Not earning enough money to balance a budget is frightening but temporary, with a shift based on your situation.
Probably the most challenging part is knowing that you might have to give something up that is a lifeline, such as a mobile phone.
Returning to a landline might not sound realistic, but changing your mindset to roof over your head or “stuff” has to change.
Table of contents
Over the years, I’ve had my fair share of emails from readers about budgeting, but one of the more brutal budgets to work with is the budget that doesn’t earn enough money to balance itself out.
With that, you need to examine your net income and 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 goes before you earn it.
What a relief it is that you have all your bases covered, but what if you don’t or can’t?
Some options are available, but more importantly, knowing how much money you need is a priority.
Many of you reading this today may be in this situation, and perhaps you’re unsure 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 to them.
It’s so easy to get excited about earning more money, but when you don’t make enough, or it’s taken away, negativity can set in, and this can further cause a decline to a brighter financial future.
Don’t let it, especially if you can’t control what is happening now.
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, which 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 as quickly, as frustrating as that sounds.
Also, consider interest rates, investments, or anything that can cause your net worth to grow and can quickly turn around and crash.
This is how 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 in politics, no one will ever find that 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 three 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 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 up to a potential financial disaster.
Thankfully, we just made it, but that didn’t come without added stress to our relationship because I worked overtime to help make ends meet.
The good part was that we budgeted the mortgage on one income before we bought our house to cover the bills, but we still had to eat and fix things around the house.
Nothing is perfect, and financial needs will always creep up when you least expect them.
What we can do now is take what we have and make the most of it, which 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, and we may never know.
Instead of burying our heads in the sand, rise and keep 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 its lowest, and it could take a couple of years to see a substantial increase that would improve my financial situation.
In the meantime, I wanted to learn how to start budgeting as my parents did, but they were unsure where to start and if it was even worth budgeting if I was not earning enough money.
I also hoped to get some insight on dealing with creditors for whom I can’t pay the monthly payment or even the minimum amount so I don’t ruin my credit score.
Mike.
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 it is a very prestigious addition to your resume.
I want to say that budgeting is super easy, and for the most part, it is.
Budgeting starts to get tricky 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.
This means that bills aren’t paid in full, including rent, groceries are unaffordable, or you go without something you need.
It’s important to remember that if you are finding that you are struggling to budget when you don’t earn enough money, you must prioritize where you are spending that money.
For example, if you earn $5000 monthly and create a budget where $5200 is needed to balance, you should decline Friday night entertainment with friends.
Perhaps opting for fun without the cash may be a better option, and lots of free community events are 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 may want to stay in debt longer, deal with creditors that become nasty, or even worse, damper their credit score alongside possible bankruptcy.
All of this can be avoided with the simple shifting of money and setting priorities for 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 uncertain.
These emotions are expected, and indeed, 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.
Someone reading this might be struggling, but for different reasons such as job loss, illness, and even divorce, which can setback those who have well-paying jobs but nothing saved up in the bank.
An emergency savings account is a must even if you have a 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 your budget, which means creating one or 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; without it, you won’t know anything about your money, only what you remember.
Once you factor in your budget categories and net income, you will know how much money you are short.
You will also know how much your overall debt load is as you have it broken down creditor by creditor.
By this, I mean 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, and you have no choice but to find a solution 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 of what areas of your budget you should reduce, such as cable, internet, and 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 you need to earn to get out of the debt cycle faster.
Some people prefer the debt snowball paying the minimum on the highest debt while packing it away on the smallest balances first.
Whatever you choose, make sure it works for your situation and that you don’t pick it because it worked for someone else.
Related:
Communicate with Creditors
One of the worst things you can do when deciding on what bills to pay first is ignore a statement until you have enough money to pay even the minimum amount.
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, prioritize your bills, and have an action plan (even if it is minimum payments), they will most likely 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 the money.
Lower Your Expenses
Thankfully keeping the stress of our temporary setback after buying our house led to our budgeting, frugal living more than we had before, and finally earning a higher 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 acquiring extra cash on the side and still can’t make it, then perhaps it’s time to look at your most significant expense.
For many, that is living expenses such as mortgage or rent.
Sell the house, buy a smaller home, condo, apartment, or townhouse, move in with someone, or rent a room.
Do whatever you must so you don’t lose it all, even if that means relocating to a new city, job, or career change.
Don’t be afraid of the future, be fearful of not doing anything about it while you can.
P.S.- Those little expenses add up quite quickly, so knock them on the head as soon as possible if you can live 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 is to 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 keeping 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 needed, but even then, some places may not offer such services.
Look out for yourself and if you see or hear an opportunity to make more money, then jump on that wagon and go for a ride.
I don’t know anyone complaining about earning more money, especially when they needed it.
Just because your financial advisor is the pizza delivery guy or gal doesn’t mean they don’t earn enough 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 you have to remember that it should not be your forever plan as long as you can work.
There are people on fixed incomes, disability, and for other health reasons who can’t get that second job but perhaps can find different ways to earn a bit more on the side when they can.
If earning minimum wage is suffocating you and what you want from life is more than you have options.
You go back to school, find a new job, upgrade your skills, and 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 U.K. was like taking a giant step backward.
Finding out my University Degree would need to be re-tested, securing only minimum wage 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.
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?