Finding ways to manage household finances on a $300 salary can be very challenging. Especially if the number of family members and the demands of existing needs keep on increasing.
Still, a moderate income does not mean that meeting monthly needs is impossible. Here are steps and techniques that you can try to apply in managing household finances.
1. Change attitude
It is important for every married couple to learn the ability to manage finances because financial instability can be the root of many problems, including the initial trigger for divorce. Therefore, married couples are strongly advised to start changing their nature attitude So that they can plan their family finances better. like what? See the following explanation.
treatment of money
first mindset The way you deal with money needs to change. For this case a concrete example quoted from the book is psychology of money , The book gives examples of employees from two different occupations, namely a janitor who graduated from junior high school and a high-ranking official who graduated from Harvard.
Chowkidars have a meager salary that is only enough to meet one month’s daily needs, while high-ranking officials have salaries ten times higher than that of chowkidars.
However, by adopting a simple lifestyle and saving steadily, the watchman was able to send as many of his children to high school as possible, until one of them managed to graduate from Harvard. In fact, janitors can live peacefully into old age with millions of dollars in savings at the end of their lives.
On the other hand, fat high officials with excessive extravagant behavior and luxurious lifestyle are actually very indebted for their lives. Deep in debt, he became bankrupt until he spent his old age in a small hut in the middle of a mountain.
From the above example, it can be concluded that the management of money is not determined by high intellectuals alone, but by how we treat money. It doesn’t necessarily have to be a huge amount of money, even if owned by someone who deals well with his own finances will definitely yield optimum results.
know the limits
second mindset To be able to manage your finances properly, you need to recognize your own financial limits. Those who recognize their financial limitations will be able to control themselves from unnecessary expenses. It can also ‘force’ oneself to know that it is enough so that it doesn’t continue to compare itself with other people’s financial situations.
build self-awareness
yourself- Awareness is an important attitude It also needs to be inculcated in oneself to manage finances wisely. This awareness can be built upon by training to strengthen the determination to continually achieve healthy finances.
after changing your attitude , it will be easy for you to implement how to manage household finances with a salary of $300. Here are other steps you can try.
2. Identify Financial Situations
Try to find out what is your current financial position. The trick is to record all the assets you have and existing debts.
Assets in question include how much money you have in the bank or in cash, what valuable jewelry you have, and the amount of your savings or assets.
These assets such as land or building, business or investment that are being made for all other valuable items that you can later resell at higher prices, such as personal vehicles and so on.
The loan may be in the form of the money itself or in the form of a loan for the purchase of goods. If it is recorded, try to compare the value between the total value of your property and the loan you have. Your finances are classified as good if your loan to value is much less than your net worth and vice versa.
3. Set Goals
Without a financial goal, you will be impulsive in spending money. As a result, you will find it difficult to control expenses and will not know where the money is allocated. So it is very important to set realistic goals according to your capabilities and limitations so that it becomes easy to reach the goal.
Instead of setting big goals in the long term, you can start building financial goals gradually from short, medium and long term financial planning goals. For example, in the short term of the next 3 months, you aim to cut unnecessary expenses and save at least $30 per month.
Then, continue with medium-term goals of 6 months to a year. Such gradual goals will help you easily achieve long-term financial goals, such as paying off debt or furnishing your home.
4. Make a Regular Expense List
After identifying your financial situation and setting realistic goals, the next step is to list your regular expenses for the month. Starting from highest priority to lowest priority.
This monthly regular expenditure record is very important to know where your money is allocated. This list helps you avoid spending more than your income, and evaluate your monthly needs more wisely.
5. Differentiating between wants and needs
While making a list of regular expenses, you also need to understand the difference between wants and needs. Desire is usually temporary, not immediate or deferred, and often aims at fulfilling pleasure. For example, shopping for luxury goods or doing other recreational activities.
Meanwhile, needs are more related to the main things that must be met, are immediate, and aim to facilitate daily activities. For example, the need for food, accommodation, education, transport, monthly bills such as water, internet and electricity costs.
6. Create a budget plan
After applying the above steps, you can begin planning a monthly budget as a way to manage household finances with a $300 salary. There are several financial budgeting methods you can use, one of which is the 10:20:30:40 formula.
This method assigns the largest percentage of the budget to basic needs, then prioritizes other household needs from most important to least important, but should still be released. For example, 40% for regular household expenses such as food and electricity, then 30% for installments or loans, 20% for investments, savings or emergency funds, and the remaining 10% for charity or social costs.
7. Build an Emergency Fund
When planning a monthly budget, don’t forget to set aside an emergency fund. This preparation is important for anticipating any unforeseen situations, such as sudden home repair accidents, so that you can be better prepared to deal with them. For example, while you budget 20% for investment and savings costs, set aside 5-10% for an emergency fund.
Ideally, each household should create an emergency fund of at least 6 times the total monthly expenditure for married households with no children, then 9 times the total monthly expenditure for married households with 1 child, and so on needed.
8. Do it at the beginning of the month and be consistent
Make sure that you have allocated the entire budget plan as soon as you receive your salary at the beginning of the month and always try to stick to it consistently. Getting in the habit of not delaying paying bills or your investment budget will save you from cutting into your income for unnecessary things.
Consistency is also important because no one really succeeds in achieving important financial goals without it, given that life’s needs change over time. In savings and investments, we recommend using a separate account by activating the automatic withdrawal feature.
9. Do periodic financial evaluation
After implementing all the above steps, do not forget to do financial evaluation regularly every month. Check and compare assets and loans, income and expenses, and check your financial capabilities. Through this evaluation, you can easily find out whether the financial condition of your house is good or not.
Finally, Healthy Finances shows that you have successfully implemented how to manage household finances with a $300 salary. So, ready to try?