How to manage your finances on a low income in New Zealand

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The cost of living varies from country to country, but in the US, a low income is defined as earning less than 2x the poverty line.

Living on a low income isn’t easy. You may find you have very little money left over at the end of the month. Here are some tips to help you manage your finances better if your earnings are low.

Make a Budget

It is very difficult to manage your money if you have no idea how much goes in and out of your account each month. Instead of sticking your head in the sand and pretending everything is fine, sit down and draw up a budget.

Pull together your bank statements for the last three months. Go through them and make a note of bills, everyday expenses such as food and fuel, and non-essentials like takeout, trips to the movies, and clothes.

Use a spreadsheet or budgeting app to see how much you typically spend on essentials and non-essentials. It will probably be very enlightening.

Cut Your Costs

Look at areas where you can save money. For example, if you stop at Starbucks every dayfor a double shot latte with extra vanilla, make your own coffee and take it to work in an insulated mug. Instead of going to the movies every week, consider buying a Netflix subscription instead. The money you save can be funneledinto a savings account for rainy days.

Coping with Unexpected Expenses

Unexpected expenses can cripple families on a low income. Most don’t have any savings, so when the car breaks down, they are stuffed.

A short-term loan might be your best bet if you can’t live without a car or washing machine. Look for competitive easy loans that allow you to make repayments weekly or fortnightly. This will make budgeting your money a bit easier.

If you don’t want to take out a loan, try asking family and friends for some assistance, but be very clear about how much you are expected to repay – and when the money is due. Misunderstandings over money can tear families apart.

Build Some Savings

Try and save some money each month. As little as $20 put aside every month will turn into $200 in 10 months, which could pay for some Christmas presents for the kids. Where possible, divert a small sum straight into a savings account on payday, as you won’t miss the money so much.

Check to See Whether You Qualify for Assistance

Look for grants to help you reduce your energy bills. Warmer Kiwi Homes is a four-year government-funded program that helps fund underfloor and ceiling insulation, and also part of the cost of heating appliances.

Boosting Your Income

Have a think about whether you could supplement your income. A part-time job waiting tables could really make a difference. Even if you can’t work outside of the home because you have young children, there are income streams you can develop online, such as self-publishing on Amazon Kindle.

Managing your money is the key to survival when you are on a low income. Look around, see how you can improve your lot in life, and stay positive.