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How to Live on a Tight Budget

Updated on February 25, 2013
Image by Martin Kingsley
Image by Martin Kingsley

Living on a tight budget doesn't have to be accompanied with stress and melt down. Giving up and declaring bankruptcy might seem tempting at times but let's face it, do you really believe that the banks will let you off the hook that easy?

Living within ones means is probably the hardest thing that we all have to master before achieving true financial security. It is hard but is totally possible for anyone in any financial situation.

My boss once told me something I'll never forget. As a self-made millionaire he was feeling the financial crunch as much as I was - and I was making a mere fraction of his income. He said that "the more money you make, the more you'll end up spending."

So what is the trick to being financially secure? Living within one's means? - That's it! Sounds easier said than done, I know. So what if you live in New York City and make $15,000/year? What then? Well It'll be tough for sure. The only thing I would suggest is to really prioritize what you want in life, what do you want to achieve? Maybe living in NY working minimum wage is just a bad idea. Leave those jobs for the kids who are working through college or living with their parents.

Here are some tips I have learned so far on how to survive on a very tight budget.

1. Find a place you can afford

This one should be obvious but it is the most overlooked step in achieving financial security. Paying off a mortgage you can afford will pay better in the long run over a mortgage you can barely just afford.

As a general rule of thumb make sure that you pay no more than 30% of your net income. Most hand over 50% of their living costs to the bank. You simply cannot survive doing this. You will end up cutting necessary expenses like health or insurance to make sure the house or rent is paid.

If living within your means implies moving, than move! It will be way cheaper in the long run if you do.

2. Live on cash only

This one might seem foreign in these days with credit cards and debit machines. Cash only means not paying for anything without cold hard cash in your pockets. You might think that your money is safer in the bank but honestly we all know that we are our worst enemies. We tend to spend more if we do not see what we are spending. Until debit cards have a money counter integrated on it you will never be able to truly know how much money you have in the bank.

Plus, we've all faced the scenario when we had to pay something but the funds bounced causing a bank fee to be incurred. The less money you keep in the bank the more likely you will have to pay more than average on bank fees.

No, the only way to really keep you money safe is to keep it with you. Keep the majority of your money locked away safe when you are not home and only take small amounts when you go shopping.

3. Frugal Living

'A penny saved is a penny earned.' Saving your money is the best way to make sure you have enough when you really need it.

Cut up your credit cards or only use them for emergencies. Never buy things now with the intent on paying later. Later comes quicker than you think and unless you know what the future holds, you should avoid paying interest on anything. Save your money to buy that new TV, table or kitchen set. You may rationalize these purchases as necessary, but try to avoid the temptation. Buying now means sometimes paying for the item purchased four time the sum in interest. If that means going to the laundromat for a few months while you save for a washing machine then do it. Watch TV at your friends house. Avoid interest as if it were the plague.

Other ways to save money is to shop at thrift stores for clothes or housing items. Purchase 'no name' brand foods and shop with a handful of coupons.

4. Do it yourself

One of the best ways to save money is to just simply do it yourself. If your car breaks down, plug in the symptoms into Google Search and zero in on the solutions. There are a great many resources on the internet that provide free info on how to do everything from building a log house to home maintenance. Most of the time repairs are so simple to solve that you end up kicking yourself after watching a professional take your money after working just 5 minutes.

5. Pay yourself

The last thing I want to mention is the nearly forgotten rule of paying yourself first. This is similar to saving your money except that instead of saving whatever money you have left over after paying all the bills, you are paying yourself a salary for your services. As a general rule of thumb, save 10% of your paycheck for this. You work hard for your money and if you think about it, being able to allot 10% of everything you make to yourself is not a whole lot to expect.

Do you live within your means?

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    • AllSuretyBonds profile image

      AllSuretyBonds 6 years ago

      Great Hub. I really like your point when you said living within ones means is probably the hardest thing that we all have to master before achieving true financial security. This is very true. The economy is very bad right now but its teaching all of us to learn how to live within our means and to not spend money that we dont really need to be.

    • profile image

      Frank 7 years ago

      I have always used cash only and live well within my means. I have an ATM card, but NEVER HAD A CREDIT CARD!

    • Betty Reid profile image

      Betty Reid 7 years ago from Texas

      Last year I overlooked step #1. I'll be glad when my lease is over!

    • profile image

      ShyGirl 7 years ago

      Pigtails, don't consider giving up your love of theater. It provides the balance needed for caregiving. Continue to be a blessing!

    • profile image

      pigtails 8 years ago

      My New Year's resolution of last year was to pay off my credit card and reduce debt. It wasn't easy but I paid off the credit card and am more inclined to pay with cash. I stopped buying new clothes and I use what I have. the clothes are still in style. I have more than 90% of the mortgage paid off and I don't plan to buy another. I'll drive my car until it dies of old age. I stopped buying books and music and instead use my local library. We have a home warranty so that if anything breaks its pretty much repairable. So far the hubby and I are doing well in our relationship so that we are not looking to costly divorce. My weakness however is theatre. We don't travel because we care for an elderly parent. I use cash and I look for deals.It's important to save but I don't want to save so much that I lose the enjoyment of life.

    • profile image

      scheng1 8 years ago

      It's time to consider "barter" system. For example, help your neighbor clears the blocked drain in exchange for home-baked cookies.

    • profile image

      Guylaine 8 years ago

      Great piece. I'd also add: buy used stuff. During my lean years I bought most of my clothing and furniture from second-hand stores. Saved a bundle.

    • Jyle Dupuis profile image

      Jyle Dupuis 8 years ago from Henrico, Virginia

      It's not easy right now - times are tough. For allot of us we are just getting by, pay check to pay check. We just have to get innovative and find new ways to make the extra cash.

    • profile image

      Jonathan 8 years ago

      If the state of California can come up with ways to make cash in their tight times, we all can as well.

    • profile image

      Becky 8 years ago

      The advice sounds great. But if you are already struggling with an overload....there is no cash left to pay with.

    • profile image

      Russ 8 years ago

      I am really challenged. No cable, sattelite, or broad band, cook economical meals at home, park the car and use the bike for short trips, entertaiment by friendships doing things like board games, reuse baggies, cook in batches and freeze left overs, buy vegetables that cost less than a dollar per pound, same for fruit, buy bulk lentils and brown rice and stay away from lots of meat, get day old bread, shop for insurance, work with money out of the wallet, destroy credit cards, use a debit card rarely, put all pennies, nickles and dimes in a jar for emergencies, change the oil in the car yourself, look for natural food, use it and freeze it, like blackberries, eat out only once per month, do odd jobs that cause exercise to keep in shape with adds in the paper (rent-a-husband home care), barter and trade, take walks with friends in stead of going to the restaurant, use thrift stores, make a list of needs and go to yard sales but do not buy what is not needed, sell everything not needed and avoid purchasing little things that are not needed to make yourself feel good for a moment, read books from the library, wash cloaths in cold water with the right detergent, use the burner that is hot from cooking to warm up water for tea if it is electric, patch your geans and sox, never buy new cloaths, the cheepest way to live is in a mobil home with low space rent, and have fun doing simple things with people. I am maing it barely on unemployment, and prayerfully, things will get better with a new job.

    • Jyle Dupuis profile image

      Jyle Dupuis 8 years ago from Henrico, Virginia

      Reply @ LSFoster: Wow sounds like you are really making it work. You should consider writing a book and detail your experience. So many people believe that it's impossible to function in society without credit cards. It certainly makes things more difficult but so is going to bed at night knowing your rent/mortgage isn't going to be paid.

    • Jyle Dupuis profile image

      Jyle Dupuis 8 years ago from Henrico, Virginia


    • profile image

      kath 8 years ago

      It would, however, be prudent to spend a few bucks, or a free afternoon at the Library, learning simple and basic spelling and grammar usage rules. This particular piece is very difficult for anyone to read who knows how to spell and use words correctly!

    • profile image

      LSFoster 8 years ago

      I agree whole heartedly with your article. We rent a newer one-bedroom apartment that is just at that may be a bit smaller than we would like but it works. As for dealing in cash...we have dealt only in cash for nearly three years now and actually find that it helps us stay within our budget. Bills get paid first,then groceries and then the little extras like eating out. We have not used credit cards in 7 years. We do try to put fifty to one-hundred dollars aside each month on a debt use for special occasions,purchases or emergecy situations. I find that when dealing with cash for everything you handle your money much wiser. Believe or not we are debt-free. Both cars are paid for,evethough they are 8 and 9 years old they both look good and run great.

    • profile image

      Monique 8 years ago

      Hi!. I am writing a book on one income living and if you would like to be included, I would love to hear from you- all contributors will receive a copy of the book when completed- which should be sooner than later.I am looking to hear from you if your family lives on one income-names can be withheld or first name only.

      Look forward to everyone's replies.

    • midnightbliss profile image

      Haydee Anderson 8 years ago from Hermosa Beach

      great and useful ideas. living on a budget doesn't need to be difficult, it just learning to prioritize things.

    • bgamall profile image

      Gary Anderson 8 years ago from Las Vegas, Nevada

      And walk away from Usurious credit cards. That is part of the package as the government refuses to protect people against gouging and loan sharking by the banks, the greedy big banks.

    • audreana71 profile image

      audreana71 8 years ago from WV

      Very good advice your boss gave you (living within your means)! How many times I've looked back on my childhood and just wished my parents would've, at least, taught me that much about money. I came from a household where, the kids had nothing to do with finances... hands-on, conversations or otherwise. So, I went into the world with no financial backbone, whatsoever. I had to learn it all on my own, and that I did... albeit, the hard way. Now, I have a son of my own who is close to graduating and I make sure that, he knows about things like finding the best deals, making a budget, no paying with credit (but, with cash)... stuff like that. If he gathers half of what I've learned/taught him, I think we'll both be happy;) Thanks, so much, for all the good tips! Great hub=)

    • Jyle Dupuis profile image

      Jyle Dupuis 8 years ago from Henrico, Virginia

      Good point Erick, I used to have fast food at least 5 times a week. when I looked at the per month cost I was shocked. $5 X 20 days =$100. Or $1,200/year. That's ridiculous. I know we all gotta eat but not that junk.

      I cut out fast food to save money and ended up loosing 54 pounds at the same time! It's a plus no matter how you look at it.

    • profile image

      Erick Smart 8 years ago

      Avoiding eating out is one big one for many. That alone saves a lot. I also tend to not carry plastic in any form and only a large bill like a 20 or 50. I find myself reluctant to break it so I end up not buying things I consider getting.

    • DarleneMarie profile image

      DarleneMarie 8 years ago from USA

      Wonderful advice Jyle! Living within your means is hard sometimes, but it eases your mind.

    • Ms._Info profile image

      Ms._Info 8 years ago from New Jersey

      Excellent Tips. I've implemented #2 above for quite some time. I use my debit card so that the money I'm spending is coming straight form my checking account and I don't have to worry about interest fees, etc...

    • Jyle Dupuis profile image

      Jyle Dupuis 8 years ago from Henrico, Virginia

      That is great advice Ashley Joy. I am a sucker for impulse purchases. I am usually restrained by lack of funds, but if the money is there I find it hard to not buy something on the spot. 9 times out of 10 though I find that I end up returning the item or have them slash the price because I found it cheaper elsewhere. This is a waste of time end effort. Better to wait and save than to buy and not use or regret purchasing.

    • profile image

      Ellie Perry 8 years ago

      A wonderful, sensible article. Not-so-hard-to-do.

    • Ashley Joy profile image

      Ashley Joy 8 years ago

      These are excellent rules to live by! It is true the more you make the more you spend, and it is actually hard to go back. But it can be done, you just have to learn what you truly need. I always make myself wait before I make a purchase. If I still feel like I need it a week later, I guess I must. But most of of the time I do not.

    • Gypsy Willow profile image

      Gypsy Willow 8 years ago from Lake Tahoe Nevada USA , Wales UK and Taupo New Zealand

      Useful tips. I try to live within my means but just having a credit card is temptation!