How Do You Live Well on Less Pay?

There are plenty of people out there that don’t make a lot of money and have trouble covering basic expenses each month.  Unfortunately, many of them are underpaid in their professions, but they have important jobs.

I know this situation well since my wife used to be a kindergarten teacher and often had less income than others.  As and aside, I believe teaching is one of the most important jobs in society.   She worked long hours, many times taking her work home with her.  The early education of these children was in her hands.  Yet, she wasn’t paid much compared to many professions today.

I started thinking about my wife’s past job and this common issue many face after listening to a recent MoneyLife radio program.  Crown interviewed Danny Kofke who is the author of How to Survive (and Perhaps Thrive) on a Teacher’s Salary [I haven't read the book, but it sounds like it has some helpful tips].

The show sparked some creative thought as I started jotting down practial tips that came to my mind.  I believe there are 5 key tips you need to follow to live well on less income [most of them require following the basics]:

Set up a Monthly Budget

• Create a budget and allocate the right amount of money per budget category by using good % guidelines.
• You must watch your monthly spending against basic budget categories by tracking your spending often.
• Make sure you have a plan for every dollar each month.  You need to have a good reason to deviate from your plan.  Hold yourself accountable.
• No when to say no.  If you’ve spent all your entertainment money you need to be able to say no to yourself until you get paid again.

Don’t Overspend on Housing

• Teachers and other professionals need to be careful.  Avoid buying too much house and minimize housing expenses all together.
• Buying a house, condo or townhome is something most people want to do.  Rember, start small and work your way up.
• Keep your housing expenses (mortgage, taxes and insurance) to no more than 20-25% of take home pay.  I like 20% when the financial situation is tight.
• Don’t buy unless you can include maintenance costs in your budget (especially with older property).  You don’t want housing maintenance to eat up any cash savings you’ve accumulated.

Watch your Entertainment Budget

• Find creative ways to entertain each month and limit your spending in this area.  Some creative ideas may include one nice dinner out per month.  Or, a weekly trip to the coffee shop.   Some optiosn for entertainment don’t require money at all.  Find ways to enjoy the outdoors with your friends.  There are a number of ways you can be entertained on less.
• Remember, you can’t completely deprive yourself, or you’ll go nuts.
• Avoid an I deserve it attitude.  Be thankful for your pay and learn to manage it wisely.

Shop Wisely at the Grocery Store

• If you’re supporting a family you know how groceries can eat up your budget, so put in the effort to save by using coupons.
• Consider playing the Grocery Game and save money by stockpiling.
• Always have a plan when you go to the Grocery Store.  Never leave home without a list or with an empty stomach.
• Buy what you need and avoid splurging.  Splurging at the grocery store means you’ll buy items that aren’t on sale and often overpriced.

You Must Get Out of Debt and Avoid Future Debt

• Remember, your life will be limited with debt, so get out of it!  You won’t have as much to save, spend or even give.  Most people who are really struggling are carrying around credit card debt, or even car debt that’s too much for them to handle.
• Free yourself from auto bondage.  Sell expensive cars with big payments and be content with simple transportation.
• Work on a plan to get out of credit card debt.  There is really no other alternative but to get it paid off.  Your life may require a few sacrifices and even extra work to put such debt behind you.  But it’s worth it to eventually live comfortably.

Danny Kofke mentioned something during the radio show that really stuck out to me.  He and his wife evaluate opportunity costs quite well.  That means they say there is nothing they can’t have, but for everything they want they must realize there is a cost.  It’s called an opportunity cost.  If they want to drive a nice new BMW then it’s going to require a change of profession.  If they want a nice new TV they’re going to have to work harder, longer or reduce spending in others areas so they can save more before they can buy it.  Whether you’re a school teacher or not, isn’t that the perspective we should all have?  We need to be good at evaluating opportunity costs.  So far, Danny said there’s never been anything that would make he and his wife want to change what they are doing.  In other words, the cost doesn’t out weight the benefits of having more stuff!

How do you live well on less?   What do you think of these tips?

Free Email Newsletter

The Weekly Article Newsletter Delivered Straight to Your Inbox! Get this free handy eBook that provides 25 ways to save money on your cell phone bill.