This series of articles from Living Cheap helps provides a useful guide to how to live life on a low income. They are ideal for those of us living on benefits, although not all of the tips will help all of us. Living on a low income needs planning, and the ten tips will help you plan not just for the everyday, but also how to deal with financial emergencies.
Number 4 - Know Your Income
Ok, so how much do you really earn? Do you really know? Many of the tips for saving money leave some people looking bewildered and saying "I'm not doing that just to save a fiver!". If that sounds like you then try this experiment:
A - sit down with a cup of tea and a notepad and calculator and work out exactly how many hours you work in a year. Hold on - it's not just that simple. Add to your known working hours the amount of time you spend travelling to and from work, whether that be walking to the bus stop, driving or whatever. Also add any work that you do at home and any time you have to spend in work related social situations. Do you have to take clients out for meals and drinks? Add it in there. Do you have to spend any time shopping for work supplies? Add it in. Any time you can think of that counts towards your work life, throw it all in the pot.
B - now, turn over the page and work out how much money you earn in a year, this includes any benefits you get. Take a look at your payslip. It should all be there. Once you have a figure, subtract from it an tax you pay (also usually on your payslip), any travel to work costs (including fuel, servicing costs, new tyres etc), any work wear costs such as new trousers and shirts and ties etc. Do you have a family and need to pay for childcare so you can go to work? If so, subtract that too. Anything you can think of that you have to pay for in order to be able to go to work, subtract it from what you earn.
C - now, you should have a bottom line amount of money you bring home every year. You should also have a total number of hours. Divide the money by the time. You now have an hourly rate figure and it probably looks quote pitiful. I know mine does.
So, what do you do with the above information? Well, you can use your hourly rate as a comparison for everything you want to spend money on. Do you want to go out and buy the latest gadget? Well, why not sit down and covert the cost into hours using your hourly rate above. The number you come up with is the number of hours you will have to work to buy that gadget. It works in reverse too. Do you have a money saving idea? Work out how many hours of work you will save yourself by saving that cash. You will soon see that some of the smaller money saving tips make more sense than you thought they did.'