All About Budgets

How To Budget When You Don’t Earn Enough Money

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How To Balance Your Budget When You Don't Earn Enough Money



Over the years I’ve had my fair share of emails from readers about budgeting but one of the tougher budgets to work with is the budget that doesn’t earn enough money to balance itself out. With that you need to examine two things, your net income and your monthly expenses because this is the only way to understand how to fix the money imbalance.

A simple budget is a plan for your money so you know where it is going before you earn that money. What a relief it is knowing that you have all your bases covered but what if you don’t or can’t? Well, there are some options available to you but more importantly knowing what how much money you need is priority.

I know that many of you reading this today may be in this situation and perhaps you’re not sure how to attack it or whether you want to but I can assure you doing nothing will only set you back further.

With the recent announcement that Doug Ford has axed the minimum wage increase set for January 2019 to $15 an hour many people are upset because that one dollar meant so much more for them.

It’s so easy to get excited about earning more money but when you don’t earn enough or it’s taken away negativity can set in and this can further cause decline to a brighter financial future. Don’t let it, especially if you can’t control what is happening in the moment. Love what you do, Do what you love even if it’s not 100% what you had planned just yet.

Unfortunately life has its ups and downs and that might mean little to no salary increase, no benefits, loss of benefits and so on. Things always seem to get tough before they get better. The minimum wage increase was like handing a chocolate bar to an adult and then taking it away.

I like to accept any financial increase I get as a treat but realize it can be taken away just as fast as frustrating as that sounds. Also, consider interest rates, investments or anything that can cause your net worth to grow can quickly turn around and crash.

This is the way life goes, we get, we don’t get, we get, it gets taken away, we get everything, we lose everything. LIFE is a gamble and even when it comes to politics no one will ever find that one perfect politician to make the masses happy. It will NEVER happen. Bet on no one but yourself for financial stability even if that means finding new ways to earn a bit more money.

My point is, it could be worse.

I remember when Mrs. CBB was excited to get a 3.0% raise on her salary just 3 months after buying our first house only to find out she got the pink slip two days later. This is that get and then take away situation but in the worst possible way, the unemployment line.

At the time I was only earning $15 an hour and we had a large mortgage to pay on a new home we had literally just bought and weren’t sure if we could make it on one income. So many emotions kicked in when that happened because it was NOT what we had expected but it certainly woke us the hell up to potential financial disaster.

Thankfully, we just made it but that didn’t come without added stress on our relationship because I was working over-time to help make ends meet. The good part was that we budgeted the mortgage on one income before we bought our house so we could cover the bills but we still had to eat and fix things around the house. Nothing is ever perfect and financial needs will always creep up when you least expect them.

What we can do now is take what we do have and make the most of it and that means budgeting and saving money wherever possible. Sometimes when you don’t get something it’s a blessing in disguise and perhaps this minimum wage axe is just that but we won’t know, we may never know. Instead of burying our heads in the sand rise up and keep on fighting the money fight.

Dear Mr. CBB,

I’m a 30 year-old male recent grad from the University of Toronto (living in Toronto) and I struggle to cover the bills on my current income. I just started a new job and of course my salary is at the lowest and could take a couple of years to see a substantial increase that would make my financial situation a bit better.

In the meantime I wanted to learn how to start budgeting like my parents did but am not sure where to start and if it was even worth budgeting if I’m not earning enough money. I also was hoping to get some insight on how to deal with creditors who I can’t pay the full monthly payment or even the minimum payment so I don’t ruin my credit score.



Earning Enough Money To Balance The Budget


Hi Mike,

Thanks for your question and congratulations on your recent graduation from the University of Toronto. I just read that it was the top university in Canada to attend so a very prestigious addition to your resume for certain.

I’d like to say that budgeting is super easy and for the most part, it is. Budgeting starts to get tough when someone doesn’t earn enough money to balance the budget which means there will always be a deficit at the end of the month. What this means is that bills aren’t getting paid in full including rent, groceries are unaffordable or you go without something you really need.

It’s important to remember that if you are finding that you are struggling to budget when you don’t earn enough money that you must prioritize where you are spending that money.

For example, if you earn $5000 a month and you set up your monthly budget with all the relevant categories based on your current situation and find that you need $5200 a month to balance you should be telling your mates that going out drinking on Friday night is not an option. Perhaps opting for fun without the cash may be a better option and there are lots of free community events happening in just about every town.

I’m not saying that you drink Mike but the point is that everything that is not an immediate financial need has to be put on hold. Some people may not agree but those some people may want to stay in debt longer, deal with creditors that become nasty or even worse dampen their credit score alongside possible bankruptcy.

All of this can be avoided with simple shifting of money and setting priorities to debt repayment and finding more ways to earn enough money to balance that budget. I’ve talked to many people in your situation Mike and it’s not easy and never will be.

Not having enough money to get by is scary, depressing and filled with uncertainty. These emotions are normal and certainly a situation such as this can put a hold on life but always remember it will be temporary as long as you have a plan and follow through even upon the tough times and there will be some, perhaps lots.

There might be someone reading this who is also struggling but for different reasons such as job loss, illness and even divorce can setback those who have well-paying jobs but nothing saved up in the bank.

An emergency savings account come hell or high water is a must even if you have debt to pay back. I have been known to say that $5 saved a month is better than having nothing in your pot, and it’s true.


What is my budget?


Before you can do anything you have to know what your budget looks like and that means creating one of finding one for free that you can use. Please don’t pay to budget as it is simply not needed. Basic math and organizational skills are all you need to understand where your money is going and how much money you are bringing home.

This is your financial tracking system and without it you won’t know a darn thing about your money only what you remember.

Once you factor in all of your budget categories and your net income you will know how much money you are short. You will also know how much your overall debt load is as have it broken down creditor by creditor. By this I mean you know that you owe $1400 on your MasterCard, $500 Visa, $34,000 to OSAP, $14,000 car loan and so on.

You should know how much interest you pay for each debt you have to pay back and organize it from highest to lowest so you can see it on paper or a computer screen. Think of your money as a science project that you MUST make work and you have no choice but to find a solution for because if you don’t it won’t work.

Once you see how much money you are short each month this will give you an idea as to what areas of your budget you should lower or just get rid of such as cable, internet, cell phone. For those of you who don’t fancy paying minimum payments on your debts you may take it a step further in understanding how much more money you need to earn so you can get out of the debt cycle faster.

I know some people prefer the debt snowball paying the minimum on the highest debt while packing it away on the smallest balances first and so forth. Whatever you choose to do make sure it works for your situation and that you don’t choose it because it worked for someone else.



Communicate with Creditors


One of the worst things you can do when it comes to deciding on what bills to pay first is to ignore a bill until you have enough money to pay even the minimum amount on it. Take the time to contact that creditor and explain your situation to them whether they care or not. At least you’ve done your due diligence to let them know your financial situation.

If you explain to them that you’re falling on hard times and not earning enough money but working to budget and prioritize your bills and have an action plan (even if it is minimum payments) they most likely will be happy. Ignoring bills gets you shifted to the naughty pile and then you might be dealing with phone calls and boy they can be nasty when trying to retrieve money.


Lower Your Expenses


Thankfully keeping the stress of our temporary set-back after buying our house led to us budgeting, frugal living more than we had done before and finally earning a bigger income over the years. With this perseverance we were able to pay our mortgage off in 5 years and are now debt free.

Budgeting when you don’t earn enough money means making sacrifices and when you’ve scaled everything down to the bone, are working two or three jobs or earning extra money on the side and still can’t make it then perhaps it’s time to look at your biggest expense. For many that is living expenses such as mortgage or rent.

Sell the house, buy a smaller house, condo, apartment or townhouse, move in with someone or rent a room. Do whatever you have to so you don’t lose it all even if that means relocating to a new city, new job or a career change. Don’t be afraid of the future, be afraid of not doing anything about it while you can.

P.S- Those little expenses add up quite fast as well so knock them on the head as fast as you can if you can do without them.

Related: Breaking the Budget- Coffee and Lunch Comparison of Two Co-Workers


Make More Money


If you don’t earn enough money the natural thing to do is make more money, if you can.

Earning more money is the most obvious when you can’t balance your budget and although no one wants to hear that they need a second job in some cases, it must be done. This extra income may make the difference between paying your debt off on time and making sure that you keep your roof over your head.

You can always go to the food bank or other sources in the community to supplement your food supply if need be but even then there are places that may not offer such services. Look out for yourself and if you see or hear opportunity to make more money than jump on that wagon and go for a ride. I don’t know anyone who complained about earning more money especially when they really needed it.

Just because your financial advisor is the pizza delivery guy or gal doesn’t mean they don’t earn enough money or can’t balance their money it may just mean that their current financial situation is in need. No one is above struggling financially so don’t judge when you see someone you think should be the star of their financial show sweeping up the popcorn.


Long-Term Plans


Your short-term plan is to make ends meet and balance the budget but what you have to remember is that it should not be your forever plan as long as you are able to work. There are people on fixed-incomes, disability and for other health reasons who can’t get that second job but perhaps can find other ways to earn a bit more on the side when they can.

If earning minimum wage is something that is suffocating you and what you really want from life is more than you have options. You go back to school, find a new job, upgrade your skills, volunteer to get your foot in the door somewhere new. Whatever you want from life and if you have the means to do it the path is up to you.

I wish I could say this would be easy but coming from experience moving to Canada from the UK was like taking a giant step backwards. Finding out my University Degree would need to be re-tested, securing only minimum wages jobs and then going back to school and starting over was tough but for our situation it was doable.

You may not like what you can and can’t do on a limited income when you are working to better yourself or setting your career path up the ladder but stay positive and remember it’s temporary only if you want it to be.

Discussion: I know everyone’s situation is different but if you’d like to share your personal experience on this topic I’d love to read about it. Comment below and share any tips for Mike that you might have.


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One Comment

  1. Due to the downturn in the oil industry, my husband lost his business and is now in bankruptcy. I have been looking for a job for ages. I may have found one. But now i don’t think I can take it because it will effect my husbands payments. It is hard making ends meet. Do you have any insites on getting through bankruptcy?

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