For low income families, managing money can be a difficult task. But when your income is restricted, it becomes even more important to learn how to effectively manage the money you are earning. Even now, the Conservative Party is pushing for a further cap on benefits, and if it goes through many low income families will feel the pinch. But all is not doom and gloom, there are some steps that low income families can take to stretch their budget, and get the most out of their family finances.
Draft a Family Budget
The first step is to draft a family budget. Before you can do anything about your family’s finances, you need to know exactly how much money is coming in to the household, and how it is being spent. A clear, and honest, family budget will help you balance incoming funds with all of your regular outgoing expenses. Once you run the numbers, you will have a clearer picture of your family’s finances. Then, you will be able to find areas where you can economize so you can save a bit of money.
With your budget in front of you, it’s time to start looking at ways to cut your expenses. First, look for any non-essential spending that can be cut from your monthly expenses. Cable TV, broadband and even telephone costs can be reduced if you opt for basic packages as opposed to premium services. Next, take a hard look at what you are spending on essentials like food and utilities. Are there ways to reduce these monthly bills? For example, you may be able to save some money by switching to a different utilities supplier. Take a look at your monthly food expenditures. Are you spending too much on brand name items when you could be purchasing low cost alternatives? Are you taking advantage of sales, and are you using coupons and food vouchers? Remember, every little bit adds up. Saving a quid here and there will put money in your pocket.
Claim Any Benefits to Which You Are Entitled
Every year, billions of pounds in benefits go unclaimed. Some people are too proud to apply for any state funded assistance, while others are simply not aware that they may be eligible for those benefits. If your family is struggling on a restricted income, look into any benefits for which you may be eligible. There is a wide range of government supported benefits available to low income families, and you shouldn’t hesitate to claim your share if your family meets the income requirements. Some benefits are one time payments like a winter heating allowance, while others help to supplement your regular income.
Borrow with Care
It’s a fact that low income families struggle the most in an emergency. Whether it’s an unexpected car repair or a plumbing disaster, when there’s not much in the family bank account it may be necessary to borrow money to get through a difficult patch. If you’re on a low income and claiming benefits you might be eligible for a Budgeting Loan form the Social Fund. That being said, not everyone can be approved for a no-interest Budget Loan. In which case you may need to consider other options. Appealing to family and friends should be your first course of action. Barring that, you might consider a short term payday loan to get you through a tight spot. Despite any negative press, payday loans do serve a purpose, and if you are in a financial bind they can come in handy. However, think carefully about how much you borrow, how much interest you will be paying, and how soon you need to repay the loan. Compare lenders, and look for the best deal you can find before signing any loan agreements.
Low income families typically find it difficult to make ends meet. But even when your finances are low, it is possible to save a bit of money and make that family budget work for you rather than against you. If you’re living on a low income, use these tips to help you get more out of your money.