Rent/mortgage payments, student loan payments, internet services, and insurance are examples of expenses that automatically fall into this category
We all have the best intentions when creating a budget, but when money gets tight, budgeting can become much more difficult. Although budgeting should be a tool available to everyone, budgeting tips often cater to people with “middle class” incomes. What if your mandatory expenses eat up most-or all-of your income? What if an unexpected blip in your financial situation (like a car repair or a missed week of work) could be enough to derail you completely?
If it feels like all you can do is make sure you have enough to cover your bills, youre not alone. Its still possible to use budgeting to help increase your financial security, plan for the future, and reach your goals, even on a limited income. Heres how to get started:
Rethinking budgeting
If youve spent any time researching budgeting strategies, youve probably come across many tips and tricks that dictate that your “needs” (such as rent, groceries, transportation) should account for roughly 50 percent of your income.
However for many Albertans, only spending 50 percent on “needs” may not be realistic. Sometimes meeting your households needs consumes all of your income. Unexpected expenses can even make determining the difference between a “want” and a “need” difficult to discern. For example, although many people would automatically categorize new shoes as a “want”, if you need new shoes to be presentable at work, it changes the equation.
High expense or low income budgeting
So lets try a new set of budgeting categories, based on your real monthly spending: fixed expenses, variable expenses, and savings.
Fixed expenses are expenses that are relatively consistent month-to-month. Other expenses (like groceries, clothing, electricity and phone bills) might fall into the fixed expense or the variable expense category, depending on the consistency of your lifestyle. […]
