Be Brave and Budget (Even on a Low Income)

Many Americans—more than 60%—say money is a “significant” source of stress¹. If income is tight for you, you might be tempted to avoid the uncomfortable topic of money. We get it. It’s painful to think about, and maybe you believe saving is a luxury you can’t afford until you have more funds to spare.

At UFCU, we suggest an approach that works for everyone, even if you have a limited or low income: Face your money fears head-on by making a monthly spending-and-savings plan, also known as a budget. Don’t put it off any longer. You can get a grip on your limited budget, even if you have a low income, in five simple steps. So log in to your Online Banking or Mobile app, grab a calculator, and spend an hour or two building your money muscles.

1. Make a List of Money that Came In
   
   • List all the funds that you received last month. Don’t count advances from your credit card, ATM withdrawals, or private loans others made to you—that’s money out, not in.
   • Don’t count money owed to you but do count money others actually repaid to you.
   • Take a moment to consider whether you can increase money coming in next month by requesting a raise, selling belongings that are gathering dust, or finding part-time work.



Set an appointment any time. Select “Other” and our representatives can help you brave the budgeting landscape to find financial success.

2. Make a List of Everything You Spent
   
   • Look up purchases made through all the ways you pay, including a digital wallet, cash apps, and merchant credit, for example. Honesty and completeness are your friends here. If you visited the ATM, record what you used the cash for. If you have subscriptions you buy through your phone, add them to the list. Did you tip? Add that to your Uber ride or cafe total. If you can’t remember the exact amount, estimate it as accurately as you can.
   • Include basics like groceries, phone, utilities, rent or mortgage, insurance, and transportation. You might regret them now, but don’t leave out unnecessary purchases—feel-good or impulse treats such as clothing, drive-through lattés, lottery tickets, and entertainment.
   • Make categories for the items you paid for last month, even if you think last month was not a good example. Every month will be a little different. Also make a category for items that were necessary one-offs, like doctor copays and car repairs, even if they don’t happen every month.
   • Calculate seasonal or quarterly expenses like membership fees or auto premiums for the full year, divide them by 12 months, and assign that amount to the current month.
   • Make a category for savings, even if the amount was $0. Every budget should include savings!


3. Don’t Dodge Your Debt!
   
   • Debt can be stressful, but knowledge is power. Make a special category in your budget for all the debt payments you made—or should have made.
   • Include any unpaid “buy now, pay later” purchases in this category.
   • Debt and savings can coexist! Don’t wait until your debt is paid off to start an emergency fund—it could prevent further debt. Set up a monthly automatic transfer to save a little immediately after every paycheck.
   • If you struggle to make only minimum payments on a large debt load, consider meeting with a debt advisor. UFCU offers a free financial consultation to Members.


4. Make Some Decisions
   
   • Add up the amounts you spent in all categories. Compare the total to your total monthly income.
   • Examine your spending habits and choose some spending areas to cut, especially within the unnecessary spending category. Find free alternative ways to treat yourself, such as a walk, family game night, or hobby time. Are there some methods of payment that make it easy to spend more than you want to? Try leaving credit cards at home and carry small amounts of cash instead.
   • Commit any extra money, like a pay raise or tax refund, to paying off debt and saving.
   • If your expenses match or exceed your income, your budget may lack resilience, or the flexibility to weather a surprise expense like a car repair or medical bill. Next month, see if you can steer 10-20% of your income into savings. That might sound ambitious, but saving any amount is better than nothing and could prevent further debt.
   • Enlist your partner. If you share income and spending with someone, convince them to share your commitment to better financial health.


5. Improve Over Time
   
   • Pick a date each month to draft a rough budget like this and use what you learned about last month to adjust the current month. You already expend energy finding ways to pay, deciding what to pay, and worrying about money. Spin that worry time into budgeting!
   • Find inspiration by setting short- and long-term goals. What would you do if money were not so tight? Do you have dreams of traveling, studying, or buying a home?
   • Go online to find tips to curb spending, trim monthly expenses, and tuck savings away.
   • In the coming months, prioritize paying off debt over unnecessary spending. Later, do an online search to find debt-paydown approaches you can try.
   • Transportation is necessary, but high car payments aren’t. See if refinancing would reduce your payment.

1 The 2023 Stress in America™ survey was conducted online within the United States by The Harris Poll on behalf of the American Psychological Association (APA) between August 4 - 26, 2023 among 3,185 adults age 18+ who reside in the U.S. that serves as a nationally representative sample. In addition, oversamples were collected in addition to the national sample to allow for increased totals by race/ethnicity: 805 Black, 811 Hispanic, and 800 Asian. Interviews were conducted in English and Spanish.