How to Live on a Budget

Four Parts:Budgeting HelpDetermining Your BudgetChanging Your LifestyleGetting Crafty with Money

Trust us -- you are in good company when it comes to wanting to live on a budget. More and more people are looking for ways to make their dollars stretch longer than ever before. And it's totally doable, too -- sometimes in ways that you'll barely even notice. You won't just be surviving, you'll be actually living and enjoying life. Consider it challenge accepted!

Part 1
Determining Your Budget

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    Estimate your income. This is step 1 to any budget. In order to know how much money you can spend, you need to know how much money you make. And that's after taxes, by the way. This will be easiest to do by month, so take a look at your paychecks -- how much did you bring home these past four weeks or so?
    • If you're an independent contractor or freelancer, make sure you know what you'll be paying come April. This blow that's coming won't hurt so bad if you account for it year-round.
    • If you're a regular employee, don't count on that tax refund. That's gonna be party time if and when it comes. It's nothing sturdy enough to count on right now.
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    Create a list of expenses. This is the standard stuff that's easy to figure out (rent, student loan payments, transportation, etc.) and the not so standard stuff: food, entertainment, utilities, etc. Be sure to be realistic -- if anything, over estimate. Rack your brain for everything you're forgetting -- do you donate to Children's International? Have a $4 latte every other day? Have automatic payments set up for that yoga class you never go to? Be sure to cover your bases!
    • Go through your records for the extras. The main benefit to being a plastic society is that you can log on to a website and literally see where you've spent your money. But that doesn't mean you should forget about your cash flow, too!
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    See where you can make cutbacks. As you look at this list, find a handful of places where you can reduce those unfortunate little numbers. Can you ditch the landline? Forgo cable for Netflix? Skip that latte? The easiest places to do it will be in the "fluff" -- the money you don't even realize you spend until you spend it.
    • When it comes to technology, don't be afraid to make a fuss. It is possible to call your phone/Internet/TV provider and tell them you can't afford what you're currently paying. You'd be surprised what money a "squeaky wheel" can save. So even if you're looking at your list and saying, "I can't make any more cutbacks! I need these things!" you may be just assuming.
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    Set goals. Now that you know how much extra money you think you can bank if you're conscious of it, take that number and set a goal for saving. Have two numbers: 1) the number you should spend per month, and 2) the amount of money you want to put away. The rest is for fun!
    • It's possible to have daily, weekly, and monthly goals -- it's all about how you want to do it. You could allot yourself $10 a day for food, $50 a week for groceries, or a monthly stipend for whatever the heck you feel like. Just make sure you know exactly what would save you the money.
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    Leave room for emergencies. There will always be emergencies. Whether it's the faucet leaking or a mysterious case of diarrhea that keeps you from work, there will be emergencies. Allot a bit of money in your budget for these -- and if they don't happen, woo-hoo! More room to breathe.
    • Think about it: how often do you end up spending money you didn't plan on spending? If you're like 99% of us, the correct and only answer is all the time. So even if that emergency is a friend's birthday that you totally forgot about, you're prepared.
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    Prioritize the extras. Hopefully you have a few dollars that are just floating about in space that you can spend however you please. Unfortunately, these dollars don't grow on bushes and there is a very limited amount of them, so it's important to prioritize them. Do you want a houseful of puppies or a manicure every two weeks? Well, what would make you happy?
    • We're not about to tell you that a houseful of puppies or a bimonthly manicure is a bad idea. Some people might not view these as essentials, but you do. That's all that matters. So whatever is of supreme importance to you, make room for it. Just be realistic. If you can't make room for it, it's gotta go.

Part 2
Changing Your Lifestyle

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    Set aside the money right away. For most of us, this is a definite lifestyle change. We're used to getting our paychecks and celebrating until it's gone. Can't do that anymore, sadly. When Friday hits, set aside that magic number you swore to yourself you could save. When it's gone, you can't be tempted to spend it.
    • If you can, have it put into a savings account -- or at least a different place than how you normally spend. Keep it in cash in your sock drawer (if you can resist the temptation) or, heck, make your mom hold onto it. This way you're automatically forced to live on the amount you're trying to live on.
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    Get self-sufficient. In today's technological age, that can be asking quite a bit. We're a culture of frozen meals, instant gratification, and constant entertainment. To live on a budget, that lifestyles gotta go. You have to do most of it yourself. Here are some ideas:
    • Start cooking. Not only is it healthier, but it's way cheaper, too. And if you can create meals a whole bunch at a time, you can freeze it and save it for a rainy day.
    • Grow your own food. This is taking cooking to the next level. Growing your own fruits and veggies is about as cheap as they come. Not only are you not paying those insane grocery store rates but you also get the satisfaction that you're feeding yourself. How many people can say that?!
    • Sew. How many of us get a hole in our clothes and then we throw them out? C'mon now, raise your hands. You know you do it. Instead of being wasteful, how about making, fixing, and sewing your own clothes? Not only will the dollars stay in your bank account, but you'll be trendy as hell. A look that literally no one else has? Awesome.
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    Get a second source of income. Alright, not exactly rocket science, is it? If you want more money, you need another job. But don't think of it as one where you're donning an apron and filling out paperwork -- even picking up a weekly babysitting gig can pad your lifestyle so you feel a little better about it (which is the main battle). It's about being happy; it's not about being rich.
    • Craigslist. Seriously. There are so many little things you can do for an extra dollar, even if it is helping a divorced-soccer mom moving into her new apartment. And ask your friends! They may know of one-off gigs that are good for an extra $50. You never know until you ask!
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    Find a roommate. Another obvious step. Whether you live in the city or in a town with one stoplight, 6 bars and 9 churches, finding a roommate cuts your rent in half. And don't forget about the extra little perks! That's half the toilet paper, half of some of the food, and half the boxed wine on Wine Wednesdays. If your roommate is cool, at least.
    • You could either get a roommate and halve your rent or move into a bigger place and pay the same -- both have their merits (though the latter doesn't exactly save money). And if you have to block off your bed with a curtain, so be it. Life will continue on. Hey, you could be sleeping in a corner on the floor!
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    Cut out the bad habits. Because they can get expensive. The obvious ones are smoking, drinking, and drugs, but the list obviously goes on and on. If it's not core to your survival, you don't really need it. And if it's bad for you, you really don't need it. Sometimes we gotta get real with ourselves and this is definitely one of those times.
    • Even if you're just addicted to the movie theatre, there is progress to be made here. Take an honest look at yourself: what habits do you have that are costing you unnecessary amounts of money? We all have them. And if you can't get rid of them, what cheaper substitutions can you make? Redbox, anyone?
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    Use cash. Having something concrete in your hands can make all the difference. Our minds can't totally grasp that when we swipe that little piece of plastic, money is vanishing from our bank accounts. Imagine if every time you used your card a little goblin came up and showed you the money that's no longer yours. You probably wouldn't be so keen on doing it! So use cash. You'll be more likely to hold onto it.
    • A good idea to is to give yourself so much cash to spend for the week. When you're outta cash, that's it. Sorry, Charlie. It's rough -- but it'll teach you lickety-split to ration!
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    Adjust your perspective. For all this talk about money-saving life changes, one of the most important is mental. If you feel totally deprived not eating out at 5-star restaurants, this is gonna be rough. But if you can adjust your perspective and not feel deprived, this whole budgeting thing will be almost effortless. You run less of a risk of combating "frugal fatigue"[1] and, well, going batty because of it. Budgeting isn't worth it if it drives you crazy!
    • You do not have to keep up with the Joneses. You do not have any image you have to maintain, believe it or not. You can be happy having what you have. Life isn't about possessions at all. It's your mindset. If you're happy with your situation, you're happy -- and that's all that matters.

Part 3
Getting Crafty with Money

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    Get to couponing. It's not shameful -- it's trendy! There are entire TV shows dedicated to it! It's a veritable movement! So grab your scissors and start scouring. There's weekly ads for your favorite stores and manufacturer's coupons. Don't forget about either!
    • And think seasonal, too. If it's not on sale this week, it may be on sale next, so try to hold off. And sometimes mid-week or post-holiday brings better deals as well.
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    Get to social couponing. In addition to cutting paper and checking out manufacturer's websites, head for the social couponing websites, too, like LivingSocial, Groupon, Hukkster, or TravelZoo. The deals don't just stop at grocery store goods -- you could be hitting up restaurants at half of what you normally pay. With a little ingenuity, your party lifestyle could stay intact!
    • This is a good way to make life richer, too. Can't afford the gym? Take an 80% off kickboxing class through Groupon. Need a Christmas gift? Hmm, where do you have a coupon for? It doesn't have to stop at things you can stock your house with!
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    Thrift shop. This is becoming trendy, too. If you can buy it second-hand, might as well, right? Vintage is totally in and consumerism is totally out. And apart from legit second-hand shops, go for garage sales, Craigslist listings, auctions, and other community events (like church book sales, etc.). You'll be a treasure-finder in no time.
    • Hit up your family, too. We've become a culture that has so much stuff, we actually have storage facilities. Think about how twisted that is. How many people do you know that truly live minimally? So hit 'em up! They probably (read: definitely) have stuff they need to get rid of.
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    Use the Internet to your advantage. You know Craigslist, but have you heard of a site called[2] You go to your community's page and find people offering to get rid of things for free. And people wanting things, too, of course. And that's just one of many!
    • You really shouldn't have to pay full price for anything. Apart from the social couponing websites we talked about earlier, there's also sites like eBay and Etsy where you can get things from actual people, often at much cheaper rates.
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    Consider a rewards credit card. This one can be a bit dangerous. If you're the spendy type, a credit card may be the worst thing you can possibly do to yourself. But if you know you can handle it (and you have a decent credit score), consider opening a credit card with a rewards program. Every time you use it, you rack up points. Every so often you can turn those points in for stuff -- or cash. Boom, second source of income!
    • Always be sure to read the fine print. The last thing you want is to open a credit card with an insane interest rate and start using it and work yourself into a terrible, debt-laden existence. That's the opposite of what you want to happen.
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    Aim for experiences, not possessions. You probably won't be surprised to hear that experiences are shown to make humans happier than possessions. They last longer and they don't clutter up our shelves in their lack of being used. So if your life is feeling lacking, aim for experiences. Those possessions won't actually make you feel better. And if they do, it will be entirely short-lived.
    • Christmas coming? Ask to have a class or gym membership paid for. Ask for travel credit. Ask for things you can actually use. Sure, that 50" TV would be nice, but you'll want to replace it in a year anyway. Make your life richer with experiences, not things.


  • Consider drinking water other than the other drinks. Water's a healthy alternative to many of the drinks available out there and not to mention that it's a bit cheaper too.
  • Try to lower your food bill by only shopping once or twice a week and use the other days to use whatever food you have laying around the kitchen.
  • Try to pay off any loans or bills you haven't paid off yet. If you still haven't paid off the credit card bill then do it asap because interest will make it more expensive.
  • Lower your electric bill by taking a few steps. Turn off any lights in a room, unplug your appliances if it's not in use. Don't just turn off the appliances as it still might be using a tiny amount of power which could be adding more money to your electric bill.
  • Keep yourself fit by choosing healthy diet and exercise so that you no need to spend unwanted money on doctors or medicines.
  • Choose to do any of the home activities like washing clothes or cooking. This way you can not only save money but also you can burn some calories too.
  • Try to carry homemade foods so that you can save lots of money by eating outside. This way you can save both money and health.
  • You can use some mobile apps that can help you to calculate the budget for everyday purpose.


  • Be careful when you choose which roommate you live with as they might not be a good one at all to live with. Possible reasons like he or she could have a criminal record or a habit that might annoy you to the point where you need to waste more time looking for another.
  • Try to forgive yourself if you sometime spends out of your budget. Plan to make proportionate with the next activity.
  • Be careful when you use credit. Many people get into a lot of debt because they keep going over the limit and took months and perhaps years to pay it off. Also it can lead to bankruptcy, which will cause you to become homeless.
  • Keep patience and steady on the principle which you adopted to keep your life on budget.

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Categories: Managing Your Money | Budgeting