How to live cheaply on an income

Many people learn to live with an income that’s at or just beyond the poverty guidelines. Whether you’re a family of four and rely only on one income, recently took a pay cut or live in an area where the cost of living is relatively high, there are lots of steps you can take to cut your expenses and live below your means. The secret to doing so successfully lies in identifying what you actually need and foregoing or sacrificing a few of your more expensive wants.

 

Track your spending habits

Write down every purchase or transaction you make through the week and month in a spending journal. Sort the purchases into categories, such as “transportation,” “eating out” and “entertainment.”

 Develop a budget

Write down your monthly take-home pay and expenses you must pay, such as housing, utilities, food, transportation. Look closely at your spending journal and decide where you must cut spending. For example, money being spent on “entertainment” or “eating out” may not always be necessary. Build savings into your budget so you can start building an emergency fund or have extra for unplanned expenses.

Evaluate your expenses

Look for lower-cost alternatives when paying for Internet, cable and cell phones. For example, you can usually save money by switching to prepaid cell phones instead of contract plans with major carriers. Choose a standard cable package over digital cable with channels and features you may not watch or need. Select an Internet package that offers slower, instead of faster or “turbo” speeds.

Look for cheaper housing options

If you’re single, for example, find a roommate to share an apartment and expenses. Look for apartment communities that offer rent-restricted units to low-income tenants or communities that offer free amenities. Consider finding a tenant to contribute to the mortgage payment if you have the extra room in your house.

 Adopt new shopping and meal-planning habits

Learn to make or grow food items, such as bread, cereal, crackers, fruit and vegetables. Cut manufacturer and store coupons to lower your grocery bill. Substitute generic brands for name-brands. Purchase cheaper cuts of meat for some meals, such as round or chuck roast instead of sirloin or rib roast. Plan your meals ahead of time instead of shopping when you’re hungry or eating out.

 Save on your clothing budget

Buy clothes only from discounted sale racks at the mall or clothing store. Ask the store clerk when sale racks get setup so you can plan your trip. Thrift shop clothes can sometimes be of far higher quality than what you can afford at the mall. Look for non-synthetics, meaning 100 per cent cotton or wool, to get the best value.

 Make a list of low-cost entertainment options

For example, go to museums, zoos and state parks that may have little or no admission fees. Take trips to the library instead of buying books, magazines, newspapers and CDs. Look for movie rental options, when you want to enjoy a movie instead of going to the theatre

Turn belongings into cash when you no longer need them

Sell clothes that no longer fit instead of throwing them out. Toys, furniture and appliances can all be sold through classified ad websites, in newspapers or by posting fliers on bulletin boards. Likewise, search classifieds and garage sales to save money on items you need, such as home furnishings and clothes.