Across the United States, many homeowners are saying yes to renovating their homes in 2024.
Key findings from Opendoor’s 2024 Home Decor Report reveal that Americans plan to spend an average of $5,635 on home remodeling projects this year. This money will be invested to breathe new life into their existing spaces.
See: 10 Expenses Most Likely To Drain Your Checking Account Each Month Learn: How To Get $340 a Year in Cash Back — for Things You Already Buy
What are Americans prioritizing with their home renovations? GOBankingRates spoke with several experts in the renovation business to learn more about homeowner ideas for improving their spaces in the year to come.
Updated Kitchen Appliances
Investments are being made in the kitchen this year, especially when it comes to updating appliances. According to Opendoor’s report, updated kitchen appliances may potentially help with resale value when and if homeowners decide to sell their homes.
When deciding which appliances to replace, Stephanie Duncan, senior home designer at Opendoor, recommends opting for sleek, stainless-steel appliances. These appliances, like a new refrigerator and stove, should inspire potential buyers to imagine life in that kitchen — and encourage them to make an offer right away.
As an additional shopping pro tip, Duncan said you don’t need to buy the most expensive appliances on the market.
“While it is important to have updated appliances, it is not necessary to buy the top-of-the-line options. Not overspending on the most luxe brands will ensure people see a return on their investment,” said Duncan.
View: 4 Red Flags as You Check Your Bank Statements Every Month More: How To Survive on $500 a Month: A Frugal Living Guide
Sponsored: Owe the IRS $10K or more? Schedule a FREE consultation to see if you qualify for tax relief.
Stained Wood Makes a Comeback in the Kitchen
Stained wood tones are making a comeback in kitchens as more homeowners move away from head-to-toe white kitchens. Julie Hampton, interior designer and project director at Freemodel, said some of the popular stains she sees range from light cerused oak to inviting medium hickory shades.
The good news for buyers is that it’s cost-effective to shift cabinet finish from paint to stain. According to Hampton, homeowners who choose stain over paint can save $3,000 to $5,000 on their project.
Related: What Is the 75/15/10 Rule? A Simple Path to Financial Wellness
Upgraded Kitchen Cabinet Hardware
The spotlight is on kitchen cabinets and cupboards this year.
Buyers trying to avoid overspending on their kitchen renovations are recommended by Duncan to upgrade knobs and handles on their cabinets or cupboards. Switching the hardware out is an effective way to upgrade these spaces without needing to buy new pieces.
Storage as a Decorative Element
Buyers this year are getting inspired by organization-themed TV shows, Instagram Reels and TikTok when it comes to kitchen storage for specific purposes.
Amber Shay, national VP of design studios at Meritage Homes, has seen everyday items, like snacks and supplies, being organized into specific pantry containers. Shay said there’s also storage being used as a decorative element with containers in fun colors and designs to match the décor scheme.
For the full kitchen, Hampton said buyers can expect to spend $3,000 to $6,000 on customizing cabinet interiors. Other options to explore, if you have a big budget to work with, include appliance garages or pantries with pullout shelves.
Those on a budget can still customize their cabinet interiors. “Homeowners should budget $150 to $1,200 for each cabinet to add options such as drawer pullouts, appliance lifts or converting a cabinet with doors to drawers,” Hampton recommended.
Read: 5 Frugal Habits of Barbara Corcoran
Sanctuary Bathrooms
The primary bathroom is getting a makeover as a relaxing retreat inside homes.
Buyers seeking to create a luxurious, spa-like atmosphere in their bathrooms are recommended by Shay to explore the following investments:
Adding vintage rugs, art and other décor to make the primary bathroom look and feel like a welcoming place of respite. (Opendoor’s survey notes Americans spend an average of $1,599 per year on home décor.)
Embracing matte black. “A matte black faucet seamlessly blends with on-trend iron and aged brass light fixtures in a bathroom,” said Shay.
Using plants as accessories. This helps bring the outside indoors.
Hotel-Style Living Rooms
Buyers don’t need to spend a lot of money to create a stylish living room that they love.
“Think of items like upscale hotel-style bedding, monogrammed towels, cozy throw pillows or a stylish mirror. You can keep your eye out for original art when you’re on the hunt for furniture at thrift stores,” said Shay.
“Also, consider investing in a high-quality area rug that’s designed to look like a priceless heirloom — it can set the tone for the entire space,” she added.
Discover: 9 Frugal Secrets I Learned From Growing Up Poor
Eco-Friendly Laundry Room Solutions
More homeowners are prioritizing eco-friendly solutions in their laundry rooms.
Hampton uses the example of homeowners choosing to air-dry clothes instead of putting them into the dryer. This choice is both environmentally friendly and causes less damage to garments.
“Laundries may include pullout drying racks that are hidden in the cabinets to maintain the aesthetic,” said Hampton. “Popular systems with installation cost around $1,500.”
Interior Painting Is the Second Remodeling Priority
According to Opendoor’s survey results, kitchens are the number-one remodel priority for homeowners with the number two slot going to interior painting. (New lighting fixtures and new floors take the third and fourth priority spots, respectively.)
As far as which colors are popular with buyers, Duncan said subdued greens and blues are emerging to the forefront. Both shades offer grounding and stability to homeowners.
Shay also agrees with Duncan’s color assessment, adding in her color recommendations of sea blue and darker, moody blues for interior painting.
Buyers who choose sea blue will be able to complement any marble and other natural stones in a space or use it as a fun accent while a moody blue is ideal for a sophisticated and dramatic space. If you dare create a bolder look in your home, Shay said to use dark blue as an interior wall or ceiling color or for painted cabinets and furniture.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Experts: Here Are 8 Home Renovations Buyers Want the Most in 2024
Inside: Learn what 11 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
We are going to under the cover and discover $11 an hour is how much per year.
For most Americans, this is hovering near minimum wage.
Let’s get this straight… This is not a livable wage.
If you are in high school or college and have support from your parents, then this is great spending money for you.
However, if you are making it on your own, $11 per hour will not make ends meet each month.
For most people, being at minimum wage is common and the goal is to make your way up the payscale and quickly!
In this post, we’re going to detail exactly what $11 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
When living close to minimum wage, you must know how to manage money wisely.
More than likely, you are living paycheck to paycheck and struggling to survive to the next paycheck. Take a deep breath and make this minimum wage just a season.
The ultimate goal is to make the most of your hourly wage with inspirations to make more money.
If that is something you want to do, then keep reading. You are in the right place.
$11 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $11 per hour is as annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $11 = $22,880
$22,880 is the gross annual salary with a $11 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
This you are making WAY LESS than the average wage.
Let’s breakdown how that number is calculated
Typically, the average work week is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $11 times 2,080 working hours and the result is $22,880.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
Work Part Time?
But you may think, oh wait, I’m only working part time. So if you’re working part time, the assumption is working 20 hours a week at $11 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $11 times 1,040 working hours and the result is $11,440.
How Much is $11 Per Month?
On average, the monthly amount would average $1,907.
Annual Amount of $22,880 ÷ 12 months = $1,907 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid on and on which days you get paid.
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $953.
How Much is $11 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $11 = $440 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $220.
How Much is $11 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $440 and double it.
$440 per week x 2 = $880
Also, the other way to calculate this is:
40 hours x 2 weeks x $11 an hour = $880
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $440.
How Much is $11 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight hour work day.
8 hours x $11 per hour = $88 per day.
If you work 10 hours a day for four days, then you would make $110 per day. (10 hours x $11 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $44.
$11 Per Hour is…
$11 per Hour – Full Time
Total Income
Yearly (52 weeks)
$22,880
Yearly (50 weeks)
$22,000
Monthly (173 hours)
$1,907
Weekly (40 Hours)
$440
Bi-Weekly (80 Hours)
$880
Daily Wage (8 Hours)
$88
Net Estimated Monthly Income
$1,455
**These are assumptions based on simple scenarios.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Paid Time Off Earning 11 Dollars an Hour
Does your employer offer paid time off?
As an hourly, close to minimum wage employee, more than likely you will not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off, equivalent to 2 weeks of paid time off.
In this case, you would make $22,800 per year.
This is the same as the example above for annual salary making $11 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $11 times 2,000 working hours, and the result is $22,000.
40 hours x 50 weeks x $11 = $22,000
You would average $88 per working day and nothing when you don’t work.
$11 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
This is why you always wondering why your take-home pay is so much less.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $22,880
Federal Taxes of 12%: $2,746
State Taxes of 4%: $915
Social Security and Medicare of 7.65%: $1,750
$11 an Hour per Year after Taxes: $17,469
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$17469 ÷ 2080 hours = $8.40 per hour
After estimated taxes and FICA, you are netting $8.40 an hour. That is $2.60 an hour less than what you planned.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
$11 an Hour Budget – Example
You are probably wondering can I live on my own making 11 dollars an hour? How much rent can you afford at 11 an hour?
Using our Cents Plan Formula, this is the best case scenario on how to budget your $11 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated $11 an hour was $8.40 after taxes. That would average $1455 per month.
According to the Cents Plan Formula, here is the high level view of a $11 per hour budget:
Basic Expenses of 50% = $728
Save Money of 20% = $291
Give Money of 10% = $146
Fun Spending of 20% = $291
Debt of 0% = $0
Obviously, that is not doable when living so close to minimum wage. So, you have to be strategic on ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $11 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $11 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$76
Savings
15-25%
$114
Housing
20-30%
$572
Utilities
4-7%
$114
Groceries
5-12%
$153
Clothing
1-4%
$19
Transportation
4-10%
$114
Medical
5-12%
$191
Life Insurance
1%
$16
Education
1-4%
$10
Personal
2-7%
$29
Recreation / Entertainment
3-8%
$48
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$451
Total Gross Income
$1,907
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
Living on $11 Per Hour
Living close to minimum wage can be a very difficult situation.
Is it doable? Probably not for long.
You just have to be wiser (or frugal) with your money and how you spend the hard-earned cash you have been blessed with.
A lot of times when people are making under the minimum wage mark, they feel like they are in this constant cycle that they can never keep up (which completely makes sense it is hard!).
When your thoughts are constantly focused on how you are struggling to keep up with bills and expenses, that is all you focus on.
You need to do is change your money mindset.
This is what you say to yourself… Okay, I am making near minimum wage for now. I have aspirations and goals to increase how much I make. For now, I am going to make sure that I am able to live on my 11 dollars per hour. I’m going to try and avoid debt and payday loans at all costs.
Other Tips to Help You:
Check your minimum wage for your state and city. You might find a higher minimum wage in a nearby city.
Look to living in a lower cost of living area to stretch your money.
Find ways to minimize your basic expenses.
Thrive with a minimalist lifestyle.
Decide if a roommate or moving back with your parents would help.
Bike or walk to work.
In the next section, we will dig into ways to increase your income, but for now, you must focus on living on $11 an hour.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $11.50 will add up over the year. Even better $12 an hour!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $11 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially and being financially sound happens.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Tips to Live on $11 an Hour
In this last section, grasp these tips on how to live on $11 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $11 an hour. Highlight these!
1. Spend Less Than You Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $11 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $11 an hour minus all the taxes, FICA, Social Security, and Medicare is taken out. That is your net income.
So, your net income has to be less than your net income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. Period.
It could be participating in a no spend challenge for the month.
Check out the 200 envelope challenge (which is doable on your income)
It could be challenging your friends not to go to Target for a week.
Maybe changing your habits and not picking up takeout and planning meals.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt free date.
Paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt free journey.
Here are resources now for you to pay off your debt:
Jobs that Pay $11 an Hour
You can always find jobs that pay $11 per hour. Polish up that smile, fill out the application and be prepared with your interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Cashiers
Back of the house restaurant staff
Landscape Laborer
Retail jobs
Paraeducators at schools
Janitors
Farm help
Warehouse workers
$11 Per Hour Annual Salary
In this post, we detailed 11 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
$22,800
In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Try one of these ways to make money quickly to help you in the interim.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
After decades of saving for retirement, many new retirees often find themselves facing a new challenge: Determining how much money they can take out of their retirement account each year without running the risk of depleting their nest egg too quickly.
One popular rule of thumb is “the 4% rule.” What is the 4% rule? Learn more about the rule and how it works.
What Is the 4% Rule for Retirement Withdrawals?
The 4% rule suggests that retirees withdraw 4% from their retirement savings the year they retire, and adjust that dollar amount each year going forward for inflation. Based on historical data, the idea is that the 4% rule should allow retirees to cover their expenses for 30 years.
The rule is intended to give retirees some planning guidance about retirement withdrawals. The 4% rule may also help provide them with a sense of how much money they need for retirement. 💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
How to Calculate the 4% Rule
To calculate the 4% rule, add up all of your retirement investments and savings and then withdraw 4% of the total in your first year of retirement. Each year after that, you increase or decrease the amount, based on inflation.
For example, if you have $1 million in retirement savings, you would withdraw 4% of that, or $40,000, in your first year of retirement. If inflation rises 3% the next year, you would increase the amount you withdraw by 3% to $41,200.
Drawbacks of the 4% Rule
While the 4% rule is simple to understand and calculate, it’s also a rigid plan that doesn’t fit every investor’s individual situation. Here are some of the disadvantages of the 4% rule to consider.
It doesn’t allow for flexibility
The 4% rule assumes you will spend the same amount in each year of retirement. It doesn’t make allowances for lifestyle changes or retirement expenses that may be higher or lower from year to year, such as medical bills.
The 4% rule assumes that your retirement will be 30 years
In reality an individual’s retirement may be shorter or longer than 30 years, depending on what age they retire, their health, and so on. If someone’s life expectancy goes beyond 30 years post-retirement they could find themselves running out of money.
It’s based on a specific portfolio composition
The 4% rule applies to a portfolio of 50% stocks and 50% bonds. Portfolios with different investments of varying percentages would likely have different results, depending on that portfolio’s risk level.
It assumes that your retirement savings will last for 30 years
Again, depending on the assets in your portfolio, and how aggressive or conservative your investments have been, your portfolio may not last a full 30 years. Or it could last longer than 30 years. The 4% rule doesn’t adjust for this.
4% may be too conservative
Some financial professionals believe that the 4% rule is too conservative, as long as the U.S. doesn’t experience a significant economic depression. Because of that, retirees may be too frugal with their retirement funds and not necessarily live life as fully as they could.
Others say the rule doesn’t take into account any other sources of income retirees may have, such as Social Security, company pensions, or an inheritance.
How Can I Tailor the 4% Rule to Fit My Needs?
You don’t have to strictly follow the 4% rule. Instead you might choose to use it as as a starting point and then customize your savings from there based on:
• When you plan to retire: At what age do you expect to stop working and enter retirement? That information will give you an idea about how many years worth of savings you might need. For instance, if you plan to retire early, you may very well need more than 30 years’ worth of retirement savings.
• The amount you have saved for retirement: How much money you have in your retirement plans will help you determine how much you can withdraw to live on each year and how long those savings might last. Also be sure to factor in your Social Security benefits and any pensions you might have.
• The kinds of investments you have: Do you have a mix of stocks, bonds, mutual funds, and cash, for instance? The assets you have, how aggressive or conservative they are, and how they are allocated plays an important role in the balance of your portfolio. An investor might want assets that have a higher potential for growth but also a higher risk factor when they are younger, and then switch to a more conservative investment strategy as they get closer to retirement.
• How much you think you’ll spend each year in retirement: To figure out what your expenses might be each year that you’re retired, factor in such costs as your mortgage or rent, healthcare expenses, transportation (including gas and car maintenance), travel, entertainment, and food. Add everything up to see how much you may need from your retirement savings. That will give you a sense if 4% is too much or not enough, and you can adjust accordingly.
💡 Quick Tip: Did you know that a traditional Individual Retirement Account, or IRA, is a tax-deferred account? That means you don’t pay taxes on the money you put in it (up to an annual limit) or the gains you earn, until you retire and start making withdrawals.
Should You Use the 4% Rule?
The 4% rule can be used as a starting point to determine how much money you might need for retirement. But consider this: You may have certain goals for retirement. You might want to travel. You may want to work part-time. Maybe you want to move into a smaller or bigger house. What matters most is that you plan for the retirement you want to experience.
Given those variations, the 4% rule may make more sense as a guideline than as a hard-and-fast rule.
Recommended: How Much Retirement Money Should I Have at 40?
The Takeaway
The 4% rule represents a percentage that retirees can withdraw from their savings annually and theoretically have their savings last a minimum of 30 years. For example, someone following this rule could withdraw $20,000 a year from a $500,000 retirement account balance.
However, the 4% rule has limitations. It’s a rigid strategy that doesn’t take factors like lifestyle changes into consideration. It assumes that your retirement will last 30 years, and it’s based on a specific portfolio allocation. A more flexible plan may be better suited to your needs.
Having flexibility in planning for withdrawals in retirement means saving as much as possible first. A starting place for many people is their workplace 401(k), but that’s not the only way you can save for retirement. For instance, those who don’t have access to a workplace retirement account might want to open an IRA or a retirement savings plan for the self-employed to invest for their future.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Invest with as little as $5 with a SoFi Active Investing account.
FAQ
How long will money last using the 4% rule?
The intention of the 4% rule is to make retirement savings last for approximately 30 years. How long your money may last will depend on your specific financial and lifestyle situation.
Does the 4% rule work for early retirement?
The 4% rule is based on a retirement age of 65. If you retire early, you may have more years to spend in retirement and your financial needs will likely be different.
Does the 4% rule preserve capital?
With the 4% rule, the idea is to withdraw 4% of your total funds and allow the remaining money in the account to keep growing. Because the withdrawals would at least partly consist of dividends and interest on savings, the amount withdrawn each year would not come totally out of the principal balance.
Is the 4% Rule Too Conservative?
Some financial professionals say the 4% rule is too conservative, and that retirees may be too frugal with their retirement funds and not live as comfortable a life as they could. Others say withdrawing 4% of retirement funds could be too much because the rule doesn’t take into account any other sources of income retirees may have.
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Inside: Looking for delicious, budget-friendly meals? Look no further! This guide has 100+ delicious and frugal recipes that will help you stick to your food budget.
When it comes to keeping your grocery budget in check, meal planning is a powerful tool. It can simplify your life, save you precious time, and stretch your dollars further.
You don’t always need pricey ingredients to whip up something delicious. Creating frugal meals doesn’t mean you have to compromise on flavor.
Sometimes, a frugal meal could mean something cheaper but equally, if not more, delicious than takeout! The key to this art is using simple, inexpensive ingredients, being creative in their application, and not shying away from condiments, herbs, and spices that can elevate your dish.
Remember, eating frugally is not just cost-effective but also simple and stress-free, utilizing common kitchen staples, and easy-to-locate items.
Join me on my mission to make frugal meals that are adored by my family and my thrifty self appreciates.
Frugal Breakfast Ideas:
A frugal breakfast should not equate to boring. Here are a few ways to start your day off right without stressing your wallet:
Waffles/Pancakes: These could be made with basic ingredients like flour, eggs, and baking powder. Top with peanut butter or dust of cinnamon sugar for extra flavor!
Eggs: Cooked to your preference, be it fried, boiled, or scrambled, they are not only easy on the pocket but also a rich source of protein.
Oatmeal: Buy oats in bulk and pair them with over-ripe bananas, pumpkin butter, or a sprinkle of brown sugar. It’s a hearty and filling for just about anyone.
Muffins: Basic muffin ingredients include flour, eggs, and baking powder. For an element of surprise, add in nuts, blueberries, or mashed bananas.
French Toast: With eggs, cinnamon, and loaves of French bread, you can whip up a scrumptious breakfast.
Homemade Bread/Toast: If you’re up to the task, making your own bread could be a money-saving option. This is something I do with sourdough bread. Pair the fresh bread with either sweet or savory toppings.
Omelets: Eggs are a cheap source of protein. Whip up an omelet and serve it with your choice of inexpensive veggies.
Homemade Biscuits: Biscuits are a great addition to any frugal breakfast, with just “milk” and flour ingredients. Pair them with a little meat or enjoy them in butter. Just like my great Aunt Marie made at the ranch.
Choose Spice for Breakfast: This recipe for Mexican baked eggs uses budget friendly canned beans and eggs as a protein source. It’s super simple to make in less than 30 minutes, with eggs baked in a smoky, spicy tomato sauce with black beans, poblanos, and corn. Serve with plenty of corn tortillas for a super satisfying meal.
Frugal Lunch Ideas:
Lunch should be something to look forward to, even if you’re on a tight budget. Here are frugal lunch ideas that keep your tummy and your wallet happy.
Salad: A salad is an excellent choice for a frugal lunch, it’s both cost-effective and healthy. Based on what’s available in your fridge, you can combine different vegetables, proteins, and dressings to create a filling and tasty meal every day.
Sandwiches: The humble sandwich can be as frugal or as lavish as you like. Tuna, grilled cheese, peanut butter, and jelly, ham… you name it, sandwiches offer a great variety.
Homemade Soup: Consider creamy potato soup, creamy vegetable soup, or even curried cauliflower soup. They can be light yet fulfilling, and the ingredients are reasonably priced.
Toast Pizza: Save money by using toast as your pizza base, add what you have in the fridge, top it off with cheese, and cook it under the grill or in the oven.
Baked Potatoes: A toasty baked potato with butter is a delightful, inexpensive lunch. Top it up with fillings such as cheese or broccoli.
Remember, lunch doesn’t have to be expensive to be delicious! Use what you have at home for a more sustainable, economical, and satisfying meal.
Frugal Dinner Ideas:
Dinner is the time when families come together, share their day, and unite over food. There’s a common misconception that frugal foods are bland and monotonous. However, you don’t have to spend a fortune to make dinner delicious and satisfying.
Spaghetti: Who knew that the ultimate comfort food could be so cheap? Combine spaghetti with homemade tomato sauce or cheese, add your favorite seasonings, and voila! You have a delicious meal.
Baked potatoes: Fully customizable and super simple to be a dinner game-changer. Top them with cheese, sour cream, or any other leftovers like chili!
Stir Fry: This is a perfect way to use up any veggies you have. Throw in some meat if you have it, cook with rice and tasty sauce, and your stir fry is ready!
Tacos: Pick up tortillas, get ground beef, or use dried beans, lettuce, and salsa, and there you have your Taco night. You can also swap out the beef for beans, and it’ll still taste delightful.
Breakfast for Dinner: Who said breakfast foods are only for mornings? Whip up scrambled eggs, toast, or pancakes, and enjoy a breakfast-style dinner!
Creating a delicious, nutritious, and frugal dinner can be easier than you might think. It’s all about making the most out of the resources you have, every day.
Recipe Breakdown : Variety Of Frugal Meals
Satisfying Soup & Salad Recipes on a Shoestring
When it comes to frugality, nothing beats the soup and salad combination. These meals are not only hearty and satisfying but also easy on your wallet. With just a few ingredients, these recipes will bring variety and nutrition to your kitchen without putting a strain on your wallet.
Here are a few of our favorite frugal soup and salad recipes:
The Best Chicken Soup Recipe: Simplicity meets flavor without breaking the bank. Utilizing affordable ingredients and leftover chicken, this soup is a testament to how economical choices can still yield rich, comforting results.
Cauliflower and Bacon Soup:
Instant Pot Three Sisters Soup: A blend of corn, beans, and squash.
Root Vegetable Soup: Healthy, comforting, and made with only a few simple and inexpensive ingredients! It’s prepared with veggies like carrots, parsnips, rutabaga, and potatoes simmered in a savory broth.
Healthy Roast Pumpkin and Sweet Potato Soup: Winter favorite loaded with nutrients.
Instant Pot Cabbage Roll Soup: Comfort food at its best.
Smoky Black Bean Soup: Protein packed, tasty, and hearty.
Hearty Lentil Soup: Healthy and will keep you warm during the winter! It’s made with only a few ingredients and requires no special equipment. This soup is made with lentils, veggies, and spices simmered in a savory tomato broth.
Vegan Coconut Curry Lentil Soup: Exotic, aromatic, and down-right delicious.
Instant Pot Split Pea Soup Recipe: Classic soup, ready in no time.
Vegetable Barley Soup: With protein-rich chickpeas, cabbage, potatoes, and the twist of curry spices, this soup is easy, comforting, and delicious!
The Very Best Ham And Potato Soup With Peas: Savory, delicious and economical.
Cheap and Easy Hamburger Soup: Mouthwatering and super easy to prepare.
Creamy Vegetarian Potato Soup: Originally named 45-Cent Potato Soup because that was how much it cost per serving over a decade ago! The cost has increased a bit but this hearty potato soup is still a keeper. Creamy potato soup with veggies and milk – thick, velvety, and hearty. It’s on constant rotation at our house!
Moreover, when it comes to salads, using seasonal produce, beans, or leftover veggies can be an affordable way to create nutritious meals. Add chicken, tuna, or boiled eggs for protein, or keep it simple with fresh greens and a homemade dressing.
Remember, a frugal lifestyle does not mean you have to compromise on taste or variety. It’s about being creative with what you have!
Cut Costs with these Cheap ‘n Cheerful Chicken Recipes
Dinner necessity is the mother of so many amazing chicken dinners! Plus it is an excellent protein option that can be inexpensive, especially if you seize sales or buy in bulk.
Maple Chicken & Potato Supper: This recipe turns an affordable cut of chicken and two types of potatoes into a family favorite.
One-Pot Chicken and Potatoes: Chicken thighs are cheap, add in potatoes, onions, and carrots for a hearty comfort meal.
Leftover Chicken Curry and Vegetables: Lots of recipes use leftover chicken or turkey. But this “All the Leftovers” Chicken Curry also uses your leftover vegetables. Clean out your refrigerator today!
Instant Pot Chicken Tortilla Soup: A quick, deliciously rich, and slightly spicy meal made up of chicken, black beans, and stewed tomatoes.
Crockpot Chicken Tacos: With just 3 ingredients and 5 minutes of prep, this is a lifesaver for busy nights.
Chicken Curry and Quinoa: Simple, tasty, and feels like a treat without the expense.
One Pan Baked Chicken Thigh Recipe with Green Beans and Red Potatoes: This recipe is easy and inexpensive when you grab the chicken thighs on sale! It is easy to prepare, a healthier option and a family favorite!
Cheesy Chicken Quesadillas: A perfect, weeknight meal.
Slow Cooker Chicken Thighs with Potatoes and Carrots: A value for money meal with chicken thighs – one of the cheapest chicken cuts.
One-Pan Chicken Legs with Chickpeas and Quinoa: A wholesome, naturally sweet dish with a few spices.
Easy Cheesy Chicken Taco Spaghetti: Made with pantry staples, this comforting dinner recipe is frugal and filling. Full of pasta, creamy sauce, and canned chicken, your family will be asking for seconds!
Chicken Fried Rice: Uses leftovers efficiently, add veggies, and you have a meal.
Easy Pizza Chicken Recipe: A low carb and high protein meal, especially when you use ordinary cheddar.
Remember, maximizing flavor in cheap chicken recipes often relies on using good quality, inexpensive ingredients, and cooking techniques like slow cooking or sautéing. Happy cooking!
Beautiful Beef Dishes that Benefit Your Wallet
When trying to maintain a frugal lifestyle, using affordable cuts of beef like ground beef, shin, or skirt steak can yield mouth-watering meals that don’t bust the budget. Here are a few beef recipes that are both economical and satisfying:
Ground Beef Stroganoff: A classic comfort food that is simple, quick, and incredibly hearty.
Poor Man’s Stew: An excellent choice for a filling, cheap, and tasty meal for a whole family.
Simple Hamburger Hotdish: This simple hamburger hotdish (casserole) makes delicious use of affordable and easy-to-find ingredients like ground beef, pasta, and tomato sauce. This is a great meal idea to feed a family.
Beef Skillet Nachos: Layer chips, ground beef, and cheese in a skillet for an easy, cost-effective meal.
Homemade Beef and Noodles: An economical-friendly classic that can serve a good number of people.
Tortellini Bake: This 4 ingredient Tortellini Bake uses common ingredients like ground beef and marinara sauce to make a satisfying and hearty meal for families!
Cheesy Ground Beef and Rice Casserole: Across the realms of deliciousness and frugality, this casserole rings the bell.
Beef and Tomato Macaroni Soup: Combining the wholesome elements of beef, macaroni, and tomatoes provides a satiating meal at an affordable cost.
Beef and Vegetable Stir Fry: Brimming with colorful vegetables and protein-rich beef, this dish is a delight to both the stomach and the wallet.
Taco Skillet: It’s the taste of tacos in a convenient and cost-friendly rice skillet.
Classic Stuffed Peppers: Filled with a mixture of ground beef, rice, and a zesty sauce, it’s a comfort meal that’s easy on the pocket.
Sesame-Ginger Beef: This dinner calls for an inexpensive cut of meat.
By creatively utilizing budget cuts and leftovers, you can create economical, hearty, and tasty beef dishes for yourself and your family, fostering a love for cooking while sticking to a money plan.
Money-saving Meatless Meal Marvels
When it comes to cost-saving, meatless or vegetarian dishes are a winner. Not only are they usually cost-effective, but they’re also often packed with nutrients. Here are meatless recipes that are sure to delight your taste buds, without denting your wallet:
Quinoa Edamame Salad with Peanut Sauce: Use cabbage and edamame to make a balanced lunch. The peanut sauce is flavor-packed and uses pantry staples, and the quinoa is easy to swap with rice or pasta.
Vegan Lentil Curry: Packed with nutrition, this dish makes an inexpensive, protein-rich meal.
Jamaican Rice and Peas: Economical rice and beans doesn’t need to be boring. Jamaican rice and peas are easy to make in the slow cooker. This flavorful, easy recipe brings delicious Caribbean flavor to any meal as a side dish or a complete meal on its own.
Spinach Lasagna Roll-Ups: Proof that vegetarian dinners can be delightfully hearty, this twist on classic lasagna is a crowd-pleaser.
Bean, Tomato, and Spinach Stew: A hearty and richly flavored dish that is low cost and satisfying.
Vegan Texas Tamale Pie: Great down-home, budget-friendly meal is perfect to whip up when you need something hearty, healthy, and filling to serve to your hungry family or friends in under an hour. Prepared with basic canned ingredients you might keep in your cupboard, this simple recipe can be easily adjusted to suit your tastes with the groceries you have on hand.
Stuffed Bell Peppers: Fill peppers with a delicious mixture of quinoa, black beans, tomatoes, and spices.
Eggplant Parmesan: Classic Italian dish, easy to make, and delicious to eat.
Pasta e Fagioli aka Pasta and Beans: Feed your family for pennies a bowl with pasta e fagioli. Cucina povera Italian food is the food of peasants, but it is so delicious! Only three inexpensive ingredients are needed to make this quick and easy, nutritious, one pot weeknight meal.
Potato & Zucchini Frittata: Use up your leftover veggies and whip up a quick frittata for dinner.
Tomato Basil Soup with Grilled Cheese: A classic that’s both inexpensive and palate-pleasing.
Vegetarian Stir-Fry: A colorful medley of veggies stir-fried in a savory sauce served over rice.
Spaghetti aglio e olio: This spaghetti aglio olio (with garlic and olive oil) is probably one of the most popular classic Italian pasta recipes and yet it’s so simple, budget friendly and super easy to make!
Butternut Squash Risotto: This dish, while sounding fancy, is frugal and straightforward to make.
Vegan Spaghetti Bolognese: This is a rich, hearty, and flavorful dish that’s lighter on the wallet than traditional bolognese.
Crispy Pan Fried Gnocchi: A simple and quick & inexpensive recipe to make in only 20 minutes for an easy weeknight meal. Crispy gnocchi coated in a light sauce made with garlic, herbs, butter and parmesan.
Implementing meatless meals can significantly cut down on grocery bills, with the added bonus of being healthier and environmentally friendly.
So why not give these recipes a try for your next frugal feast?
Luscious Low-Budget Lunch Ideas
The midday meal can often be overlooked when planning budget-friendly meals. Don’t let lunch blow your allowance! Here are a few low-cost, lip-smacking lunch ideas:
Bean Burritos: Beans and cheese wrapped in a tortilla can be quite satisfying and light on the pocket too.
Tuna Salad Sandwiches: A classic frugal lunch option that’s rich in protein.
Egg Salad Wraps: Egg salad in a wrap is a fulfilling lunch that’s economical.
Homemade Hummus and Veggies: Prepare hummus at home and pair it with fresh veggies for a light and inexpensive lunch.
Mixed Bean Salad: Beans are a powerhouse of nutrition and offer a low-cost lunch option. Mix different beans and dress them up with herbs and spices for a flavorful lunch.
Veggie and Cheese Stuffed Potatoes: A cheesy baked potato with veggies is filling and affordable.
PB&J: Peanut butter and jelly never go out of style and are a great low-cost lunch option.
Tuna Tomato Pasta: Tuna tomato pasta is a delicious healthy and easy recipe that only takes 20 minutes to make. With just a few basic ingredients it’s budget friendly too!
Falafel Wraps: Homemade falafel is quite reasonable and can be wrapped up with pita and fresh veggies for a satisfying meal.
Pasta Salad: Cold pasta salad with veggies is a cheap and filling lunch idea.
Vegetable Fried Rice: Leftover rice, mixed with whatever veggies you have on hand, makes for a delectable and affordable lunch.
When your lunch is as tasty as it is affordable, you’re winning at the game of frugality. Enjoy these luscious lunch ideas without breaking the bank!
Delightful Dinner Recipes That Don’t Dig A Hole In Your Pocket
Dinner is the meal you eagerly look forward to after a long day. Unfortunately, it can also be the priciest meal of the day. But it doesn’t have to be! Here are delightful, cost-effective dinner recipes:
Sloppy Joe Pasta: A homemade mix of pantry staples for a mouth-wateringly filling, budget-friendly twist on the classic Sloppy Joe.
Easy Chilaquiles: Fresh made tortilla chips smothered in homemade salsa, chilaquiles are the best way to make a flavor-packed meal on a budget!
Cottage Pie: Make a delicious cottage pie in the instant pot pressure cooker from scratch. Ideal for using up leftovers and easy to make!
Chicken Pot Pie: Homemade and padded out with cheap, seasonal veggies, it’s a classic favorite, perfect for a weeknight dinner.
Mince & Potato Stew: Heartwarming, flavorful dish that’s easy to make and easier on the pocket.
Linguine with Clam Sauce: Using canned or jarred clams, this linguine dish is made from simple pantry ingredients that won’t break the bank. Dive into a dinner of delicious choice for yumminess.
One Pot Sausage, White Beans, and Kale: It combines flavorful sausage, rich canned tomatoes, white beans, fresh kale, and a few herbs and spices – a cupboard-friendly, inexpensive dinner option.
Tacos: They’re versatile, they’re delicious, and most importantly, they’re cheap.
Potato and Salmon Fish Cakes: Canned salmon and potatoes create a delicious, inexpensive dinner the family will love. They are super easy to make and you can freeze them, too. Even those who dislike salmon enjoy these fish cakes!
Asian-Style Chicken Noodles: This recipe uses leftover chicken and packs a lot of flavors without a lot of cost.
Pasta Arrabbiata: This inexpensive pasta dish is full of garlic, tomatoes, and spicy red pepper flakes. Simple, yet incredibly delicious.
Garlicky Spinach and White Bean Pasta: This recipe is packed with flavor thanks to a surprise, budget-friendly ingredient – tinned anchovies! Simply toss cooked pasta with spinach, white beans, and a garlicky anchovy sauce. It’s easy to throw together for a satisfying weeknight dinner.
Egg Fried Rice: It’s a quick, healthy meal that anyone can cook.
Leftover Pasta Bake: Don’t waste food! Turn your leftovers into a treat with our leftover pasta bake!
Vegetable Stir Fry with Noodles: A quick, healthy dinner full of veggies and flavor.
Low-cost does not mean low taste. These dinner recipes prove just that. So get cooking and start saving!
Put it in Pot and Forget It – Cheap and Easy Crockpot Creations
Using a crockpot or slow cooker can be a real lifesaver for busy individuals or families. Not only does it save time but it’s also a great way to save money by making inexpensive cuts of meat tender and flavorful.
Slow Cooker Sausage and Peppers: Slowly simmered in marinara sauce for a frugal dinner that’s hard to beat! Just serve over pasta or polenta for an easy dinner. Plus, the leftovers are just as delicious for lunches.
Crockpot Beef and Broccoli: The economical version of your favorite takeout dish.
Slow Cooker Black Bean Soup: Inexpensive, full of flavor, and so hearty!
Creamy Crockpot Chicken: Warm shredded chicken and gravy in your slow cooker for the win.
Crockpot Baked Beans: Cheaper and healthier than store-bought!
Crockpot BBQ Chicken: Sweet, tangy, and made with a handful of pantry staples.
Crockpot Lentil Soup: Super hearty, packed with nutrients, and so easy to whip up!
Slow Cooker Pot Roast: The easiest one pot meal and is an instant win for family dinner! Plus, it’s budget-friendly! Easy to prepare for weeknight meals or special occasions alike, this easy pot roast recipe is always a crowd-pleaser!
Slow Cooker Salsa Chicken: Just two ingredients are required for this super versatile recipe.
Crockpot Vegetable Beef Soup: Healthy, hearty, and incredibly easy to make.
Chicken Paprikas Recipe: Use chicken thighs and cauliflower which make it a super frugal meal. If you prefer you can serve it over rice instead of the cauliflower but even her kids agree that the cauliflower version is delicious.
Slow Cooker Mac and Cheese: Yes, even mac and cheese can be done in a crockpot! Even better try this Broccoli Mac Kielbasa Casserole.
Crockpot Ham and Bean Soup: This recipe uses inexpensive and filling beans and veggies, perfect for when you’ve leftover ham.
Slow Cooker Vegan Chili: A vegan twist on this classic comfort food for those chilly days ahead makes for a healthy dinner packed with nutrients brimming with flavor!
Each of these meals will serve you without making a significant dent in your grocery budget. Enjoy the convenience and frugality that slow cooking brings!
Make It Snappy With Instant Pot Recipes
The Instant Pot is a versatile kitchen appliance that’s excellent for fast, delicious meals when you’re on a budget.
Instant Pot Ground Beef Enchilada Pasta: This easy dish combines a few affordable ingredients into a hearty meal that your family will love.
BBQ Beans Instant Pot Recipe: A frugal recipe that’s great as a main dish or a filler for burritos.
Easy Pizza Potatoes in the Instant Pot: A simple pairing of pizza flavors and potatoes for a wallet-friendly dish.
Air Fryer Pita Bread Pizza: Only 5 minutes and a handful of low-cost ingredients to a delicious DIY pizza.
Sweet Potato, Lentil and Chickpea Curry: This vegan instant pot recipe is full of flavor, super hearty and delicious, and extremely reasonable to make.
Mushroom Masala- Mushroom Curry: An exotic and easy-to-prepare mushroom curry that satisfies without stretching the dollars.
Chicken and Sausage Paella in the Instant Pot: Cut down cost by using sausage and chicken thighs for this easy, savory dish.
Instant Pot Tuna Casserole: Comfort on the cheap, using pantry staples.
Fast and Easy Instant Pot Chicken and Rice: Made using basic pantry staples and suitable for both adult and kid taste buds.
These Instant Pot ideas are not only quick and easy to prepare but also budget-friendly. They’re proof that frugal doesn’t mean boring!
Handy Kitchen Tools for Budget-Savvy Cooking
When it comes to frugal cooking, your kitchen gadgets can be your best companions. These tools can save you both time and produce restaurant-quality dishes at home for a fraction of the cost.
Many are the same as frugal home must haves!
Only rely on tools that you use regularly in order to maximize their cost. So, equip your kitchen with these practical, cost-effective tools, and enjoy a more manageable culinary journey.
FAQs: Navigate Your Approach to Cost-Efficient Eats
Eating lunch at work doesn’t have to mean spending a fortune, following these tricks can save you a lot of money:
Meal prep: Plan your meals ahead of time. Invest in a few hours during the weekend or your day off to cook large amounts and portion them out for the week ahead.
Leftovers Are Your Best Friend: Make a bit extra while cooking dinner, and voila, you’ve got lunch for the next day. A yummy, cheap, no-fuss, and no-waste solution!
Pack Your Own Snacks: Trade small shop-bought packs of snacks for a large bag or bulk-buy from a wholesale store. Divide them into small reusable containers for your daily hunger itch.
Invest in a Flask: A good quality thermos flask can keep your homemade soup or stew warm until lunchtime and it’s a lot cheaper than buying soup from a cafe.
Remember, the key is not to take complicated dinners which takes a lot of time. Rather, simple sandwiches, yogurt with fruits, homemade soup even boiled eggs can make great inexpensive lunch options. Planning ahead is key when you’re trying to eat on a budget.
There are several cheap meals you can whip up using budget-friendly ingredients. The absolute cheapest would depend on what you already have on hand in your pantry or the cost of ingredients in your locality.
Rice & Beans: This is a universally cheap and filling meal that can be flavored with some stock, onions, and spices.
Pasta with Tomato Sauce: This is a popular choice when it comes to cheap ideas. All it takes is a rigatoni of your choice, a basic tomato sauce made from canned tomatoes, garlic, and herbs.
Cereal & Milk: A bowl of generic brand cereal and milk is an incredibly cheap meal. It lacks in terms of proteins and fats, but it can be a good quick fix.
Eggs on Toast: Eggs and bread are both cheap elements. Whip up scrambled eggs or make a simple boiled egg sandwich.
Potato Soup: One of the cheapest vegetables around, and they make a filling, simple potato soup.
Homemade Pizza: Using basic homemade dough and simple tomato sauce, you can add anything you have on hand to make a delicious pizza.
Remember, the cheapest dinners typically use basic pantry staples. By having a well-stocked pantry, you’ll be able to whip up a variety of low-cost dinner ideas.
A frugal meal doesn’t equate to scanty or tasteless. Here’s what defines a frugal meal:
Inexpensive Ingredients: Frugal meals predominantly use cheaper ingredients. Find plenty of cheap foods when broke (and you don’t need to be broke).
Fewer Ingredients: Meals with minimal ingredients are typically more economical. They aren’t stuffed with fancy extras, but they make up for it in hearty flavor.
Uses Pantry Staples: Rely on pantry staples like rice, dried pasta, canned goods, and dry baking ingredients.
Repurposes Leftovers: Instead of wasting ingredients incorporate leftovers in innovative ways.
Meal Prep and Batch Cooking: Cooking in bulk and freezing dinners for later can be a massive money saver, reducing waste and reducing the number of ingredients needed overall.
Limited Meat or Vegetarian: As meat is typically one of the more expensive ingredients, frugal cooking is often vegetarian or uses meat sparingly.
While frugal meals won’t always hit all these factors, if they contain a few of these aspects, you can be assured they will provide a cost-effective dining experience. A frugal meal strives to offer nutritional balance, satisfying taste, and minimal impact on your wallet.
Perfecting the Art of Frugal Cooking
Preparing budget-friendly cooking not only saves money but also reduces food waste and can create a warm, comfortable home. This is how to be frugal with food. Here are some expert tips to get you rolling:
Plan Your Meal Calendar: Plan out your menu for the week, keeping in mind what ingredients you already have.
Shop Smart: Shop for groceries with a list in hand so you don’t end up buying unnecessary items. Look out for sales, and discounts, and try to shop in bulk.
Utilize Leftovers: Don’t throw away leftovers. Repurpose them into a new meal or use them as an ingredient in another dish.
Use More Vegetables and Grains: Vegetables and grains are generally cheaper than meat and can be used to bulk out dinners.
Freeze Extras: If you cook in bulk, freeze the extra portions for a later date. This can act as a lifesaver during busy periods.
Use Cheap Cuts of Meat: Cheap cuts, such as chicken thighs, can be just as delicious as expensive ones, especially when slow-cooked.
Cook from Scratch: Convenience foods often cost a lot more than the sum of their parts.
Grow Your Own: If you have a garden, consider growing your own vegetables and herbs.
Reduce Waste: Get creative in the kitchen and use parts of food that you’d otherwise throw away.
Remember, with a bit of planning and creativity, you can prepare delicious, healthful meals without breaking the bank! It’s all about making smart choices.
Which Filling Cheap Meals are You Going to Try?
Embarking on these frugal meals can help stretch the budget while still enjoying a variety of flavorful and satisfying dishes.
Whether you are budgeting on a low income or just want to stretch your dollar further with going teens, we have given you plenty of options to eat well and healthy.
Many on this list are my personal favorites. This is how we stay on our grocery budget.
The biggest step is learning how to meal plan and stick to the menu! Now, off to move frugal living tips to save money!
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Inside: Balancing a shoestring budget is possible and provides great rewards. With savings and budget strategies, you will find genius tips to manage your finances smartly!
With the rise of economic inflation, a growing number of people are finding the need for shoestring budgets to effectively navigate through their expenses.
Whether it’s planning for a low-cost holiday, initiating a frugal home makeover, or launching a start-up business with minimalist funds, the concept of a shoestring budget comes into play.
Moreover, it’s not only limited to low-income families but also extends to larger households and entrepreneurs that need to strategically lessen costs to achieve their goals. This is how many people reach financial independence sooner.
Then, let’s talk about a shoestring budget – an effective tool used to stretch finite resources, manage money wisely, and achieve financial goals, all while minimizing expenses.
If you’re familiar with the feeling of every dollar in your wallet counting, then this blog post is for you.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is a Shoestring Budget?
A ‘shoestring budget’ means to accomplish a task or a project within a very limited or bare minimum budget. The shoestring budget work strategy involves curbing discretionary spending dramatically to take care of high-priority expenses.
Understood across various contexts like travel, events, and lifestyle, the term implies an approach of resourcefulness and discovery of low-cost alternatives to achieve desired results.
Not exclusive to households with low incomes, working with a shoestring budget expresses the art of making what’s deemed impossible possible, navigating time constraints, and maximizing minimal available funds.
Shoestring Budget Idiom Definition
According to Merriam-Webster, the official definition of a shoestring budget is: 1
“involving a relatively small amount of money for planned spending.”
‘Shoestring Budget’ Origin
The phrase ‘shoestring budget’ has an intriguing origin story that dates back to the 1800s in the United States. Fact-checks reveal that this term is indeed a reference to the precarious nature of a thin and weak shoestring, metaphorically implying a scarce and strained budget.2
Several theories have been proposed regarding its original use.
One theory suggests that the term ‘shoestring gambler,’ meaning someone gambling with a limited budget, might be the precursor to the idiom.
Another theory, based on British history, suggests that prisoners would lower a shoestring out of their cell to collect small donations from passersby, symbolizing the idea of managing with few resources.
Despite the debates around the phrase’s exact origins, it is undisputed that it signifies a tight budget situation.
How to live on a shoestring budget?
Living on a shoestring budget can be challenging but doable with a bit of dedication and planning.
Start by reviewing your regular expenses per month.
Cut down on unnecessary expenses as much as possible.
Monitor your small, daily expenses as they can add up significantly over time.
Refinance any existing debt to reduce interest payments.
Renegotiate contracts with utility providers, subscription services (consider uninstalling unused ones), or insurance for better rates.
Shop at thrift stores or choosing used items over brand new can also help you save.
The key to surviving a shoestring budget is self-control and determination to avoid impulsive spending.
Your goal is to prioritize essential needs over wants – a no spend challenge will help you with this. Remember, regular tracking and analysis of your personal site usage can provide valuable insights to manage your budget better.
How to travel on a shoestring budget?
Embarking on an adventure while on a shoestring budget requires creativity and pre-planning.
Be flexible with your travel dates, destinations, and mode of transport to take advantage of the best deals available.
Consider options such as budget airlines, off-peak travel times, and less touristy locations.
Staying in budget accommodations, or even trying out housesitting, can significantly cut down your lodging costs.
Eating at local fresh markets rather than restaurants will not only save you money but also provide a more authentic experience.
Plan your daily activities; consider free local events, parks, and attractions.
Always carry a water bottle to avoid buying expensive drinks.
With careful planning, traveling on a shoestring budget can make your journey all the more rewarding and memorable.
How to Save Money on a shoestring budget?
Saving money while on a shoestring budget might appear challenging, but it’s not impossible. Begin by monitoring your expenditures and identifying areas where you can potentially save money. Also, consider substituting costly activities with more affordable or free ones.
Every small action counts when you’re on a shoestring budget, and these savings accumulate over time. Remember, consistent small savings can make a significant difference in the long run.
Starting a business on a shoestring budget
Starting a business on a shoestring budget requires careful financial planning and innovative thinking. Indeed, it may sound challenging, but numerous shoestring startups have surged to success by optimizing their business budgets. It is all about crafting a solid business plan that clearly delineates your budget and the efficient utilization of each dollar.
Maintain focus on essential expenses only. These expenses might include mandatory licenses, essential software for business operations, or even crucial industry-specific tools. Leverage your personal and professional networks for free advice and resources.
Also, make the most of free or low-cost online marketing strategies as these can be vital to shoestring business budgets. You can use effective strategies, like using different social media platforms for marketing or creating a blog, to broaden the reach of your business.
Remember, having the capital to start is important but it’s secondary to a truly novel idea, intense hard work, and a strategic approach. So, let your creativity thrive and work passionately towards growing your business.
Shoestring Budget Examples
Shoestring Vacation
Wedding or Honeymoon
Home Improvement
Business on a Shoestring Startups
Savings Goals
Financing your Next Car
A shoestring budget is not always related to bigger projects. It can also refer to the scenario where the money required for daily expenses, buying an item, or completing a project isn’t enough. Here, the person has to be creative and find ways to stretch the money to make ends meet.
Practical Tips for Surviving on a Shoestring Budget
In this section, we will present practical advice for managing a shoestring budget, derived from case studies of my readers and my own personal experience who have thrived despite financial limitations.
Whether you are budgeting on a low income or looking to reach FI number faster, this guide has you covered.
1. Starting with a Budget: Your First Step
Before you embark on your journey of living on a shoestring budget, the first step is to define a realistic budget.
Understand your total earnings and list all your monthly expenses.
Identify which expenses are necessary (rent, utilities, groceries) and which are discretionary (eating out, entertainment).
Now create a spending plan such that it covers all necessities, allocates some amount towards savings, and leaves a little for leisure.
A well-defined budget will be your roadmap to financial management success.
Remember, the goal is to live within your means but also to ensure you aren’t depriving yourself.
2. Make Saving Automatic
A proven way to save money on a shoestring budget is to make saving automatic.
In such a method, you can set up an automatic transfer when you get paid. Another idea is to use Acorns, which rounds up purchases made with your debit card to the nearest dollar and deposits the change daily into your savings account.
Essentially, you’re saving without even noticing it! These little amounts add up over a period and can really bolster your savings.
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3. Cut Back on Expenses
One of the most effective ways to operate within a shoestring budget is by reducing expenses. These can be small lifestyle changes, like cutting back on takeaways and preparing meals at home, walking or cycling instead of driving short distances or canceling unused subscriptions.
Specifically, you are looking to cut back your flexible expenses the most.
4. Look for Ways to Make Extra Money
Alongside cutting back on expenses, we continually stress the importance of finding ways to supplement your income. This could be from a side hustle, passive income, part-time job, or even a pay raise.
This additional income can help ease pressure on your shoestring budget. Also, it might provide an opportunity to explore new interests or passions. By diversifying your income streams, you make your financial situation more secure and flexible in unexpected circumstances.
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5. Utilize Free Resources
When it comes to saving money on a shoestring budget, the key is to utilize free resources and focus on essentials before spending money.
Thankfully, there are many vital ways to do this:
Find free things to do without spending money.
Use your local Buy Nothing group to find items before spending your hard-earned cash.
Learn and enhance your skills through free or low-cost online platforms like Udemy, Coursera, and YouTube.
Leveraging such resources can have a significant impact on your budget, leading to substantial savings for other meaningful expenses.
6. Look for Deals and Coupons
Another wise strategy when operating on a shoestring budget is seeking out deals and using coupons whenever possible. This game-changing approach can be applied to your grocery budget, dining, clothing purchases, and even travel.
Search for coupons in newspapers, magazines, or on coupon websites. Perhaps, subscribe to newsletters from your favorite retailers, a move that will provide straightforward access to information about sales and discount codes. Be mindful while shopping online or in stores, and always remember to rein in impulses, checking for any available discounts before purchasing.
Moreover, take advantage of holiday sales or Amazon Prime Day for larger purchases. Taking a little extra time to hunt for the best deals can significantly cut down your expenses and help you stick to your shoestring budget.
7. Utilize Household Resources
Leveraging what you already have in your household is another fantastic way to save money.
For instance, before running to the grocery store, take stock of what’s in your pantry and design meals around these items.
Also, consider repurposing and upcycling household items. An old ladder can turn into a chic bookshelf; jars can be used for storage.
Optimizing utility usage by switching off lights when not in use and limiting water usage can also reduce bills.
Start treating everything in your house as a resource with a specific purpose and value, including leftover food, old clothes, and used furniture. Every household item utilized efficiently can add up to visible savings over time.
8. Get Rid of Unnecessary Expenses
Perhaps the most crucial aspect of managing a shoestring budget is identifying and eliminating unnecessary expenses. These could include subscriptions to magazines or online services that you hardly use, dining out frequently, or buying expensive coffee daily.
Analyze where your money is going every month. You’d be surprised how the smallest changes can have a big impact on your budget. Eliminating even a few unnecessary monthly expenses can add up to substantial yearly savings.
Remember, the key is not to deprive yourself of everything but to find that balance between living comfortably and within your means.
9. Reduce Your Monthly Rent or Mortgage Payment
Want to slash a significant expense of your shoestring budget by considering ways to reduce your rent or mortgage payments? Could you move to a more affordable area or a smaller property?
For homeowners, look at refinancing your mortgage or negotiate better terms, resulting in lower monthly payments. Always remember to check if any fees would apply before proceeding with refinancing.
If relocation isn’t an option, consider renting out a spare room in your home or offering it on a vacation rental site.
If you are a renter, look at becoming a permanent housesitter.
Lowering these substantial expenses can make a huge difference in your budget, allowing you to allocate funds to other pressing areas, save, or even invest in building wealth.
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10. Be Creative When Paying Bills
When managing a shoestring budget, it can be helpful to get creative with the way you pay your bills. Sometimes, splitting payments between paychecks or paying on certain days can make managing your budget easier.
You could also consider bill negotiation services or check if you qualify for reduced rates based on your income. If meeting all payments becomes too strenuous, communicate with your service providers about it. They may have hardship programs or payment plans to assist during tough financial periods.
Remember, the key is to avoid late fees or penalties that could further strain your budget.
11. Leverage Technology to Save Time and Money
Make the most of technology to manage your shoestring budget. There are numerous mobile apps and online resources to help you track your expenditures, save money, pay bills, and even invest.
Budgeting apps can help you keep track of your income and expenditure, warn you when you’re nearing your limit, and provide valuable insight into your spending habits. Digital wallets can help you make secure transactions without the fear of losing cash.
Moreover, there are apps and websites to compare prices of different products, get the best deal alerts, apply instant coupons, or even earn cashback like Rakuten.
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12. Participate in a Mini Savings Challenge
As a fun and effective way to boost your savings, consider embarking on a mini savings challenge! These challenges break the intimidating concept of saving into manageable, small steps. They can vary based on duration and the amount you’re aiming to save.
For example, in a 52-week challenge, you save $1 in the first week, $2 in the second, and so on, until you’re saving $52 in the 52nd week. By the end of the year, you’ll have saved $1,378!
Not only does it make saving fun, but it also allows you to develop a consistent saving habit, crucial when budgeting on a shoestring.
Frequently Asked Questions (FAQ)
If you’re fortunate enough to have a budget that’s more than a shoestring, the principles discussed still apply. Having more resources doesn’t mean you should ignore opportunities to save and invest wisely.
So, whether your budget is minimal or ample, consider adopting these healthy financial habits to achieve your financial goals. Make sure to sock away any extra money into a savings or investment account so you aren’t tempted to spend it.
Starting to invest on a small budget involves several key strategies. You must pay yourself first each and every time you are paid.
Set up an auto savings plan through a high interest savings account to make sure you start earning interest.
Contribute enough to your 401(k) to take full advantage of your employer’s match, if available, and consider mutual funds with an initial investment as low as $500.
Pick one solid company wherein you believe data and financials are stable enough to invest in, and buy 1 share.
If you receive a work or tax refund bonus, allocate it towards your investments instead of immediate spending.
Key Takeaways: Managing Money Well on a Tight Budget
Managing finances on a shoestring budget can be a daunting task, but with the right strategies in place, it can become a way to achieve financial health.
This is something I did when I was a stay-at-home mom looking for ways to make money.
In the grand scheme of things, managing a shoestring budget is less about the money and more about your mindset. Yes, limited resources can present challenges, but your attitude and creativity can make a difference.
Embracing frugality, taking control of your financial choices, and building resourceful strategies can turn your constraints into opportunities.
Money comes and goes, but the ability to manage it effectively is a life skill that will always be beneficial. The real wealth lies in your ability to live within your means and make the most of what you have – turning your shoestring budget into a stepping stone towards financial independence and stability.
Remember, every journey starts small.
Day by day, these tips can help you improve your financial stability and achieve your goals, regardless of your budget size.
Source
Merriam-Webster. “on a small/tight/shoestring budget.” https://www.merriam-webster.com/dictionary/on%20a%20small%2Ftight%2Fshoestring%20budget. Accessed December 5, 2023.
Grammarist. “Shoestring Budget – A Creative Expression for Limited Money.” https://grammarist.com/idiom/on-a-shoestring-and-shoestring-budget/. Accessed December 5, 2023.
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Inside: Are you struggling to keep up with your variable expenses? Whether it’s groceries, gas, or rent, managing these costs can be daunting. This guide will teach you how to budget for variable expenses and reduce the strain they put on your wallet.
Understanding and effectively managing your variable expenses is a crucial aspect of maintaining financial health.
These are expenses that fluctuate on a monthly basis, such as groceries, fuel, and entertainment. Their inconsistency can make budgeting a challenging task.
For many people, this is where they give up on budgeting because variable costs can sway too much for the average budgeter to know what to do.
Around here at Money Bliss, we know those who efficiently manage their variable expenses tend to fare better in achieving their financial goals. Furthermore, it empowers you to anticipate, plan and manage costs better, and avoid unnecessary financial stress.
Our focus here will be on explaining how variable expenses can make notable changes to your personal budget and offer strategies to manage them effectively.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is a Variable Expense?
A variable expense is a cost that changes from month to month.
Unlike fixed costs that are paid at regular intervals and may endure only slight fluctuations, variable expenses undergo a higher degree of fluctuation depending on consumption or quantity used. These expenses can comprise costs such as groceries, entertainment, and fuel for your car.
What primarily distinguishes a variable expense is its potential to vary from one period to the next, making it an important calculation in accounting for a comprehensive monthly budget.
Knowing the intervals of these variable costs can enhance the accuracy of your budgeting, turning this challenging aspect into an opportunity to reduce costs.
What is an Example of a Variable Expense?
Variable expenses typically entail a high degree of personal discretion and vary substantially between individuals. While one person may see dining out as a variable expense, for another, it may be a rare treat. Either way, it is still an example of variable expenses.
Here are a few typical examples:
Groceries: You decide what food to buy, and it depends on your food preference, the number of people at home, and special dietary needs.
Gasoline: This expense is dependent on how much and how far you drive.
Utilities: Electric, water, and gas bills fluctuate based on usage.
Clothing: The cost can vary each month depending on how often and how much you choose to buy, such as seasonal shopping, special occasions, or replacing worn-out items.
Gifts: Costs can fluctuate depending on the occasion, person, and your personal budget for the period, making them unpredictable and potentially impacting your monthly budget plans. Especially for Christmas gifts.
Entertainment: Costs such as movie tickets, concerts, or amusement parks may vary depending on your social life.
Repairs: Costs for home and car repairs are unpredictable and can markedly vary. Essentially, any expense that is not fixed (like rent or car payment) can be considered a variable expense.
Taxes: Yes, even your taxes are variable based on your income.
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Difference between Fixed and Variable Expenses
Understanding this difference is a significant step toward setting realistic savings goals
Fixed expenses are constant costs that remain the same each month, like rent, insurance premiums, car payments, or childcare. They’re predictable, making them easier to incorporate into your budget without unexpected surprises.
On the contrary, variable expenses fluctuate month-to-month and include items like groceries, utilities, gas for your car, or entertainment. The unpredictability of these costs can cause potential challenges in budgeting and limit the consistency of your financial output.
Nevertheless, variable expenses often present more opportunities for saving.
You have greater control over these costs, giving you a chance to limit expenditure and prioritize savings.
How to Budget for Variable Expenses
Personal budgeting is an essential tool. Despite variable expense’s unpredictability, it is possible to plan for these expenditures by applying practical tactics and strategies.
From using budget apps to examining previous spending patterns, this type of budgeting enables you to maintain control over your finances and make adjustments as necessary.
50/30/20 Budget: An Effective Approach
The 50/30/20 budgeting approach is a simple yet effective method that can help you manage both fixed and variable expenses.
This method suggests you divide your after-tax income into three categories: 50% on necessities, 30% on wants, and 20% on savings or debt repayment.
By categorizing this way, you ensure your most critical outlays (the necessities ) first. You then allocate your income towards discretionary spending (your wants), and finally squirrel away a portion for savings (hopefully 20%) or paying off debts. This budget calculator strategy can serve as a foundation to guide your spending, helping you to stay on top of your finances.
Quicken
Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.
I have used this platform for over 20 years now.
Pros:
Birds-eye view of your complete financial picture.
Conveniently download your spending activities, and automatically categorize them (Quicken connects to over 14,000 financial institutions).
Track investments with it’s features like portfolio analytics, retirement goals, and market comparison.
Cons:
Little complex to use at first, the learning curve is moderate.
Yearly subscription-based model to use the platform.
Zero-Based Budget
A zero-based budget is a technique where you make a budget from scratch or “zero” and allocate every dollar of income towards different categories of expenses until they sum up to zero at the end of the month.
This budgeting strategy, very popular due to the budgeting app, YNAB, can be a rewarding technique that solicits justifying every expense’s worth as you give every dollar a job.
Distributing money toward fixed costs is usually shoo-in, but budgeting for variable costs can be tricky because you won’t know how much you’ll spend on them. The solution is to estimate as closely as possible.
The beauty of a zero-based budget is that it ensures your money is purposefully allocated, leaving no room for unexplained spending especially when used with sinking funds.
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YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Envelope Budgeting System
The envelope budgeting system is a successful method for managing variable expenses. By dividing your income into envelopes assigned to different categories like entertainment, groceries, or transportation, control over fluctuating costs is established.
With each paycheck, you determine a specific amount for each category and stuff that envelope with cash. By strictly adhering to this limit, you thereby avoid overspending.
This hands-on approach provides an exact idea of available cash and creates a stronger sense of financial accountability. In fact, recent data indicates that the envelope system has successfully helped many people stay within their budget, primarily by making expenditures more tangible and easier to track.1
What is most likely the reason variable expenses should be planned after fixed expenses?
When preparing a budget, it’s typically suggested to plan for fixed expenses first before variable expenses.
The primary reason is that fixed expenses are generally non-negotiable costs that are essential to your daily life and take up much of your budget. These costs are predictable and regular, making them easier to budget for.
Variable expenses, on the other hand, tend to fluctuate and often include discretionary spending like dining out, shopping, or entertainment. This category, despite its variability, carries a certain upside as you possess more control over these expenses than your fixed ones.
By planning for fixed expenses first, you ensure to cover your essential needs before budgeting for lifestyle choices and discretionary spending, which can flex more easily around your remaining income.
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Tips to Control Variable Expenditures
Managing and controlling variable spending is an essential aspect of sound financial planning.
Honestly, the more proactive you are in monitoring the continuous changes in variable expenses and introducing strategies to suppress any unnecessary hikes, the faster you will reach your goals.
This section will provide insights into various effective methods to control variable spending, as well as the behavioral adjustments needed for successful implementation.
Tip #1 – Save on fixed and variable costs
Everyone wants to save money and here are a few tips on reducing both fixed and variable costs:
Fixed costs: Considering these costs are more constant, savings can usually only be achieved by longer-term changes. This could be refinancing your mortgage for a lower rate, negotiating a lower car insurance premium, or switching to a cheaper phone plan.
Variable costs: Changes in habits can lead to significant savings. For instance, cooking at home instead of dining out, carpooling or using public transport to save on gas, or unplugging electronics when not in use to save on utilities.
By scrutinizing both types of costs, you can identify opportunities to cut back and increase your savings over time. Being frugal green is a huge topic! Remember, the little things can add up!
Tip #2 – Set expense limits and find ways to save
Budgeting requires discipline, and setting limits on your variable expenses is a big part of that. You can do this in three ways:
Start by reviewing your spending patterns: examine your transaction history to identify areas of overspending. Once you’re aware of these, set spending limits that align with your financial goals. Drawing from my experience, I can assure you that awareness of overspending areas, followed by setting spending limits, can significantly align with your financial goals.
Consider taking part in a no spend challenge. Personally, that is when I realized I spent a lot of money on things that didn’t matter to me in the end.
Adopt practical money-saving habits like adopting DIY approaches (e.g., home repairs, sewing, cooking), utilizing coupons and cash backs, shopping secondhand, or carpooling.
Remember, you have control over your variable expenses, and setting restrictions doesn’t mean depriving yourself. It just means making informed decisions and prioritizing your spending according to your financial goals.
Tip #3 – Use Sinking Funds
A sinking fund is an effective money management strategy that can help handle variable costs. It’s a fund where you regularly set aside a certain amount of money for a specific expense. For instance, you might establish a sinking fund to cover property taxes or unexpected costs (but they will happen) like car maintenance, vet bills, or holiday gifts.
When the time comes for these expenses, you won’t have to scramble to find the money because you’ve already collected a fund over time.
This approach can ease financial stress and prevent unplanned debts, making sinking funds an excellent remedy to unexpected variable expenses. For us, this is when we maximize the placement of our hard-earned money across multiple bank accounts.
FAQs about Variable Costs and Budgeting
While all expenses matter, we generally advise budgeting for fixed expenses first. These are critical costs that typically stay constant month-to-month, like rent or mortgage payments, insurance, and fixed utilities.
Allocating money toward these essential costs first ensures that you’re covering your necessities. Once you’ve accounted for these, you can then budget for variable expenses which are discretionary and fluctuate based on personal usage.
Thus, it helps you realize your spending habits and identify areas where you can cut back if needed.
Yes, entertainment is typically considered a variable expense. These costs vary month-to-month based on your discretionary spending habits.
For instance, your spending on concerts, movies, dining out, or subscriptions can fluctuate based on your lifestyle, events, or personal choices. Remember, since entertainment costs are discretionary, they can often be trimmed when looking to make budget adjustments.
Ready to Master your Variable Budgets?
Understanding the ins and outs of variable expenses and strategizing accordingly can empower you to manage your money more effectively.
By distinguishing between your fixed and variable expenses, budgeting effectively, and identifying potential savings, you’re setting yourself up for financial success.
Whether you’re using the 50/30/20 budget approach, a zero-based budget, or sinking funds, the goal is to ensure your money is being used wisely. It’s all about creating a balance that nurtures a comfortable lifestyle while paving the way toward your future financial goals.
So review your inconsistent costs, implement new financial strategies, and take control of your variable expenses.
The key takeaways is a well-planned budget is not just beneficial for controlling spending, but also integral to your financial freedom.
Source
Ramsey Solutions. “How to Budget With the Cash Envelope System.” https://www.ramseysolutions.com/budgeting/envelope-system-explained. Accessed November 28, 2023.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
College graduates who have been bit by the travel bug but don’t have the funds to see the world might still have the opportunity to travel by working abroad after college. Living and working in a new country may have its challenges, but the experience may also transform graduates in ways that are likely to be impressive to future employers.
The Pros and Cons of Working Abroad
Though it can be an enjoyable experience, working abroad can also have challenges. Considering both the pros and cons is recommended before making this life-changing decision.
Pro: Making Money While Traveling
Working abroad allows graduates to start their career while also having the opportunity to travel. This can be a popular post-graduation choice for students who want to travel but don’t have the funds. Moving to a new country generally makes it easier to truly explore and get to know a country better.
Traveling to nearby countries may be easy, as well. Instead of visiting a single country during a one-week vacation, traveling workers might be able to experience multiple countries and cultures.
Recommended: Ways to Be a Frugal Traveler
Pro: Learning the Language
Living abroad gives people a great opportunity to learn a new language or sharpen their skills in one they already speak. Every situation, from ordering breakfast to figuring out transportation, will give recent grads an opportunity to improve their language skills. The ability to speak more than one language might also open more doors in the job market. Being multilingual has become an increasingly desired skill, and learning a language while abroad could pay off in the future.
Con: Culture Shock
Unfamiliar surroundings. A different culture. Moving to a new country means making adjustments. People will communicate differently, eat differently, work differently. Every part of life will be new, which can be both exciting and stressful. Adjustment to life in a new place may be experienced in a range of stages, beginning with excitement and enthusiasm, with maybe some frustration in the middle, to feeling at home in new surroundings and building relationships.
Con: Language Barrier
Dealing with a language barrier can be stressful and scary. Not only can a language barrier make daily activities difficult, it can also make building relationships slow-going. This can feel isolating for people who don’t understand the local language.
Finding Jobs
Finding an international job isn’t all that different from finding one here in the states. Recent grads might consider looking on well-known job search sites or those specific to finding opportunities in other countries. Some overseas job opportunities might be found on websites for international humanitarian organizations, travel magazines, or even the United Nations.
Requirements to Work Abroad
Getting a passport or travel visa and an employment visa are important parts of preparing to work in a foreign country. Most countries grant specific work visas to international workers, but the requirements and processes for getting the visa will vary by country.
It’s also important to know whether or not fluency in the language is required. People who are not fluent in a language other than English and do not want to learn before moving may want to consider countries where English is the official language.
Employment Abroad
Graduates who like to think long term may want to consider applying for jobs with global companies that have positions in multiple countries, including the United States. This may open up opportunities to move back to the U.S. in the future.
One popular choice for working abroad is teaching English. A teaching degree may or may not be required, so make sure to check the requirements in the country you are considering.
Another popular option is to look for seasonal work, such as jobs in the tourism industry. This can include working at a ski resort, a hostel, or bartending at a local restaurant. People who enjoy caring for children might be interested in working as an au pair, which typically includes room and board in addition to a salary.
Other Post-Graduation Decisions
Finding a job isn’t the only task that begins after graduation. Once a student graduates, drops below half-time enrollment, or withdraws from school, the task of paying back student loans begins. Direct Subsidized, Direct Unsubsidized, and Federal Family Education Loan borrowers have a six-month grace period before they’re required to start making payments. Students who took out a Perkins loan have a nine-month grace period.
Refinancing student loans into one new loan may offer borrowers a lower interest rate or different terms than their existing loans. Both federal and private student loans can be refinanced, but when federal student loans are refinanced by a private lender, the borrower loses federal benefits, such as income-driven repayment plans, loan forgiveness programs, deferment, and forbearance.
The Takeaway
Whether your future employment is in the U.S. or in a foreign country, there are many options to consider. Pros of working abroad after college include gaining new work and life experiences, learning a new language, and making money while traveling. Cons of working abroad include experiencing culture shock and language barriers, and possibly missing out on events back at home.
However, no matter where your future employment takes you, if you have a student loan, repayment will follow.
If refinancing a student loan is something you’re considering, SoFi has options that may work for your situation. Saving money is simple with SoFi’s online application process, low fixed or variable rates, and flexible terms.
See if you pre-qualify for student loan refinancing with SoFi.
SoFi Student Loan Refinance If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
The Boujie Budgeter dives into how to not overspend with holiday decorations
The holiday season is around the corner and no matter which social media platform you browse, someone is prepping their tree or decorating with poinsettias in their home. For older Zillennials, this year could be different, and many people are experiencing the festivities in their first apartment.
Due to inflation and the economic crisis happening across the country, prices are at an all-time high in grocery stores, department stores and even home decor shops. Decorating your apartment for the first time can seem overwhelming, but the holidays bring new anxiety.
Social media has transformed everything into a focus on aesthetics, hauls, and presentation specifically tailored for Instagram. Though it seems like an added pressure to have the most post-worthy home for the holidays, it doesn’t have to break the bank.
The self-proclaimed Boujie Budgeter, Mykail James, has always been passionate about personal finance and helping her community. “I started my finance platform because there wasn’t financial education that catered to this new wave of young professionals,” James tells GU.
Topics around money, such as credit, bargaining and investing, are difficult to grasp due to complex language and terms many people may need to be more familiar with. James shared her top financial tips for frugal holiday decor shopping for Zillennials.
Those with a holiday shopping game plan usually shop a month or two in advance to snag the major deals. According to Shopify, 41 percent plan to start shopping by the end of October. “When it comes to holiday decorations, we run away from being intentional,” James says. “You create that intentional space when you know what you want your space to look like.”
Fitting An Aesthetic Is Not A Requirement
Though the trend of lifestyle content has taken over the timeline, it doesn’t mean you have to overspend to have trendy pieces for your home. “If you’re not buying the Architectural Digest of the season, then you’re not getting a huge peek into what other people’s homes look like, but we have a constant reminder on social media,” she says. It’s important to remember that the holidays are meant for creativity and personalizing your safe space.
Try Renter Friendly Decor
As many Zillennials prep their homes for decorating their first apartment, they now have the opportunity to look into the market for renter-friendly decor. “That market has definitely exploded in the last five years,” she says. From peel-and-stick wallpaper to lighting fixtures, there are more opportunities to have the affordable decor in your home without the commitment of long-term installations.
Shop In-Person For Better Deals
Many of us live on the Amazon website for quick delivery deals, but many in-person sales offer consumers more items for a better price. “Craft stores like Hobby Lobby and Michaels are the kinds of places that have huge discounts on holiday decor, especially right after the season ends,” she says.
Don’t Feel Pressured To Have Traditional Decor
For James, she doesn’t subscribe to having a traditional Christmas tree or wreath in her home. Though some social media can add pressure to have cookie-cutter Christmas decor, there’s also a rise in Zillennials making their own rules regarding holiday scenery. “When you are in control of your holiday vibes, what feels natural to you could be completely against the grain of what everyone else feels like is the vibe,” she says.
About Kenyatta: Clark Atlanta University and Medill School alumna Kenyatta Victoria is the Girls United writer covering everything from news, pop culture, lifestyle, and investigative stories. When not reporting, she’s diving deep into her curated playlists or binging her favorite comfort shows.
Inside: Fixed expenses are a vital part of any budget, and understanding how to account for them is essential to staying on track. This guide will teach you about fixed expenses and how to use them in your monthly budget to keep expenses under control.
Budgeting is the cornerstone of financial stability.
Whether you want to or not, it will take away the stress of money.
A budget is a practical tool that enables you to plan your spending and savings, ensuring a fair share of your income goes towards critical expenses. It also gives you more control over your money, reducing stress and enabling you to meet your financial objectives.
This is something you want, right?
In this post, we will uncover information specifically related to fixed budget expenses.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Decoding Your Expenses – Fixed and Variable
Understanding expenses forms the bedrock of effective budgeting practices. There are two key types of expenses to consider: fixed and variable.
Fixed expenses are those that remain constant every month, such as rent or car payments.
Variable expenses, on the other hand, fluctuate monthly based on usage or consumption, like groceries, utilities, or gas.
Balancing these two types of expenses forms a significant part of personal budgeting.
What is A Fixed Expense?
A fixed expense is a cost that remains typically constant and is paid at regular intervals. These intervals may be weekly, monthly, quarterly, or annually.
Given their consistency, they contribute to financial predictability and ease of budgeting.
What is an Example of a Fixed Expense?
Here are common fixed expense examples that cover a wide spectrum but predominantly include costs required to maintain a basic standard of living. Here are some examples:
Rent or mortgage payments: This encompasses the regular cost of housing.
Insurance premiums: This could be for your car, health, life, renters, or homeowners insurance.
Loan payments: Regular installments for obligations like student loans and car loans belong to this category.
Utilities: Though they may fluctuate occasionally, regular payments like water, gas, and electricity are often treated as fixed costs.
Subscriptions: Recurring payments for services such as gym memberships or streaming platforms.
Savings: For disciplined budgeters, fixed contributions to saving accounts can be considered a monthly fixed expense. This is how Money Bliss readers save so much money!
The list can extend to include other less common fixed expenses, such as alimony, child support, or back tax payments, depending on personal circumstances.
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Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
What is a periodic fixed expense?
A periodic fixed expense is a cost that is regular and predictable but does not occur monthly. These expenses still retain the characteristics of fixed expenses.
They may be caused by quarterly, semi-annual, or annual payment terms and require careful budgeting and planning. Examples include annual subscriptions, car insurance paid semi-annually, or yearly property taxes.
It’s essential to account for these expenses in your budget, dividing the total cost by the number of months until payment to ensure you’re adequately prepared when they’re due.
How to Budget for Fixed Expenses
Budgeting is a crucial financial activity as it helps manage income effectively and ensures all necessities are covered.
Most people use the zero based budget or the biweekly budget as a starting point.
1. Start With Fixed Expenses in Budgeting
Starting with fixed expenses in the budgeting process is essential, as they make up the majority of one’s budget and are typically consistent for longer periods.
When writing out your budget, prioritize fixed expenses such as housing costs, insurance, and childcare. You can use our personal budget categories to find out which expenses you shouldn’t forget.
Upon allocating your income for the month, ensure these bills take precedence over discretionary spending to avoid budgeting errors.
Quicken
Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.
I have used this platform for over 20 years now.
Pros:
Birds-eye view of your complete financial picture.
Conveniently download your spending activities, and automatically categorize them (Quicken connects to over 14,000 financial institutions).
Track investments with it’s features like portfolio analytics, retirement goals, and market comparison.
Cons:
Little complex to use at first, the learning curve is moderate.
Yearly subscription-based model to use the platform.
2. Prioritizing Between Fixed and Variable Expenses
Prioritizing between fixed and variable expenses can often feel like walking a tightrope.
The first step is budgeting for your fixed expenses. Since they make up the majority of your budget and are for longer periods of time, it’s crucial to ensure these costs are taken care of first.
Next, plan for your variable expenses. These costs fluctuate every month and can be adjusted easily.
Finally, you will account for flexible expenses.
As always, don’t forget to save and invest, as this will help with financial sustainability and wealth development.
3. Tools and Techniques for Efficient Budgeting
Today’s digital landscape offers myriad tools and techniques for efficient budgeting, which is great news for you!
Apps and digital tools can facilitate the tracking of expenses in real-time, thus making it easier to discern patterns and identify savings opportunities. Using a line-item budget can help you dig into where your money is going and plan every dollar you earn.
Here are our favorite budget apps.
Regularly reviewing and updating your budget can help you stay on top of changes and future uncertainties.
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How do I determine whether a cost is fixed or variable?
Determining whether a cost is fixed or variable often comes down to its consistency and its correlation with a factor such as output, usage, or time.
Fixed costs remain constant over time or within certain activity levels; examples include rent and insurance premiums. They do not fluctuate with changes in production or the number of goods sold.
Variable costs, on the other hand, fluctuate in direct proportion to levels of spending, such as groceries or gas.
Understanding this difference can help with accurate cash flow forecasting and effective financial management.
Strategies to Save on Fixed Costs
Now, the key is to try to lower your fixed expenses as much as possible. This will make the biggest difference in your budget.
For example, if your rent for a one bedroom apartment is $1850, maybe you move in with a roommate, and your rent is lowered to $800 per month. That is a savings of $1050, which you can save for a down payment on a house.
Ways to Curb Fixed Expenses
Optimizing your budget often entails finding ways to reduce your fixed expenses. Several strategies can help achieve this:
Renegotiate Your Bills: Reach out to service providers to negotiate lower rates for services such as insurance premiums, Internet, phone service, and more.
Refinance Your Loans: If interest rates have decreased, consider refinancing your mortgage or student loans to lower the monthly payments.
Downsize Your Living Situation: One major way to cut costs is to find a smaller or cheaper place to live.
Cancel Unused Subscriptions: Regular payments for services you don’t use, like gym memberships or streaming platforms, can silently drain finances.
Automate Savings: Regular, automated transfers to a savings account can enforce discipline and consistency in managing money.
Remember, while these strategies can help you cut costs, each individual’s circumstances are different, so personalized considerations should be made.
Which fixed expense would be most difficult to change if money is needed for car payments?
Car payments are a real struggle for most people. Right now, the average car loan is between $516-725 per month depending on a used or new vehicle. 1
As such, your largest fixed expenses are usually the most challenging to change.
If you require more money for car payments, the most difficult expenses to alter would likely be your mortgage or rent payments. Reducing these costs often necessitates significant lifestyle changes, such as moving to a cheaper home or obtaining a roommate.
Other difficult-to-change fixed expenses could include insurance or student loan payments, depending on the terms of your loans or policies.
It’s important to have an emergency fund set up for unforeseen repairs like these to avoid having to drastically change your lifestyle.
Practical Tips for Achieving Financial Stability
Achieving financial stability often boils down to effective management and strategic planning. Here are some practical tips:
Pay Your Bills on Time: This reduces unnecessary fees and interest costs. If this is a challenge, setting up automated payments may help.
Save Regularly: Aim to set aside a certain percentage of income on a regular basis. Automated savings plans are a useful tool for this.
Prioritize Spending: Distinguish between your wants and needs to help prioritize your spending.
Get Insured: Protect yourself from large, unexpected expenses by ensuring appropriate coverage on insurance.
Stay Informed: Regular budget reviews and financial check-ups can help you stay on track and adjust your plans as necessary.
Remember, financial stability is a journey, not a one-time achievement. It requires consistency and patience. So, celebrate your small financial victories along the way!
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Start 34 Day Free Trial
YNAB vs Mint
Frequently Asked Questions
Yes, rent is considered a fixed expense. It is a recurring cost that typically stays constant, regardless of changes in your income, spending, or other factors.
The rental or lease agreement specifies the monthly rent expense, which does not change until the lease period ends or is renegotiated.
If fixed costs become variable costs in a personal budget, it can add some unpredictability to your expenses. For instance, if you have a variable-rate mortgage, your payments may change due to the mortgage agreement.
To restore control, consider opening separate savings accounts for each variable expense category, turning these unpredictable expenses into ones that can be anticipated and budgeted for each month.
Fixed costs refer to expenses that do not change with fluctuations in your budget. They are incurred regularly and remain relatively constant, independent of your spending.
These costs are critical expenses necessary to live your life and cannot be quickly modified or eliminated.
Does This List of Fixed Expense Examples Help You?
In conclusion, examining and reducing your fixed expenses can be a transformative step toward achieving financial stability.
Contrary to popular belief, fixed costs are not immutable. With diligence and thoughtful consideration, you can explore cheaper alternatives for health insurance premiums, cell phone plans, and other consistent expenses.
Lowering your fixed costs enables automatic, consistent savings which can then be directed towards settling debt or securing your future. The beauty of this approach lies in its subtlety as this won’t feel like an imposition on your lifestyle.
Therefore, understanding and managing your fixed expenses can indeed play a crucial role in your journey to financial soundness.
It’s not just about making frugal decisions, rather it’s about making smart ones that can reap substantial benefits in the long run.
Now, do you have the traits needed to be financially stable?
Source
LendingTree. “Average Car Payment and Auto Loan Statistics 2023.” https://www.lendingtree.com/auto/debt-statistics/. Accessed November 27, 2023.
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Inside: Are you struggling to make ends meet on a low income? This guide will teach you how to budget money effectively on a low income, so you can live a comfortable life without having to skimp on important expenses.
Let’s face it… Navigating through the budgeting on a low income can often feel overwhelming.
The fear of insurmountable bills, the anxiety associated with rising living costs, and the overall foreboding nature of budgeting often make for a persistently stressful experience.
However, it is crucial to understand that you are not alone in this journey. I have been in your spot as well as many Money Bliss readers.
Regardless of how daunting the budgeting task may appear, we truly believe that with the right guidance and adherence to solid financial principles, you are capable of achieving financial peace of mind.
This process will simply require patience, persistence, and strategic planning. This guide aims not only to shine a light on the struggles of budgeting with a low income but also to offer a beacon of hope.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
How to Budget Money on a Low Income
While it’s true that budgeting with a low income can be tough, proper money management can make it doable.
When you have less disposable income, it leaves you with less leeway in your budget. That’s why you have to be accountable and meticulously plan your spending to ensure financial stability.
So, let’s dig in and you can find success.
Step #1 – Figure out Your Monthly Income
Developing an effective budget starts with understanding your monthly income.
Here’s a step-by-step guide:
List out all income sources: This includes all your regular paychecks, part-time jobs, side hustles, social security, child support, or any other form of income you have. If your income is irregular, say from commissions or seasonal work, it’s advisable to base your budget on your lowest monthly income.
Account for taxes and deductions: To get an accurate picture of your disposable income, you need to factor in taxes and deductions from your earnings. You need to make sure you understand the difference between gross pay and net pay.
Include irregular income: If you occasionally get money from gifts, or sporadically earn from passive income sources like investments, be sure to include these too. As these are inconsistent, it is best to fund discretionary spending with this money.
Personally, I recommend using your net income with budgeting. This will give you an accurate budget that you can truly follow.
This knowledge is powerful when it comes to effective budgeting.
Step #2 – Define your bills and Expenses
Knowing how much you spend and what you spend your money on is another crucial step in budget planning.
The key is to define ALL your bills and expenses. Here are the personal budget categories that cover almost everything you can think of.
Now, you must do the following:
Identify your fixed costs: These are basics that you have to pay monthly and remain fairly constant, such as rent, car payments, and student loans.
Consider flexible costs: These expenses vary from month to month. Examples include groceries, transportation, electricity, water, and gas bills.
Remember periodic costs: Some costs only appear annually or semi-annually. For instance, insurance premiums, car registrations, and property taxes. It’s important to set aside money each month to cover these expenses when they arise. A sinking fund is great for these expenses.
Account for daily spending: Beyond fixed and flexible bills, consider your day-to-day expenses like shopping, subscriptions, and entertainment. Be honest about the little expenses. It’s often the small, frequent purchases that can derail a budget.
Prepare for unplanned costs: Finally, remember to budget for unexpected expenditures such as car repairs or medical bills.
By defining and categorizing your bills and expenses, you can see where your money is going and better manage your spending.
Step #3 – Reach a Zero Budget
A zero-based budget is a strategy that requires you to assign every dollar you earn to a specific expense or savings category, with the goal of having your income minus your expenses equal zero by the end of the month.
Write down your income: From the step before, you already know your total monthly income.
Subtract your expenses: Subtract the total of your monthly expenses (including savings) from your total monthly income. If you’ve correctly accounted for your income and expenses, the result should be zero. This is what it means to have a “zero-based budget”.
Balance the budget: If your income and expenditure don’t balance, adjust your variable expenses and other discretionary spending until they do. This can involve cutting back on nonessential overspending, like takeout meals or unnecessary purchases.
Allocate every dollar: With your budget balanced, each dollar should now have a purpose, whether it’s paying bills, going into savings, or providing for your daily needs.
Many people struggle to hit a zero based budget on the first try. It is common for your expenses to be higher than your income. Thus, a no spend challenge may help you identify what is important to actually spend your money.
Reaching a zero-based budget equips you with a clear picture of your financial status.
Thus, it allows you to use your money purposefully and prevents unnecessary spending. This way, even with a low income, you can still meet all your needs and work towards your financial goals.
What do you do if your budget shows your expenses are more than your income?
When your monthly spending exceeds your monthly income, immediate attention is needed to prevent worsening financial issues. Before panic sets in, consider taking the following steps:
Analyze your budget: Reevaluate and scrutinize your budget. There might be necessary adjustments overlooked or expenses incorrectly categorized. This will give you a clearer understanding of where your money is going.
Prioritize essential expenses: Allocate money to necessities like housing, food, utilities, and debt repayments first. Other less necessary expenditures, like entertainment and dining out, can be reduced or eliminated.
Reduce expenses: After prioritizing, identify areas where cuts can be made. Impulse buys, unnecessary subscriptions, or expensive habits might need to go.
Increase your income: Consider part-time jobs, side hustles, selling unused items, or picking up freelance work to bring in more money.
Seek advice if debt is weighing you down: As a last resort, you may look at ways to lower your interest rate on your debt. These strategies like debt consolidation or restructuring could help make your situation more manageable.
Remember, this situation, while stressful, is not permanent. With careful planning and disciplined execution, you can turn this around and regain financial stability.
Taking Control of Your Budget When Income Doesn’t Cover Your Expenses
Now, this is where you need to learn to manage your money wisely. You are in control of where you spend your money.
Many truly believe with a higher income all of their financial problems go away. From my research, most people end up with bigger money problems, the same spending habits, and still living paycheck to paycheck even with a higher income.
So, let’s reign in what you can do today to make your budget feasible.
1. Prioritize Essential Bills and Expenses. The key is to identify which expenses are truly essential to your livelihood. All remaining expenses, like entertainment or eating out, should be considered secondary and only met after the primary expenses have been satisfied.
2. Participate in a No Spend Challenge. A No Spend Challenge not only helps you save money rapidly but also makes you cognizant of your spending habits, helps identify non-essential expenses, and guides you towards a minimalist, sustainable lifestyle. Start with a no spend month.
3. Reduce your Housing Expenses. Housing costs can be one of the most significant expenses. Look at ways to downsize, negotiate rent, refinance your mortgage, or get roommates. Or even housesit permanently.
4. Be Cognizant of Bad Spending Habits. Some examples include impulse purchases, expensive convenience, not comparison shopping, or paying too much. By becoming aware of your spending habits and making conscious choices, you can break the cycle of unnecessary spending and start saving money with the penny challenge.
5. Skip the Expensive Coffee Shop. Choosing to forgo your daily coffee shop run can result in surprisingly significant savings. Implementing just this one change could save you over $600 a year!
6. Use Public Transportation to Save Money. The costs of owning a car – gas, maintenance, parking, and insurance – can quickly add up. So, look for public transportation as an alternative or even cycling, carpooling, or walking.
7. Take Advantage of Free or Cheap Entertainment. When living with a low income, entertainment expenses can quickly eat into your budget. Good news for you! There are plenty of things to do that don’t cost money.
8. Cut Back on Grocery Spending. By implementing simple strategies such as meal planning, cooking at home, cutting down on processed food and reducing waste, you can maintain a healthy diet while significantly reducing your grocery bills. Don’t forget to use those discounts and coupons!
9. Stick to Your Shopping List. Preplan your purchases before stepping into a store. This is a powerful tool in curbing those impulse purchases which can inflate your expenses substantially.
10. Start Meal Planning. Meal planning is a practical and economical way to manage your food budget. By planning your meals for the week, you can control your grocery spending and eliminate waste.
11. Stockpile Goods That Will Stay Stocked Up Long Term. Remember, the goal of stockpiling is to save money, not to transform your home into a supermarket. Purchase enough to last a few months and focus on items that you’re certain to utilize. Here are the best foods to buy when broke.
12. Pack Your Own Lunch and Skip Eating Out. With an average meal out costing around $10, you could easily save $200 a month by packing lunch from home. Over a year, that’s $2,400 in savings!
13. Drink Water and Avoid Processed Foods. Shifting dietary habits can be a significant change, but your commitment to a healthier lifestyle can reap both health and financial dividends. It’s an investment in a life of wellness and economic sustainability.
14. Take Advantage of Discounts when Shopping. Remember, the goal of shopping with discounts is to spend less on what you need, not to buy more than you need. So, make sure to use coupons wisely, shop sales, buy off season, and use Cashback apps like Rakuten and BeFrugal.
15. Avoid Impulse Purchases. By avoiding impulse purchases, you give your budget room to breathe and create an opportunity for savings. This makes a significant difference over time, especially when money is tight.
16. Apply for Discounts on Utilities and Services. Many utility companies provide low-income home energy assistance programs. The same is true for internet service. Contact your service providers to check your eligibility.
17. Get Free or Discounted Goods Through Charities. Charities, faith, professional, and local organizations often offer grants for people experiencing financial hardship. Utilizing them can be a lifetime as they help you stretch your budget further and provide necessary support in times of financial struggle. Don’t be afraid or too proud to ask for help when you need it.
18. Get Outside. Reconnecting with nature can provide you with cost-free entertainment and a sense of tranquility that’s hard to find elsewhere.
19. Avoid Unnecessary Expenditure. While each person’s definition of “unnecessary” may differ, the key to budget management is curbing expenditures that don’t add substantial value to your life. A common culprit could be brand-name goods or late fees.
20. Start the Practice of Saving with a Mini Savings Challenge. The Mini-Savings Challenge can pave the way to a habit of saving regularly, even on a tight budget. Essentially, this challenge consists of setting aside a small amount of money each day or week, gradually increasing the amount over time.
21. Show Gratitude. While it may seem less directly related to finance, practicing gratitude is indeed integral to efficient budgeting and financial wellness. Remember, financial success isn’t just about making more money. It’s also about appreciating what you have and recognizing the steps you’re taking towards your goals.
Inciting Additional Income Avenues
Okay, this section is how you take a low income and increase your money. While cutting back spending is helpful, creating more money will help you to reach money success faster. This will take the strain off.
1. Look for Ways to Earn Extra Income
Boosting your income, no matter how minimal the increase, can help cover necessary costs and elevate your financial standing.
Here are some ideas using your current job:
Work Overtime: If possible, consider getting more extra hours at your current job. Earnings from overtime or extra shifts can be significant.
Negotiate a Raise: If you’ve been with a company for a while and demonstrated your worth, it might be time to discuss a raise. Prepare well for this conversation with evidence of your productivity and value.
Every extra dollar earned can be put towards savings, paying down debt, and creating better financial stability.
2. Leverage Side Hustles for Extra Money
Side hustles have become an increasingly popular way to earn extra money online in your spare time. They allow for flexibility and can be a great supplement to your current income.
Start a Side Hustle: These can be a great way to make use of spare time to earn extra cash. This could be anything from driving for a rideshare company, offering freelance services, tutoring, delivering food or groceries to selling homemade goods online.
Sell Unused Items: You probably have items in your home that you no longer need. Selling anything from clothes to electronics or furniture can be a good source of income.
Passive Income: From writing an eBook to renting out a room in your house or investing in stocks, creating passive income streams can provide extra money over time.
Remember to choose a side gig that fits your schedule, interests, and skill set. Not only could it bring in extra money, but it could also turn into a passion project, making the work feel less like a chore.
3. House Sit for Extra Income
House sitting can be a viable option for those looking to generate extra income, especially if you’re flexible with your time and location. It typically involves looking after someone’s home (and sometimes their pets) while they’re away.
Not only is house-sitting a way to earn money, but it can also offer a free place to stay. Hello – you just lowered the biggest expense in your budget. However, remember that taking care of someone else’s home is a huge responsibility, so only take on tasks you’re confident you can handle.
Get started by building your profile on Trusted Housesitters.
4. Items You Don’t Need Anymore
Selling items you no longer need or use can both declutter your home and add to your income. It doesn’t just have to be big-ticket items; even small routine household items can yield returns.
While this may be difficult to do, look for items in good condition that you and your family no longer need or use. If you have extra baby stuff, you can rent it on BabyQuip for extra money.
Remember, while selling items won’t provide a consistent income, it can be a great one-time source of extra cash especially if you have these highly popular flipping items in your house.
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5. Pick up a Part-time Job
When you’re on a limited income, picking up a part-time job can be a reliable way to supplement your earnings. You are trading your time for money.
Many of these jobs that pay weekly offer valuable experiences, skills, and possibly even room for growth and advancement. Remember to save and plan for any taxes due as a result of your increased earnings.
Smart Use of Technology in Budgeting
Taking advantage of personal budgeting tools can make managing your finances easier. They can help track expenses, create a budget, and set saving goals. Here are some popular options:
You Need a Budget (YNAB): YNAB helps you create a budget and live within your means, educating you on effective money management along the way.
Simplifi by Quicken: This app crunches the numbers to show how much money you have for day-to-day spending after accounting for bills, goals, and savings.
Empower: This free tool offers a comprehensive financial dashboard that includes budgeting features and investment tracking.
Tiller Money: If you want a more manual approach, you can use Google Sheets or Excel to create a customizable budget spreadsheet.
Remember, the best tool is the one you use consistently. Try a few options to see which one best meets your needs and preferences. Every tool has its pros and cons, but all aim to help you control your finances effectively.
Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss for new leads. Money Bliss is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.
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Access Paychecks Early with Digital Banking Apps
With the rise of digital banking, access to innovative financial tools like early direct deposit has become more accessible, even for those with low incomes. These services can be crucial lifelines between paychecks or in case of emergencies.
Here are a few platforms that offer such services:
Chime: Once you set up direct deposit with Chime, you may get your paycheck up to two days earlier than at a traditional bank.
Current: Current, a mobile bank account, provides users with paychecks up to two days in advance.
Varo: Varo also offers early direct deposit for its users, helping you gain access to your money more quickly.
Clair: Clair’s on-demand pay solution lets you advance a portion of your paycheck before payday. This can be particularly helpful when navigating financial crunches.
It’s important to note that while accessing your paycheck early doesn’t give you extra money, it does provide more flexibility in managing your finances and can help avoid overdraft fees or high-interest loan options in times of need. As with any financial tool, it’s essential to use early paycheck access wisely and not rely on it for regular spending.
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FAQs
Saving money on a low income can seem challenging, but a few strategic changes and smart habits can make it achievable.
Engaging in a money-saving challenge can be a motivating way to encourage disciplined saving, helping you to creatively manage your finances and significantly boost your savings plan over time.
Remember, the key to saving on a low income is to stay consistent, patient, and adaptable in your approach.
Surviving on a low income budget can be challenging, but strategic planning and careful spending can help you manage your finances effectively.
The focus as Dave Ramsey likes to say is on your four walls – food, utilities, shelter, and transportation.
Remember that it’s okay to adjust your budget as you go. Circumstances change, and so should your budget. Review your budget regularly to ensure it’s still working for you and adjust as needed.
Budgeting when you’re broke might seem like an uphill battle.
The key is to make sure you stick to your budget and track your spending consistently. Don’t hesitate to reach out to local charities, government programs, and non-profit organizations for assistance.
Remember, being broke is often a temporary situation, and even small steps towards better budgeting can compound into big changes over time. Try to stay positive and focused on your financial goals.
Now, How do you Survive on a Low Budget?
Surviving on a low income involves careful planning, budgeting, and making the most of available resources. While it may seem challenging, it is indeed possible.
Every small step you take towards frugal living, such as sticking to a budget, reducing unnecessary expenses, or earning extra cash, can lead to considerable savings in the long run.
Remember, it’s also important to invest in yourself – whether that’s asking for a raise at work, learning a new skill, or starting a side hustle.
The journey of living on a low income can be tough, but it also offers an opportunity for creativity and gratitude for the essential things in life. With a positive mindset, some patience, and careful budgeting, you can not only survive but thrive, even on a low income.
The goal isn’t to just get by but to build a financially stable future.
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