Budgets Do Not Discriminate Which Means They Are For Everyone
Just recently I had an email sent to me from a fan looking for tips on low-income budgeting for people who struggle financially.
There are lots of people in the same boat so I hope I can offer some budgeting tips that will help motivate those people who want to give up before you begin.
This is one of those touchy topics so please bear with me as I realize many people are struggling through tough times.
Debt is debt, money is money, a budget is a budget.
I know financial situations are unique and I can’t possibly targe them all however with some work a budget can work for anyone.
Low-Income Budgeting Help
Dear Mr. CBB,
I’ve been reading your blog for a while as I was searching for some family budget information and a sample family budget so I can start budgeting.
We come from a low-income Canadian family which we feel is at the poverty level in Ontario.
I grew up living in poverty but poverty today seems much more difficult as an adult than when I was a child living with my family.
We rent an apartment since we can’t afford to own a home as our credit is not good enough and we don’t have the money for a down-payment.
We have a low-income for a family of 3 which includes our son who is 6 years old.
I work part-time as I struggle to find work as I need more skills and my husband works full-time in a retail capacity.
He also has no further education after grade 12.
We take the bus to work since we can’t afford vehicles and walk everywhere else we need to go.
My question is what is a typical family budget and how do I start to budget with a low-income in Canada when we make just enough to cover the bills?
Thanks for any budgeting tips.
In a country as prosperous as Canada, everyone should have a real and fair chance to succeed.
The Government of Canada is focused on growth that benefits all Canadians, investing $22 billion since 2015 in efforts to help grow the middle class and reduce poverty.
The poverty rate of 9.5 percent in 2017 represents the lowest rate of poverty ever based on Canada’s Official Poverty Line (formerly known as the Market Basket Measure).
This historic low poverty rate represents an important step towards the Government of Canada’s goal to cut poverty in half by 2030. – Source
The current unemployment rate in Canada as of January 2019 was 5.3% which has decreased over the years but it still doesn’t solve the problem.
People in Canada are struggling to find meaningful work with a wage that will cover their bills.
In Ontario, the number of people employed rose by 41,000 in January, the result of an increase in full-time work. At the same time, more people looked for work (+31,000), pushing the unemployment rate up 0.3 percentage points to 5.7%. In the 12 months to January, employment in the province grew by 2.4% or 170,000.- Source
When exhausting all means and having to rely on employment insurance which we graciously pay into and the social assistance/welfare system just to survive it becomes fight or flight.
We all need to survive and falling oun tough times can happen to anyone, even those people with 6 figure incomes.
When I moved to Canada from the UK finding a job was just as tough back home as it is was in Canada.
Everywhere you looked people were graduating with degrees but weren’t finding jobs so they ended up working in factories or anywhere they could make money to pay the bills.
It’s no different in Canada but I believe we have more opportunities here than we do back home in England.
Like many others who move to Canada we are led to believe that there is opportunity everywhere and there is, IF you qualify.
I struggled for a long while before I gave up and went back to school to upgrade my education to help build my resume.
No matter what your income level there are two things that are important when it comes to budgeting.
- Financial Education
Before you embark on a budgeting journey you need to know what you are getting yourself into.
By this I mean have you learned as much as you can about the budgeting process so you don’t tumble before you stand.
There are many people who think budgeting is simple and it isn’t hard but it’s important to follow a process.
A budget is a tool for everyone to educate themselves about how they are spending and saving the money they earn.
People in lone-parent families recorded among the largest decreases in poverty in 2017—the proportion of people in these families living below the Official Poverty Line fell from 29.2% in 2016 to 22.7% in 2017.
The poverty rate for persons in lone-parent families has been declining steadily over the previous five years, associated with increases in child benefits.
Minimum Wage Ontario
What is the minimum wage in Ontario?
Minimum wage is the lowest wage rate an employer can pay an employee.
Most employees are eligible for minimum wage, whether they are full-time, part-time, casual employees, or are paid an hourly rate, commission, piece rate, flat rate or salary.
Minimum wage in Ontario for 2018 is $14.00 an hour where student minimum wage is $13.15 an hour but after working 40 hours you still have taxes deducted.
Minimum wage rates
|Minimum wage rate||Rates from October 1, 2016 to September 30, 2017||Rates from October 1, 2017 to December 31, 2017||Rates from January 1, 2018 to September 30, 2020|
|General minimum wage||$11.40 per hour||$11.60 per hour||$14.00 per hour|
|Student minimum wage||$10.70 per hour||$10.90 per hour||$13.15 per hour|
|Liquor servers minimum wage||$9.90 per hour||$10.10 per hour||$12.20 per hour|
|Hunting and fishing guides minimum wage||$56.95
Rate for working less than five consecutive hours in a day$113.95
Rate for working five or more hours in a day whether or not the hours are consecutive
Rate for working less than five consecutive hours in a day$116.00
Rate for working five or more hours in a day whether or not the hours are consecutive
Rate for working less than five consecutive hours in a day$140.00
Rate for working five or more hours in a day whether or not the hours are consecutive
|Homeworkers wage||$12.55||$12.80||$15.40 per hour|
|Wilderness guides minimum wage||N/A||N/A||Rates from June 3, 2019:
What does a typical budget look like?
To answer this question is difficult as I believe everyone has their own way of setting up a budget according to their income and debts but typically does include some basics.
The general basics of budgeting include fixed expenses which are expenses that are almost the same every time you need to pay them (ie. rent or a mortage payment.
There are also variable expenses that you can expect to fluctuate month after month or when the bill is due (clothing, water bill, gas, cell phone, etc).
Every month on Canadian Budget Binder I post our actual budget for 2 people which is more than a sample it’s all our actual figures which you can look at to see how we manage our money.
You can read back over the past 6 years of our monthly budget posts to get an idea of how our family budgets our money.
Low-Income Budgeting Tips
How to budget if you are on low-income?
Well, if you are not making lots of money or enough to cover the bills then you have to ask yourself if any of your variable expenses you can let go of or cut back on?
That means no more eating out, no cell phone or try pay as you go, no cable or a cheaper package (negotiate with your provider), no holidays or maybe enjoy a stay-cation or limit to surrounding area etc.
The hardest part about being on a budget is living through the budget itself.
You can’t keep making excuses every time you make a purchase because the budget will not be kind to you nor will the bill collectors who want their money.
We tend to put all of our purchases on credit cards as we know our budget inside out and pay the bill at the end off the month.
If you don’t own a credit card or you are not confident in paying one in full, use cash/debit only.
You can put together a cash envelope budgeting system that works for you.
No guessing, no monthly credit card bills just plain old cash budgeting.
Just because someone is low-income doesn’t mean they can’t use a credit card or they are irresponsible with money, it has nothing to do with that.
Consumer debt is another story and if you want to live a simple life, you’ll knock it on the head and fast.
Couples Budgeting Tips
One thing I like to point out from the start is that if you are married or in a relationship you must learn to budget as a couple.
It doesn’t matter who does the work but you both need to be on the same page, or it will fail.
- Why are you both going to work hard at budgeting your finances for the family?
- So what are your goals and objectives?
There are so many articles on CBB about budgeting but the most important one is our 10 Step Mini Budgeting Series.
If you are new to budgeting I would suggest that you start there as it will educate you on the basics of budgeting.
When it comes to budgeting you have options;
- Create your own budget spreadsheet
- Find a Free budget Spreadsheet online
- Paper and Pencil Budget
- Simple Budget Printable
- Budget Apps (many you pay for)
- Money Jars
- Envelope Budgeting System
Stop Eating Your Budget
In October 2012 I participated in The Welfare Food Challenge where I had $26 to spend for the week on groceries.
Although it was tough, I made it through and I did budget my grocery shop for that week.
I often think that starting with the grocery budget is a great way to get your feet wet in the budgeting world since food is a necessity in our lives and the budget.
Some families spend more on their food expenses each month than they do on their rent or mortgage, which is outrageous.
I had one CBB reader share her story of spending $1100 a month to $600 a month in a short period just by using tips found at Canadian Budget Binder and other popular websites.
Preparing a budget no matter what your income level is can give you peace of mind as it gives you a greater understanding of your finances.
Budgeting allows you to appoint budget categories that fit your lifestyle which becomes a monitoring system for your money.
Not Earning Enough Money
When you’re not earning enough money to balance your budget the financial emergency becomes real and needs critical attention.
You might even wonder why it took so long to start budgeting once you see how much money you need to survive in comparison to what you net each month.
If you aren’t making enough money to cover your debt and basic living needs then your options become your life-line.
- Earn Extra Money
- Get a Second Job
- Spend Less Money
- Consolidate Debt
- Update Your Skills
Back To School
Alternatively, you could always take on some part-time courses at your local college or university to build your resume to reflect current needs in the employment market.
Going back to school means you may find a higher paying job and become sought-after by employers.
This is what happened to me and although it was a struggle financially it paid off BIG TIME in the end.
Years later I’m working in a full-time capacity for what I graduated in and earning a 6-figure income with a defined benefits plan.
Earn More Money
I know making extra money for some is not an option but if you have time and the physical ability the extra cash will come in handy.
The lovely Katrina who writes for me here at CBB, she’s a single mom on a mission to cash in on the extra cash she earns.
She has been doing whatever it takes to look after herself and her 2 children as a single parent with one-income.
She earns extra money using her landscape and gardening skills which helps balance her monthly budget so she can do more with her kids.
Another fan turned her life around after drugs, alcohol, divorce, and debt and now she makes jewellery on the side for extra cash.
Don’t give up, don’t think negatively and push until you have no more go in you or you find another viable option.
If you do give up then you have only yourself to answer to and really that’s what it all boils down to.
How to make extra money
Job hunting for a second income source may be depressing but think about how much that extra money will mean to your budget.
Some ways you can make extra money may be working over-time, a second job, baby-sitting, lawn maintnenace, shovelling or using skills that you may have in a skilled trade such as a mechanic, hair dresser or plumber.
If your kids are old enough teach them money lessons by starting a paper route which will give them a kick-start in money management.
Let them be responsible for earning their own spending money and the responsibility of paying bills.
It was my first job growing up and what really got me interested in money in the first place.
To be honest I was kind-of hooked on earning money because I knew I could buy stuff with it.
In the end, I ended up saving it all and buying my first car when I was able to drive.
Spend Less Money
When it comes to a budget for families the final numbers are going to be up to you although not everyone has the luxury to go out and earn extra money especially if health issues are a set-back.
If you are finding that you are spending too much on credit and unable to pay it back one option is a credit card balance transfer.
Taking advantage of a balance transfer could save you enough money to put towards other debts depending on which credit card you set up the balance transfer with.
You can also consider taking out a bank loan where the bank consolidates your debts into one so you have one payment each month.
For many people, this type of consolidation helps them get back on their feet and working towards debt freedom.
Credit counselling is an option where someone helps you with debt solutions and assists with financial planning strategies.
Understanding Budget Percentages
Our breakdown of budget expenses below gives you a general idea of what percentage of our budget we put our money into.
So you start with 100% and parts of your budget categories will fit nicely into each of these sections except for projected expenses unless you save for them which I believe everyone should who budgets.
The money has to come from somewhere for those bills that come every so often but we tend to forget about it.
If you tell me you can’t budget in the projected expenses that means you are spending too much money.
If you use projected expenses you need to decide what percentage value you will give to that category.
The bill may not be here yet, but it will be so it’s not invisible.
If you don’t save a portion of that bill every month you WILL have to find the money to pay for it when it comes in.
Perhaps you find your percentages are higher than what is suggested below which should set off alarm bells.
This could potentially mean you are spending more than you earn.
The numbers will give you your answers once you track your expenses for a minimum of 3 months.
No budget will EVER work if you spend more than you earn.
I’ve had fans whose net income is $3000 a month yet they set up a budget with potential expenses of $4000.
Sadly, it doesn’t work that way.
Your budget must balance where you spend less than you earn or all of the money is allocated to your budget categories, full-stop.
There’s no magic that will make debt or expenses go away unless you earn more money or spend less each month.
Track your grocery expenses for one month and from there you can start to cut back and have a better understanding of your spending habits.
I’ve got a free recipe index of delicious frugal recipes that you have full access to so check it out and try some of the recipes.
If you are on a restricted diet then search the web as there are millions of blogs and lots of information for you at your fingertips.
If you want to print out meal plans, shopping lists, pantry inventory lists, and so much more take advantage of the free money-saving tools I’ve put together for you as well.
No one says you have to eat all convenience type food, I didn’t when I did the one week challenge so if you really want this, you can do it.
If you are not sure how much your grocery budget should be the easiest way is to fill out the budget spreadsheet once you know your net income and have all the bills and debts you owe in front of you.
At that point, you can then transfer the numbers into the budget but you will learn all of this by reading our 10 Step Budgeting Series.
Once your numbers all fall into place and you will clearly see where you need to make changes.
Low-Income Community Assistance
There should be financial help for low-income families in your community and if you find there is none then surf the web, read books from the library and network with others who may be in the same financial situation.
In Ontario, there are Credits, Benefits, and Incentives for low-income families or single people that can help.
Effective January 1, 2019, the non-refundable Low-income Individuals and Families Tax (LIFT) Credit provides up to $850 in Ontario Personal Income Tax relief to low-income Ontario taxpayers who have employment income, including those earning minimum wage.
Do whatever it takes to get yourself back on track working towards a safe place that you want to be in financially.
Most of all, never give up hope.
Post Updated: June 2019
Discussion: What other tips do you have for low-income earners who want to budget?