Personal Finance for Low Income Earners: How to Manage and Survive on Your Monthly Salary

Standard of living costs are getting higher and for many people the take home pay from work just doesn’t improve corresponding with the cost of living. Many workers find that their pay packet hardly takes them through the month cycle to another pay packet.

Learning how to manage your finances effectively has never been more important than it is today given the tough economic conditions. Below are tips gathered from personal finance experts and successful money managers on how to squeeze the best value from their limited wages or salary.

1. Keep a Firm Eye on Expenses

If you are like most people your expenses will be mostly categorised into what we have itemised as fixed expenses (such as rent, electricity bills, fees etc), living expenses (food, daily expenses) and impulse expenditure (this is where you spend on stuff like clothes, recharge cards and generally stuff you mostly do on impulse and not really out of necessity)

You have to create a limit for your monthly expenses and try to keep your expenses within your limit.

2. Pay Yourself First

Create a budget then automate the deductions. If you decide to pay yourself 15% ensure you do automate the deduction such that at a particular time after receiving your paycheck the said amount ids deducted to another account meant strictly for saving. I advise however that your savings be of two forms; Long term/Investment savings and Medium term savings. The earlier will be strictly for saving up enough money to invest in assets and stuff that will guarantee you good steady annual returns. This will, in a decade or two turn out to make retirement a comfortable one for you.

The Medium term savings can be used for making important purchases in future or serve as mitigating factor against future unforeseen financial circumstances.

3. Ban Yourself from Impulse Buying

Going out to buy anything you see and suddenly like is a sure way to burn through your salary even before the month has gone halfway. Impulse buys are rarely on essential stuff we need; mostly when we buy impulsively it’s on goods and services that seek to massage our ego. While you may need to buy some fancy stuff once in a while it’s better they are planned for and therefore accommodated in your budget for the month

4. Learn to Say No to Money Requests

If you earn a decent amount of money you definitely would be used to getting requests for money from friends and relatives. A few of your family or friends would have always have this one pressing need they want you to help them solve financially.

While it’s probably good to help friends and especially family financially that should not be done at the detriment of your own financial future. Have a particular percentage of your income set aside for family & friend purposes (if you can). It is from this allocation that you judiciously dip hands to give to any person within your family and close friend circle when you determine that their request is genuine.

So even before you give away money from your family and friends budget you have to ensure it is for a genuine and worthy reason. And restrict your giving to a limit you set for yourself. Any requests coming above that will have to be met with an apologetic face and genuine excuse of ‘I do not have the money now, you know if I did I’ll give you’

5. Use your Savings/Investment Funds Wisely

When you set up a long term savings/investment account there is only one rule – ensure that any withdrawal from it is for the purpose of investing in a relatively safe investment vehicle that guarantees decent annual returns.

6. Draw up a Budget
Document what your fixed monthly expenses are. Smooth out your monthly bills.

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