6 Effective Budgeting Techniques For Low Income Earners.

Personal finance budgeting could become inefficient if not properly done. For low income earners, whose minimum wage may not be enough to cater to all your basic needs, then you definitely need to adopt some techniques that'll enable you to prepare a very effective and efficient budget. It's absolutely possible that you may had taken time to plan and prepare your budget, but as soon as the money comes, you find it very difficult to even achieve up to fifty percent of your target. And before you could realize it, you're already back to ground zero.

It's basically for this reason that in today's post, we want to consider these six most effective techniques for personal finance budgeting, in order to achieve at least, up to 75 percent of your budget target.

Budgeting Techniques For Low Income Earners: 

1. Prioritize 'Needs' not 'Wants':

In my last post, we did clear the air about the difference between needs and wants. Needs are basic necessities that are very indispensable for quality of life of anyone to continue, regardless. While wants are some human desires that may not be appropriate enough to get at a particular time. Having said this, as a low income earner, you've got to be more circumspect about how you disburse your funds when making your personal budget.

Strategy that often works for me, I always advice low income earners to endeavor to always plan their budgets and perhaps expenditures, based on prioritizing their needs instead of wants. Because, this will enable them to be more frugal, and also more efficient in their expenses. This may not apply to the middle and high income earners, since they've got more money to purchase more goods. They could make use of the 50:30:20 budgeting technique. That is, 50 percent for basic needs, 30 percent for other necessities, and finally 20 percent for wants. But for low income earners, I think you should better stick with only basic needs and other necessities. So you don't run out of money, and may have to borrow before the next payment date.

2. Eighty Percent Budget Plan:

The second effective technique I'd like to recommend to you as a low income earner is, preparing your budget based on eighty percent expenditure plan. Though, as a low income earner, it's absolutely within your right and discretion on how you'd like to spend your money or personal finances. But if you want to have an effective budget that you'd be happy working with at the end of the day, wisdom demands that you make your personal budget with a resolve to expending only eighty percent of your pay or income, and this should include the cost of transporting yourself to and from your workplace. This will no doubt enable you to be more disciplined and organized in your spending, without getting broke before the next payday.

3. Twenty Percent Pay Yourself:

Twenty percent pay yourself is sure one of the best techniques that has worked for me, and sure the best way to go for every low income earner. Every labourer is truly deserving of his or her wages. You for a fact need to pay yourself. Thus, setting aside twenty percent for yourself from the balance of eighty percent is no doubt the best way to pay yourself. But it definitely does not suggest that you should expend that percentage on frivolities and or things that are obviously not needed. The money could be split between the next techniques to cover for other things.

4. Ten Percent Savings Plan:

No one can do without savings in these days of uncertainties. It will be absolutely unwise to expend all your Income or wage before the next paycheck arrives. No wise person does that in this age and time. It's therefore necessary that, ten out of twenty percent you set aside to pay yourself be used as your savings. And there should be absolutely no plan to touch your savings for any reason, unless where there's an emergency that borders on saving life.

5. Ten Percent Reserve Plan:

Savings is different from reserve. For the latter, you've got a plan to make use of the funds if need be, while for the former there is absolutely no plan to touch it unless in the most helpless of situations where you have no other choice. Having a reserve plan is another technique that had also worked for me in effectively managing my finances and being less indebted. After saving ten percent of your twenty percent pay yourself plan, the second ten percent should be put in a reserve account. This account will enable you to augment cost if need be, be free from debt, and perhaps live the kind of fun life you'd like to live if you had more money. It's basically from this plan, you could be able to fulfill some of your wants and desires after you might have achieved your basic needs.

6. Cost Effectiveness:

This is another technique you might want to use to getting more money into your reserve account. During your personal budget preparation, you may had made an overestimate of some items, or perhaps you got those items at a more cheaper rate than you envisaged. Perhaps better negotiations, comparing market prices of different products and going for a cheaper product that also offers a good value for that amount, will definitely help you to save more money that could be used for other things. Cost effectiveness is a very good budgeting technique that'll no doubt help you to save cost, and have more finance to deploy into other areas.

Conclusion:

Personal finance budgeting has some basic techniques that if properly utilized, will enable you to have an effective and efficient budget plan. Following the above six techniques will no doubt help you to effectively manage your finances and also live a debt free life.