Living on a Tight Budget…Successfully

by Nico Fowler-McClellan

Are you struggling to get by while living on a tight budget? Here’s a system that can help you make ends meet when there’s usually more month than money.

I am 27 years old and my debt takes up more than half of my monthly income, so I can understand what it is like living on a tight budget and the struggle to make ends meet. Two years ago I started using the envelope budgeting system and it has worked great for me ever since.

The envelope budgeting system works well for those living on a tight budget

I have in my purse 5 envelopes separated out for my fluctuating expenses (beyond my set expenses and debt payments) over the month. My five categories are Food, Gas, Medical, Pet, and Spending. Yours might be different. If you don’t have a car, you might have entertainment or snacks. I’ve heard people having a gift envelope, home decor or vacation one.

Begin by determining your own budget

I figured out my budget by adding up my normal monthly bills, rent, utilities, and insurance. These are set amounts. Then I took my three loans and two credit cards and wrote down just the minimum. And added them up. I don’t use envelopes for any these bills that are a set amount each month

For the first month before the envelopes, every time I spent money I wrote it down in a little book (cost and what it was for) and at the end of the month I was surprised. I had spent $210 in fast food! And I even love to cook and am an avid coupon clipper. This little book helped me to accurately estimate how much I would need for each envelope for my fluctuating costs.

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Controlling food costs

Food costs are split in half with my fiancee. We both put in a set amount each and any extra left over from saving on coupons is our treat for a nice dinner or a movie. The trick I have learned about grocery shopping is to only go once a month for the big shopping…all the meals that you can make for a month. We save about $75 out of the money for the little things that won’t last or that we typically run out of – veggies for the stew or milk and bread. We go once a week or every other week for the little things. But I realized when I only went for one or two items, I would come out with ten or fifteen, and wouldn’t use any coupons, so I’d spend more money than I should. A snack here and an extra something there…it all ads up.

Budgeting for auto costs

I intentionally overestimate my gas costs. I only spend about $50 in gas but I put $75 a month in my Gas envelope. This way, a little ads up so when I need a tune up or oil and filter change, anything unexpected, I have the money and don’t have to squeeze it in. I budget my auto insurance separately and don’t include it in this envelope.

Covering medical costs

I also overestimate my Medical costs. One thing I hate is getting sick and having to go to the doctor and worrying about paying for the medicine. I put $25 a month in this envelope. This adds up since I am rarely sick. What I don’t use for illness, I can use for my prescription eyeware or the yearly dentist visit.

The trick is to not dip into my Gas or Medical envelopes when the money in my Spending enevelope runs out.

Budgeting for and controlling spending on “extras”

I currently only allow myself $150 a month, basically $37 a week or $5 a day for spending. If I feel I really need some fast food instead of a nice peanut butter and jelly sandwich at home because I’m on the run, there goes my $5 a day. I also use this money for entertainment and going out. My fiancee and I try to be really good about only eating out occassionally. We both would rather go home and fix something, because there is food there, than spend $25-$40 each time we go out.

Only having $150 a month is hard for me. I have a lot of things I would like. Don’t need, but would like. I look at it as a sacrifice for me. So for 8 months I am limiting myself so I can pay a 20% interest credit card off. 

Keeping pet costs down

I have two cats and a dog and several fish. My pets are important to me, so I keep their money separate even though I buy their food and treats at the grocery store. I put extra in their envelope for the yearly vet bill and the dog licensing. I also buy their food (all three have separate brands) in the largest bag possible. It lasts longer, its cheaper and when you add five of the smaller versions up, you spend a lot more.

Determine your bill-paying schedule 

So with all these expenses, my envelopes and bills, I have about $550 a month left over to put towards my higher interest credit cards and get them paid off a little quicker.

I get paid twice a month. The first paycheck is for all my envelopes. It’s the first thing I do with it. All the loans and credit cards are due at the end of the month by my request, and the utilities are due at the beginning.

I requested the other bills to be due on the 30th because I usually have money left over on the first check to send to one of those bills, so not only am I sending in extra, I’m sending it in 20 days before it is due and saving on the interest that way also.

Preventing overspending

My spending envelope is the hardest for me to manage. I usually spend it in the first two weeks and then the last two I struggle. If I do lose control and dip into the other envelopes, it only puts me farther back next month because I have to take that extra money I ‘borrowed’ from Gas out of my spending the following month. Then I’m constantly playing catch up and it’s not worth the stress.

This budget has been great for me. My life insurance agent started me on this budget, and for the first three months, she told me to try and not go into any store other than a grocery store, no clothing store, no craft store, no nothing. And if I needed to buy a card or present, they have nice things at a grocery store. It limits your spending and I survived it for 8 weeks.

It has been a sacrifice, but I’m young and a year out of my life living on a very tight budget just to be semi debt free is worth it in the long run.

Reviewed October 2019

Little Luxuries

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