For low income families in the Philippines, budgeting is really a challenge. It’s not easy to budget when your income is barely enough to cover your basic needs. Every peso counts, and you have to be very careful with how you spend your money.
And that’s just the everyday struggles. There are also unexpected expenses that can send your budget into a tailspin, like medical bills or home repairs.
If you’re struggling to make ends meet on a low income, I’ll give you some budgeting tips that can help. But before that, let me just say that I understand how difficult it is.
I grew up in a low income family myself, and I know how hard it can be to get by. I had to skip meals sometimes because we couldn’t afford to buy food, and I know how it feels to be constantly worrying about money.
But despite all the challenges, I’m happy to say that my family and I were able to make it through. We were able to put food on the table and a roof over our heads, and we even had a little bit of money left over at the end of the month.
So if you’re struggling to budget on a low income, I hope my tips can help you too.
5 Budgeting Tips for Low Income Families
1. Make a list of your income and expenses
The first step to budgeting is to figure out how much money you have coming in, and how much money you have going out. Make a list of all your sources of income, such as your salary, any government benefits you receive, and any other money that you have coming in.
Then make a list of all your expenses. Include everything from your rent or mortgage payments, to your utility bills, to the cost of food and transportation. Don’t forget to include any debt payments you may have, such as credit card debts or loans.
2. Figure out what expenses you can cut
Once you know how much money you have coming in and going out, it’s time to figure out where you can cut back on your expenses. Start by looking at your non-essential expenses, such as entertainment, dining out, and shopping. Could you spend less on these things?
Then look at your essential expenses, such as rent, utilities, and transportation. Could you find ways to reduce these costs? For example, could you move to a cheaper apartment or take public transportation instead of riding a taxi or booking a Grab car most of the time?
3. Find ways to increase your income
If you’re struggling to make ends meet on your current income, it may be time to look for ways to bring in more money. Could you get a better paying job? Or could you start earning money through side hustles or freelance work?
Even if you can only bring in an extra few hundred pesos each month, it can make a big difference in your ability to cover your expenses and reach your financial goals.
4. Create a budget and stick to it
Once you’ve figured out where you can cut back on your expenses and how you can increase your income, it’s time to create a budget. A budget is simply a plan for how you’re going to spend your money each month.
When creating your budget, be sure to include all of your essential expenses, such as rent, utilities, and transportation. Then allocate money for your non-essential expenses, such as entertainment, dining out, and shopping. Finally, set aside money for savings and debt repayment.
It’s important to be realistic when creating your budget. If you try to cut back too much on your expenses, you’ll likely end up feeling stressed and frustrated. And if you don’t allocate enough money for your essential expenses, you may find yourself falling behind on bills or getting into debt.
Once you’ve created your budget, make sure to stick to it as closely as possible. I know it’s not always easy, but if you can stay within your budget each month, you’ll be on your way to financial success.
5. Track your progress and adjust as needed
Budgeting is not a one-time task. Instead, it’s something you should do on a regular basis, such as monthly or quarterly. As your income and expenses change over time, you’ll need to adjust your budget accordingly.
Moreover, it’s important to track your progress to see if you’re actually sticking to your budget. There are plenty of apps and software programs that can help you track your income and expenses, as well as your progress towards your financial goals.
If you find that you’re consistently overspending or falling behind on your bills, don’t be afraid to make changes to your budget. Sometimes all it takes is a small adjustment to get you back on track.
Budgeting can seem like a daunting task, but it doesn’t have to be. By following these simple tips, you can create a budget that works for you and your financial situation. And before you know it, you’ll be on your way to achieving your financial goals.
Sample budget of low income families in the Philippines
Assuming that the family’s monthly income is PHP 12,000, the following budget may be drawn up:
- Rent or mortgage: Php 3,000
- Utilities, such as electricity and water: Php 2,500
- Food and groceries: Php 4,000
- Transportation: Php 500
- Work allowance: Php 500
- Medical expenses or family support: Php 500
- Miscellaneous expenses: Php 1,000
- Debt/loan payment (if applicable)
- School expenses (if applicable)
- Clothing and other personal items (shopping)
Many low income families in the Philippines live paycheck to paycheck. Because their income is not enough to cover all their expenses, they don’t have savings and they often have to borrow money to make ends meet.
Some of them have to take out loans to pay off other loans. This can create a cycle of debt that is difficult to break out of and can further strain the family’s finances.
It’s important to note that every family’s budget will be different, as each family has unique needs and circumstances. But this gives you an idea of some of the common expenses that may be included in a budget of a low income families in the Philippines.
The family may adjust their budget according to their actual income and expenses. However, the goal is to ensure that all essential needs are covered first before allocating funds for other purposes.
When creating a budget, it’s important to be realistic about your income and expenses. Otherwise, it will be difficult to stick to your budget. So take some time to sit down and figure out exactly where your money is going each month. That way, you can make sure your budget is realistic and achievable.
Watch this a real life budget of a minimum wage earner in the Philippines who earns Php 12,000 per month.
How to deal with unexpected expenses
No matter how well you budget, there will always be times when you have to deal with unexpected expenses. Whether it’s a car repair or a medical bill, these types of expenses can throw your budget off course.
So what should you do when faced with an unexpected expense? Here are a few tips:
1. Don’t panic
The first thing you need to do is stay calm. It’s easy to get caught up in the moment and make rash decisions that you later regret. So take a deep breath and try to think clearly about your options.
2. Prioritize your expenses
Once you’ve calmed down, it’s time to prioritize your expenses. Ask yourself what expenses are absolutely essential and which ones can be put off for another month.
For example, if you need to get your motorbike or bike repaired in order to get to work, that would be considered an essential expense. But if you’re simply trying to upgrade your Wardrobe, that would be a non-essential expense.
3. Look for ways to save money
Once you’ve prioritized your expenses, it’s time to look for ways to save money. Can you get a cheaper bike repair by going to a different shop? Can you put off the non-essential expense until you have more money available?
4. Use your savings
If you have an emergency fund, now is the time to use it. Unexpected expenses are exactly what your emergency fund is for. If you don’t have an emergency fund, you may need to tap into your other savings, such as your sinking fund savings. Just be sure to replenish these accounts as soon as possible.
5. Consider borrowing money
If you don’t have the money available to cover your unexpected expense, you may need to borrow money. This could mean taking out a loan or putting the expense on a credit card. Just be sure to carefully consider your options and only borrow what you absolutely need.
No one likes dealing with unexpected expenses, but it’s a fact of life. By following these tips, you can handle them without too much stress. And before you know it, your budget will be back on track.
How to adjust your budget as your income changes
If your income changes, it’s important to adjust your budget accordingly. This could mean either increasing or decreasing your budget, depending on the change in income.
If your income goes down, you may need to cut back on some of your expenses. This could mean eating out less often, cutting back on entertainment, or even downsizing your home.
If your income goes up, you may be able to afford some luxuries that you couldn’t before. But it’s important to be mindful of how much you’re spending and not to go overboard.
No matter what happens with your income, it’s important to be flexible with your budget. By making small adjustments as needed, you can keep your budget on track. And that way, you’ll be prepared for whatever comes your way.
How to adjust your budget as your life priorities change
As you go through life, your priorities will inevitably change. This could mean getting married, having children, or even changing careers. And as your priorities change, so too should your budget.
If you get married, you may need to start sharing expenses with your spouse. This could mean combining bank accounts and creating a joint budget.
If you have children, your expenses will likely go up. This could mean adding childcare to your budget or increasing your grocery budget.
And if you change careers, you may need to adjust your budget to reflect your new income.
No matter what changes in your life, it’s important to be mindful of how they will affect your budget. By making small adjustments as needed, you can keep your budget on track. And that way, you’ll be prepared for whatever comes your way.
How to Stick to your budget
When it comes to budgeting, the hardest part is often sticking to your plan. It’s easy to be motivated and stay on track for a few weeks or even a few months. But eventually, life happens and your budget can go off course.
If you’re struggling to stick to your budget, here are a few tips that can help especially for low income families:
1. Review your budget regularly
One of the best ways to stay on track with your budget is to review it regularly. This could mean looking at it weekly, monthly, or even daily. The key is to find a schedule that works for you and that you can stick to.
2. Make changes as needed
Life is always changing, which means your budget needs to change too. If you get a raise at work or your rent goes up, be sure to adjust your budget accordingly. By making small changes as needed, you can keep your budget on track.
3. Don’t be too strict
If you’re too strict with your budget, it can be easy to get discouraged and give up. So don’t be afraid to give yourself some wiggle room. Allow yourself a small budget for fun and entertainment. This will help you stay motivated to stick with your budget overall.
4. Set realistic goals
If your budget goals are unrealistic, it’s going to be very difficult to stick to them. So be sure to set goals that are achievable and realistic. This will help you stay on track without getting too discouraged.
5. Find a buddy
It can be helpful to find someone else who is also trying to stick to a budget. This could be a friend, family member, or even an online community. Having someone to talk to and bounce ideas off of can be a great way to stay on track.
Sticking to a budget can be difficult, but it’s not impossible. By following these tips, you can make it work for you. And before you know it, sticking to your budget will become second nature.
Watch this video on how to use the cash envelope system to manage your limited budget. This is a good budgeting tool for low income families in the Philippines who prefer using cash to pay bills and other expenses.
Although budgeting can be difficult for low income families in the Philippines, it is not impossible. There are many ways to make ends meet and stretch your money further. With a little bit of creativity and perseverance, you can make a budget that works for you and your family. I hope these tips have helped give you some ideas on how to get started.
Which of these tips worked for you? Do you have any other budgeting tips that can help low income families in the Philippines? Feel free to share it in the comments!