It is possible to comfortably live on a small budget if you know how. You need to cut back on things like your gym membership, cable, high-cost cell phone plan, and unnecessary purchases on credit.
Depending on your living situation, you may also need to move to a less expensive place or get a roommate, reduce your non-essential overhead, and follow a plan to reduce your debt. Learn more in this guide with step-by-step instructions, examples, and tips.
Steps to Living on a Small Budget
You need to take specific steps to live a good life on a small budget.
1. Reduce Your Debt
Reducing your debt is a good idea, no matter what your income. However, it is even more essential if you live on a small budget. Paying high-interest rates will consume more of your money. You can use the 10/20 rule to get out of debt quickly and manage future debt.
2. Create a Budget
Creating a budget is also essential. You need to budget every penny when you do not have a significant income. The better you plan, the more comfortably you can live.
3. Plan Grocery Trips and Use a List
Groceries are another major monthly expense. So, you need to plan what you are going to buy from the store, so you do not end up spending more than you have on food. Purchase items when they are on sale to save money, and use a list when you go to the store to avoid purchasing items you do not need.
4. Watch a Streaming Service Instead of Cable
Canceling your cable TV and using a streaming service through your smart TV, streaming box, or DVD player costs less than paying your monthly cable bill. Many cable subscriptions cost $150 or more, while you can sign up for Netflix for a fraction of that. So, this is an excellent way to reduce your overhead.
5. Switch to a Budget-Friendly Phone Plan
If you are on a high-cost monthly cell phone plan, you need to instead opt for a budget plan. You can also reduce your data and use Wi-Fi instead. Many low-data plans are available for as little as $25 per month.
6. Cut Cost When Eating Out
When you decide to treat yourself to a meal at a restaurant, you can go to lunch instead of dinner to save money. Even fine-dining restaurants have reasonable lunch menus you can order from if you get to the restaurant a bit earlier.
7. Buy a Cash Car or Moped
If you have a monthly car payment, you should consider trading your car for a cash car or buying a moped. You can live more comfortably on a small budget without a car payment and full coverage insurance. A moped is a great idea because not only will it give you the ability to save on insurance and a car payment, but they receive better gas mileage than most cars.
8. Move to a Less Expensive Home
Whether you own your home or rent, you can save a lot of money by moving to a less expensive place. You can also get a roommate to help you share the cost of living.
9. Reduce Waste
When living on a smaller budget, it is important not to waste food and other resources because you have less money to pay for essential items like toiletries, cleaning products, electricity, etc. So, it is important to turn your lights off, reduce food waste by eating leftovers, and use other items you regularly buy sparingly.
10. Look for Ways to Earn More Money / Free Items
There are many ways that you can earn a little extra cash that you can use to pay for things you want or need. For example, you can join Survey Junkie to earn gift cards that you can use at many stores.
11. Reduce Unnecessary Spending
Instead of shopping at high-end retail stores, you can look for deals online or at discount and thrift stores for clothes. You can also buy products you frequently use in bulk at Costco or Sam’s, opt for gas station coffee instead of Starbucks, and eat at home more than you eat out.
Final Thoughts on How to Live on a Small Budget
You can live on a small budget and have a good life. However, you have to plan carefully and live within your means.
Learning to be happy with less is also important. Otherwise, you will spend a lot of time thinking about the things you do not have.
For help with other personal finance topics, like how to live without a job, read the other guides on our site.