Fixed incomes are not only for senior citizens. If you or your spouse have lost a job, are in school, are recovering from an illness, just had a baby, or have mounds of other debts, you may be living on a fixed income. Creating a budget to live on a fixed income will allow you to live within your means and eliminate spiraling debt.
Sit down with your spouse, make a list of each of your expenses, and set them against your income. Work together to set a spending budget, and to see where you can cut your expenses. For example, examine whether you really need all the premium cable channels, and if you can take your lunch to work instead of going out. Rent movies instead of seeing them in the theater. Unplug appliances when not in use, such as your cell phone chargers and your microwave. You may be surprised at how much you can save by taking small steps to cut expenses.
Write down every single dollar you spend. Keep a running list handy, so each time you buy a candy bar, clothes, gasoline, gifts, coffee, lend a friend $10, etc., write it on the list. This will help you to see where each dollar is going.
Set aside money each month for your inflexible core expenses, such as mortgage or rent, phones, insurance, installment loans, gas and electric. These expenses are your first priority. Other expenses such as food, gasoline and entertainment have more wiggle room to adjust, based on your fixed income.
Withdraw cash from the ATM once a week -- and only once a week. Factor spending money into your budget, and do not make multiple trips to the ATM if you run out of cash within the week. Don’t think of the ATM as an endless money tree. Always be aware of how much is in your bank account by checking your balances online.
Use cash or a debit card for all purchases. If you do not have the cash – do not buy it. In other words, do not rely on credit cards for purchases. This can easily lead you down the path of spending outside your budget, and buying things you cannot afford.
Sell or trade in your car if you cannot afford the car payments. Try to survive with one car, or buy a less expensive car outright, using the money from the sale of your car. If that’s impossible, buy a used car with smaller and shorter car payments. Set an amount you can afford to pay before going car shopping, and don’t be pressured by a car salesman who knows nothing about your financial situation.
Talk to your spouse about why you are on a fixed income. One of you should try to bring in extra income to your household. Get a part-time or second job if your expenses exceed your income. Take a waitress shift, do data entry, take a shot at freelance writing or selling your crafts.
Francine Richards is a licensed multi-state insurance agent with years of human resources and insurance industry experience. Her work has appeared on Blue Cross Blue Shield websites and newsletters, the Houston Chronicle and The Nest. Richards holds a Bachelor of Arts in communications from the University of Maryland.