hard to see sometimes where all that money disappears to.
So here’s a quick guide to setting yourself a minimum wage budget that also allows you to save.
Use the 50 30 20 Rule For Your Minimum Wage Budget
Elizabeth Warren’s 50/30/20 rule helps those in need manage their finances more effectively. It works on the principle that for a comfortable lifestyle, whatever your salary, 50% of your income goes on living costs, 30% on non-essential spending, and 20% saving for the future.
This way, you can future-proof any emergencies that arise by having a savings fund put aside. Plus, knowing your necessary spends are covered allows you to purchase luxuries within your budget guilt-free.
The 50/30/20 rule gives you flexibility and direction. However, it isn’t compulsory, so feel free to adjust to what suits your position, but later in the article, all is explained in more detail.
Write Down Your Existing Costs
Moving your bills to somewhere cheaper is the easiest way to increase your disposable income. Firstly, write down every expense and filter into needs and wants. And be strict with yourself.
Needs are anything that, if you don’t spend it, you end up on the streets. Examples include rent, gas and electricity, primary food shop, minimum credit card payments. If you don’t have to pay it by law and it won’t make you homeless or hungry, it isn’t necessary. It’s a want.
Then write down your wants. This section is everything else, but there are some crossovers. For example, car finance is a need as you have a legal duty to repay it. Owning a car when you can cycle to work is a want. You don’t need the car, but it helps.
Analyze Your Spending Habits
Take a look at your needs section. Can you get those costs down further to free up funds? Examples include moving debt over to 0% finance or changing energy provider.
By reducing these expenses first, you know what you need to live. Then, you can look at your wants. The idea with wishes is guilt-free spending. If you’re struggling, do you need a gym membership?
And learn how to save and invest on a minimum wage salary. Even if it’s only $10 a month, this could mean you can repair your car when it breaks down.
You can also invest in cryptocurrencies. Click here for more information on how to get started with a cryptocurrency wallet.
Remember These Guides Are Flexible
Financial circumstances are so personal; it’s hard to tell everyone to stick to a rule such as a 50/30/20. Many choose 70/20/10 as an alternative, especially on low incomes, where you cannot further reduce the essentials.
But it’s good to have these goals. The goals give you direction, and most importantly, allow you to live a worry-free lifestyle on a minimum wage budget.
For more money-saving tips on keeping your finances in check, keep reading our blog.