Ideas for Managing on a Low Income

An important part of managing on a low income includes not allowing your income to define you. It's important not to have a preconceived notion of what someone on a low income has or does. Many people make the mistake, for example, of just automatically believing their low income has to mean not eating healthy foods or not being able to allow their daughter to take dancing lessons. Automatically deciding to buy only macaroni for dinner, and automatically believing that a girl from your low income home cannot take the dancing lessons more fortunate girls can take, will put you and your family in a "poor" frame of mind in more ways than one.

People can manage (and manage amazingly well) on a low income. They just need to prioritize and plan.

Good ways to manage on a low income include:

THE LITTLE-OF-EVERYTHING APPROACH:

One approach to managing on a low income is with the "a-little-of-everything" approach. In other words, consider what the average person with an average incomes usually has in life, and then aim to have a scaled down version of an "average" life. There is a reason I suggest doing this, and it has nothing to do with "keeping up with the Joneses". People on a low income often lose perspective on what it takes to have a whole life. It is normal, understandable, and even sensible, to approach spending by focusing on the clearly important matters, such as food, heat, and electricity. I'm not advocating using the money for the gas bill to pay for dancing lessons, but realizing that "man does not live by bread alone" can help keep a low monthly income from removing you and/or your family from normal living. The low-income family that has nothing but macaroni in the cabinets, and children who cannot participate in normal childhood activities will suffer negative effects that don't have to be necessary - even on a low income.

Using what the average family has as a guideline, here are examples of ways to have a scaled down version of the same lifestyle: The average family may have cable television and a high-quality DVD player, and regularly run down to the video rental store for movies. A low-income family may have to forego cable television (there's only so much television children need to watch anyway), buy an inexpensive DVD player, and sign up for the most inexpensive movie plan that will allow only two or three movies a month.

With things like activities for the children, average-income families may have children in several activities. Low-income families may have to limit their child to one. With or without being able to let a child take private lessons, public schools and town recreation departments often offer low-cost or free activities (which can help a child have the benefit of participating without the additional high cost of more private lessons).

The average income family may take all the kids back-to-school shopping at the mall, and buy everything each child needs in one shopping trip. The low-income family may have to start early, make three separate trips weeks apart, and shop at stores where bargains can be found. The average-income family may buy each child ten outfits for back to school. The low-income family may only be able to buy three pairs of pants with five different tops.

Another example is that the average-income family may eat out several times a week. A low-income family may need to eat only only every weekend or every other week, and they may need to eat where prices are lower. Still, they are able to enjoy the treat of eating out together, which is always better than feeling eating out isn't something "people like us" can ever do.

Average-income families generally have a savings cushion. The low-income family should aim to have at least a small savings cushion. Aside from the obvious benefits of having a savings cushion, just knowing you have one can add to sense of being "just like everyone else" (and that it important when it comes to not allowing a low income to define your self image or sense of being capable). While the ideal thing is to leave a savings cushion untouched, low-income living can't always be ideal. A savings cushion may have to be used to help you get to your next paycheck, but if you use some of it to get you through the last week of the month replace what you "borrowed from yourself" as soon as the next check comes. Even if it turns out you repeat this process month after month, you will still be managing better than if you had no cushion to help get you through that last part of the month.

The average-income family uses at least one credit card, which may have thousands of dollars as the limit. Credit cards are convenient, and using one wisely helps build up credit. A low-income family may benefit from having one lower limit card on which they put smaller purchases, which require smaller amounts of money to pay off the balance each month. Without a credit card it is difficult to rent a car, make some purchases, or do any number of things that average-income people take for granted.

ELIMINATE FRILLS:

In addition to scaling down the things that most average-income families have, carefully determining which things can be eliminated comfortably is important. Such things may include something like having someone else take care of the yard, paying to get nails done (you can do them yourself, and if you can't, learn how), or using air conditioning when a fan will do. Doing without frills on purchases can help too. If your toaster breaks (or is a fire hazard) don't live without toast. Buy a cheap but new one. You don't need the fancy one.

If you need the security of a cell phone don't sign up for a two-year/$50 a month plan. Sign up for a $20 refurbished phone that uses $15 prepaid cards. In this case, you would have the basic use of a cell phone without the "frills" of "all the talking you can possibly do".

SHOP WISELY:

When shopping keep sales in mind, learn which stores offer the best prices, and shop clearance and end-of-season if possible. Know which products in discount stores are of equal quality to those sold in better stores. (Hanes underwear or Osh Kosh kids' clothes are the same, regardless of which store sells them. Shop for items like this in discount stores, and save the better stores for special items.) Prioritize clothing items as well. You may want to buy a better quality blazer in a better level store, but you can save if you buy the white shirt to wear under it at a discount store.

Don't forget dollar stores. Look for items you use regularly at dollar stores - wrapping paper, pens, cleaning products, plastic containers, bath products, make-up, etc. Buying what you know you'll be using at the dollar store when you see it can save quite a bit over waiting until you need the item and buying it at full price.

EAT SENSIBLY BUT ALLOW FOR OCCASIONAL TREATS:

Know which stores in your area sell for less and shop there. Fresh fruits and vegetables, as well as canned and frozen fruits and vegetables, are not awfully high in price. Frozen foods tend to be more expensive, but even the frozen case may offer items for under $2.
Frozen juices are less expensive than juices from the dairy case, but buying a small bottle of orange juice may give you just the amount you need for a short time. Allow for occasional treats, but even treats can be found at reasonable prices. Stay away from the store's bakery products unless you only need to buy one or two of these higher-priced treats.

If your family eats meat, rather than serving it with every dinner, consider serving it twice a week and substituting it with a less expensive source of protein at other times. (That may be a healthier thing to do anyway.)

Don't forget the concept of sharing. These days many foods are sold in serving sizes that are too large for young children (and many women). It's not such a bad thing to let two small children share a box of animal crackers, or even to buy a twin pack of Drakes or Hostess cakes and give one each to two older children.

RE-THINK THE RULE ABOUT BUYING IN BULK:

While it is true that buying in bulk will get you a lower price-per-unit on any item, there are times when the low-income person may not want to use $5 to buy a large package of paper towels. Paying a slightly higher unit price for a single roll may serve the purpose better. If you have $10 until the next paycheck and need milk, bread, toothpaste, paper towels, and toilet paper; you may be better off buying the smallest and least expensive package of each, and even a trial size toothpaste. In this example you may spend less than $1 for the toilet tissue, $1 for the inexpensive roll of paper towels, $2 for a quart of milk, and $2 for the bread. You could find a trial size toothpaste in the drug store's trial size department for $1 or less. This approach would get you what you need for the next couple of days, without doing without any of those items. You may even choose to get yourself a cup of coffee and a danish with what you have left (a nice way to top off a trip to the store and have some "me" time).

On the other hand, if you chose to stick with always buying at the lowest unit price, you would have to do without some of the things you needed in order to make the "wisest" price choice.

Making choices that are based on need, rather than on advice from money "experts" helps. In the case of the above shopping example, you may decide you need a half gallon of milk, rather than just the quarter, so adjusting your choices is often necessary.

Another point about buying in bulk is that if you don't use foods fast enough they may go bad, in which case you have wasted money that didn't have to be wasted.

Ask what you absolutely need today and don't try to buy anything you'll be needing two days from now. This approach keeps impulse spending and extra spending down.

DON'T FORGET WHAT'S FREE:

Your public library offers all kinds of reading, as well as CD's, DVD'S, and use of PC's. There are often activities or programs offered there as well. Public parks offer a great place to have outdoor time and fresh air. Bring a book for you, and if you have children pick up some 40-cent bubble stuff, a sponge ball, and a Frisbee.

Most towns and cities have other activities, and rural locales offer their own version of free outdoor activities.

DO YOUR MATH:

As each paycheck arrives take out money allotted for paying monthly bills and savings. If you've used a little of your savings to get through the month pay yourself back immediately. Separate out your allotted, scaled down, amounts for grocery shopping, things children need, some limited treats/activities, other purchases, and gas. Divide that amount by the number of days in the month, and then spend some time figuring out which days and ways you will distribute the spending. If your child needs book fair money on the 15th shift plan to skip a movie rental during that period and instead use the money for the book fair.

If you cannot make it to the end of the month on the available money, plan for the next two weeks or for as long as your money will last. This is where you may need to borrow from yourself (your savings) to get through the last part of the month. Again, dipping into savings is not ideal (and if possible try to leave some untouched savings), but at least you will not be using a credit card or borrowing from family members or friends.

CUT DOWN ON AS MUCH AS POSSIBLE:

Consider absolutely everything you spend on and ask if there are ways you can cut down on those expenses. Pay attention to the amount of gasoline you use, and find ways to reduce driving (or get better mileage). Look into alternative phone services or cutting back on Internet service. (Having a lower cost Internet service allows you to have use of the PC without spending quite as much. This fits into the "scaled down" approach.)

Ask yourself if there are ways to reduce heating or electric bills and whether there are ways to reduce the use of gas or electric dryers and ovens. Blocking off drafts, limiting air conditioner use, or supplementing with solar heating may help. Don't use extra paper products you can do without. Buy all-purpose cleaning products rather than a product for every job.

TRY TO THINK OF WAYS TO INCREASE YOUR INCOME:

Try to think of ways that your income can be increased. Every little bit helps, and picking up as little as an extra $5 a week could turn into $20 in that little savings cushion.

DON'T BE PENNY-WISE BUT POUND-FOOLISH:

Living on a low income is stressful, and the stress is long-term. Low-income parents need to be aware that their stress can affect the mood of the whole household, so it's important for low-income parents to find ways to take a break, enjoy themselves and their children, and not think about money at all. Stress takes it toll on single people and childless people too, but at least children aren't the victims. Long-term stress can destroy health and damage emotional wellbeing for adults and children alike.

It's also important for children to have the chance to do what most other children get to do (even if that means using a borrowed guitar for lessons, or taking only ballet rather than the ballet, tap, and jazz someone else gets to take).

"Managing on a low-income" isn't just about managing to make money last from one end of the week or month to the next. It's about managing to stay whole as an individual and as a family. It's about managing to keep up the mental and physical energy needed to remain positive in a challenging situation, and it's about managing not to always be thinking about money. Most importantly, it's about managing not to feel left behind by the world - or worse, left out of living.

When planning spending, low-income individuals need to keep in mind that the soul needs nourishment as much as the body does; and if that means having a few too many omelets a month in order to see a good movie or put money toward a prom gown, then maybe that's the thing to do. People who live on low incomes but manage money and spending well can live surprisingly comfortably.

Managing to create the feeling that you and your family are living on a modest income but are not poor in any way is not an easy thing to do, but it is something that will pay high dividends over the long term.