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One of the most common budget issues I hear from my readers is that they’re trying to figure out how to live on a fixed income, but are having trouble. Let’s face it; if you only have a specific amount of money each month, life can be downright hard. There are a few things you can do to help your fixed income budget though. Prepare yourself before you begin because learning how to live on a fixed income successfully will be anything but easy.
Living on a fixed income budget can be a lot like simply living frugally. It can make you miserable if you’re not careful. If there are ways to live a frugal life without being miserable, there are ways to live on a fixed budget happily too. It will take some time and quite a bit of work on your part, but if you set your mind to it and keep a positive attitude about things, you’ll be successful. The attitude you carry is more important than you realize. Having negative thoughts can keep you broke whether you realize it or not so please make sure you go into fixing your fixed income budget with a positive one. I would hate to see any of my readers get dragged down by negative thoughts.
How to Live on a Fixed Income Successfully
These tips will help no matter how much or how little you’re trying to live on. Whether your income is fixed because of Social Security, your job or some other reason, read carefully then decide that you’re going to do this no matter what. It will be a long road, but one that is very worth it in the end.
Apply for Assistance
There is absolutely zero shame in needing help sometimes and if you are living on a fixed income; chances are good that you need help making your basic needs. I am not at all ashamed to say that there was a time in my life when my daughter would not have eaten had it not been for those food stamps and WIC or that her doctor bills were paid for a time by Medicaid. Accepting a hand up is something we all need at one time or another. Applying for assistance can help with this. Food assistance, rent or house payment assistance, cash assistance for older or disabled households, medical assistance and the rest are all there to help you out when you need it.
Pick a date to start your new way of living
Like with any serious goal in your life, picking a start date is a good way to kickoff being successful. Pick a date that is far enough out to allow you time to prepare, but close enough that you won’t be struggling for months.
Decide which budget style works best for you
For some people, using a zero based budget (Six Dollar Family) – the type where you zero out any money left over to savings or bills – works best. For others, using a cash only budget works. For some, an irregular budget will be the answer. Take some time to research different types of budget styles so you know which style will work best for you.
How to Create a Fixed Income Budget
Create a budget
Once you know which type of budget you want to use to learn how to to live on a fixed income budget, you’ll need to actually create a budget that you can use to live by. Make certain you list all expenses so you don’t get caught off guard by something you’ve forgotten. When you’re doing your budget, be sure to use either a budget printable like these or a budgeting software like this to help you keep track of things.
Variable vs Fixed Expenses
When you live on a fixed income, you will have a far better time making your expenses if you can keep your budget the same for a few months. Having expenses that you know the amounts for will make certain that you don’t have any surprises. If you have expenses that are variable – meaning they change every month – look at your last 12 months of bills and average the expense out. Add $10 to your average and use that total amount as your “fixed” amount.
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Lower any expenses you’re able to
As you’re going through adding expenses to your new budget, pay close attention to the amounts you’re budgeting. This will help you identify any problem areas that may need to be lowered. Even if an expense doesn’t appear to be high enough that you want to lower it, it is always a good idea to find a few ways to knock a few dollars a month off of it. Things like setting up wifi enabled power outlets like these, putting your lights on timers, timing your showers and unplugging electronics when they’re not in use are easy ways to save a few dollars. To save on groceries, use these 16 real ways to save money on groceries to help. Those tips combined with things such as freezer cooking and menu planning can help you cut your grocery bills quite a bit.
You will also want to take a close look at which expenses you are paying for. When you’re living on a fixed income, you can not afford to be paying for extras very often. Make certain that your budget only includes your needs and that wants are kept as things you save for over time.
Make extra money
Even though you’re living on a fixed income, you can still make extra money from home to help ease the stress of learning how to live on a fixed income. This is especially important if you don’t have enough money in your fixed income budget to cover your basic expenses. Even those that receive social security can still make a bit of extra income each year. The amount used to be $10,000 extra per year, but that may have changed so please call the Social Security Administration to verify that since that amount could have changed.
If you need ideas on how to make extra money from home, these 39 ways to earn free gift cards or these home based business ideas area great place to start. You could even learn how to start a blog in just 15 minutes. All are fantastic ways to earn extra cash.
Get caught up
If you’ve been trying to stop living paycheck to paycheck (Six Dollar Family) and trying to learn how to live on a fixed income better than you currently are, there is a good chance that you’re behind on some of your bills at this point. If that is the case, make it a priority to get caught up. Dave Ramsey, a favorite financial guru, calls this going “four walls.” This means that you pay for nothing other than your housing, transportation and clothing expenses until you are caught up.
Getting caught up might sound harder than it actually is. Even if you’re only paying a few extra dollars a month on a past due bill, you are still paying extra. Eventually, you will get it caught up. Do this across the board until you’re current on everything that is necessary for your family each month.
Build your savings as slowly as you need
Once you are current, take the extra money that you were paying on your bills and use it to build your savings account. You can either put it directly into a savings account or use a micro-investor such as Acorns to help build it. Do this as slowly as you need to so you don’t put yourself in a tight spot. It may seem like it isn’t worth it but the saying “a penny saved is a penny earned” really is true. Even the smallest amounts add up over time.
Get one month ahead
As you start lowering your expenses and get caught up, you may find yourself with extra money. If not, that’s okay. You can either choose to live paycheck to paycheck at this point and that is perfectly fine if you are comfortable with that. Alternatively, if you don’t have enough money, you can use the resources in the tip before this one and make extra money to add to your income.
Either way, once you have a little bit of wiggle room in your budget, work on getting one month ahead of yourself on every expense you have. You can do this by paying extra to build up credits or simply by keeping that money in a savings account for when you need it. Having this extra buffer each month will ease the stress you’re feeling right now.