Managing finances

The Best Tips to Help You Manage Money on a Low Income

In a perfect world, everyone can afford what they need and even have extra money to pay for luxury things from time to time.

The reality is that Australia, just like all countries around the world, has people living from paycheck to paycheck.

Do you belong to the low-income group in Australia? If so, this blog post is for you. We want to help people on a low income manage their funds appropriately and even have some money for the rainy days.


What Is Considered Low Income in Australia?

In the Australian Bureau of Statistics unpublished report for 2013, the average weekly income of Australians is $790 ($801 for couples with dependent children and $578 for single parents with dependent children). In Western Australia, the median weekly income is a bit higher at $867 ($862 for couples with dependents and $687 for single parents with dependents). WA has one of the highest mean incomes, second only to ACT in 2011-12.

Wages have grown over the years in the country, especially in Western Australia. However, the cost of living also increased. As a result, many low-income households continue to keep up with the rising costs. ABS states that those with a $700-$850 average weekly income are low-income individuals. This includes government benefits, social assistance, and pensions. For those who do not receive any aid, weekly payments of $450-$800 fall into the low-income category. Low-income households with children up to 14 years old receive an average of $558 weekly.

Single parents with dependent children made up about 40% of low-income households from 2003 to 2006. In 2009-10, the percentage grew to about 45%. Meanwhile, couples with dependent children made up less than 20% of low-income earners from 2003 to 2006. It increased to 20% in 2007-08 but decreased to 18% from 2009 to 2012.

Having a low income can be stressful. It can become more problematic if you have children, especially because inadequate income leads to poor health and education. When one gets sick, medical bills are a huge issue, which results in people opting not to be seen by a health professional. And for young individuals, the situation can be embarrassing. Living in a low-income household can indeed cause adverse health and psychological effects.


How to Save Money on Low Income

If you are among those who live on $500 or less per week, life can be difficult for you. More often than not, you do not get to enjoy your wage because you have to pay for electricity bills, rent, insurance, and car repayments. You also have to use the money to cover petrol and groceries, among other things. It’s hard to manage, which is why it’s crucial to invest some time planning for your spending habits. Understanding your income and your everyday living expenses will assist you in saving money even on a low income.

We have some excellent money-saving tips so you can manage your funds without forgetting to enjoy life at the same time.

So, let’s get started.


1. Set Up a Budget

It all begins with knowing how much you have and your expenses. Setting up a budget means that you should check your bank statements regularly. Write down the figures and list all your fixed expenditures. That’s how you can budget accordingly, making sure to have enough to cover your basic needs, including utilities, food, and rent.

Budgeting does not require a lot of skill. You do not need to be a mathematical genius to know how much money you have and subtract your regular fixed expenses. To make things simpler, you can use apps that are downloadable to your smartphone. You only have to input information about your income and expenses to create your weekly or monthly budget.

Monthly budget.


2. Figure Out Your Entitlements

You could be one of the several Australians that do not know they are entitled to financial support from the government. Low-income families can get aid from different agencies. For example, you could qualify for a low income Health Care Card, which is offered by Centrelink to low-income individuals. With this card, you can reduce your daily expenses on medication and public transport.

There are several other income support programmes that you can turn to, including Age Pension and Austudy. These payments, however, have specific requirements and restrictions, which you need to meet before you can qualify. For example, Age Pension is only applicable to those who are at least 66 years old. Meanwhile, if you are 25 and over and you’re currently studying or working as an apprentice, you can benefit from Austudy.

Some people have low income because they are caring for a spouse or a loved one with a disability or who is old. If you belong to this group, you should apply for Carer Payment. JobSeeker is also a good government initiative that you may be able to qualify for if you are looking for work and are around 22 years to pension age. An alternative is Youth Allowance, which is for people who are 21 years or younger. Farm Household Allowance is for farming families who are facing financial hardship.


3. Make the Necessary Adjustments

Start with housing, which is undoubtedly one of your biggest expenses whether you are renting or paying down your new home. Imagine if you could reduce your housing expenses. Even a hundred dollar decrease each month can have a significant impact on your budget, savings, and the overall quality of your life. But is it possible to cut your housing costs? The good news is that you can, but it will take some effort and perseverance.

If you are serious about reducing your housing costs, here are steps you may want to consider:

  • Downsize to a smaller home or apartment: As you may have noticed, a big house contributes to your total expenses. From electricity bills to heating and cooling to renting, your expenses are directly proportional to the size of your home. If you want to slash costs, look for a smaller dwelling.
  • The city you may be living in can be expensive. If it is not a hassle for your job and everyday routine, you should look for a more affordable location. This tactic works well for those who are renting. A key detail in property prices is the location of the real estate, so switching to a different suburb may be a better option.
  • Earn some money by renting out the extra spaces in your house: It is a great way to offset your housing costs, especially with the popularity of Airbnb.

Make sure that you look at your situation first: Some of the ideas above may not apply to you. But in all cases, having an affordable place to live can give your finances some breathing space.

You can also seek assistance from the government, especially if you are a first home buyer. WA offers housing support to low-income families and individuals looking for a new home. For example, the Shared Ownership Home Loan Scheme through the SharedStart Home Loan lets low-income buyers provide a low deposit of 2% or $2000 (whichever is higher). This scheme is only available for first home buyers. Another is the First Home Owners Grant (FHOG), a project to ease the expenses of people building or buying a property. This property, however, should be your primary place of residence.


4. Cut Back on Expenses

Your everyday expenses can wreak havoc on your budget if you are not mindful about your spending habits. Food is a good example. Although you need food to survive, some of the foods you eat are not a necessity. The constant temptation of going to restaurants because you do not want to prepare food at home can be challenging. If you already have a budget, eating out can surely make it impossible for you to stick to your financial plan.

Since you are low on money, food expenses are an area that you can focus on to save some cash.

Here are some tips that will help you cut back on food and grocery expenses:

  • Buy your basic items, such as coffee, tea, and dried fruit in bulk.
  • Pick a generic product over a brand-name option.
  • Create meal plans, which tell you what you will eat for your next meal. Some apps will help you plan your meal for seven weeks or the whole month. By knowing what you will eat for lunch or dinner, you do not have to go to your favourite restaurant for a takeaway.
  • Don’t overspend on groceries. Before you head out to replenish your supplies, check your pantry first. You may already have what you need for the next few days.
  • If you truly want to eat out, pick a good day to do so. Several food places offer meal deals on specific days. For example, you can find pubs with cheaper lunches on Tuesdays.
  • You can also try subscribing to a food delivery service. It’s like online shopping but for food. This new phenomenon has taken Australia by storm because of its convenience. You can have food delivered to you, along with recipes. The ingredients are measured, too, so you do not waste food.
  • Select the most satiating foods, especially those that give you energy. Some examples are brown rice, oats, quinoa, and wholegrain bread.

Having a low income does not mean you should starve yourself to save money. Additionally, if you’re bored, you do not have to stay at home all day just to avoid spending cash. There are creative ways to enjoy your time, including going to outdoor concerts or any activities, which are free. You can also go to a local library to borrow books, CDs, or movies that you can get busy with for the weekend. Go for a hike or explore free museums in your area.

Grocery list.


5. Conquer Your Debts

Managing your money is a huge challenge that can take years to master. But if you can eliminate your debts, it becomes an easier feat. The sooner you reduce your debts, the better. If you owe a lot of money from many organisations or people, start with the debt that has the highest interest. Credit cards often have high-interest rates, which continue to rack up daily. Make sure you pay them on time to avoid any late fees and other charges.

If you can consolidate your debt, you may be able to start saving money quicker than expected. However, this method is not for everyone. Check that you will benefit from debt consolidation, which means that you will take out a larger loan to pay for your other loans.

Refinancing may also be an option for your existing loans. It’s when you have your loan terms revised, including the interest rates and payment schedules. Refinancing is a smart strategy for those whose credit scores may have increased, which means that the rates can become more attractive. Talk to your lender first to see how you can benefit from loan refinancing.


6. Get Help from Experts

Budgeting is not easy for many people. If you require assistance, you can talk to a representative from the Department of Human Services. This agency has a Financial Information Service, which you can take advantage of for free. You do not have to be a customer of the department to use the service, which includes general advice for people needing better money management.

You can also speak to Quantum Finance. With our years of experience in the finance industry, we can provide you with advice or recommendations if you wish to get a loan with us.

Our friendly staff can help you pick the best product for you and your situation. That way, you can manage your debt and budget your finances properly. Contact us today to find out how we can help.

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Dawn Brown

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