9 Effective Ways to Manage Household Finances on a $300 Salary

Finding ways to manage household finances on a $300 salary can be very challenging. Especially if the number of family members and the demands for existing needs continue to grow.

Even so, mediocre income does not mean it is impossible to meet monthly needs. Here are steps and techniques that you can try to apply in managing household finances.

1. Change  Mindset

The ability to manage finances is important to learn for every married couple 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  mindset  in order to better plan their family finances. Like what? Check out the following explanation.

Behavior towards money

The first mindset  that needs to change is the way you behave with money. There is a concrete example for this case quoted from the book  The Psychology of Money . The book exemplifies two workers with different professions, namely a janitor who graduated from junior high school and a high-ranking official who graduated from Harvard.

Janitors have low wages that are only enough to meet daily needs for one month, while high-ranking officials have large salaries tens of times that of janitors.

However, due to adopting a simple lifestyle and consistent saving, the janitor was able to send his children to as high a school as possible until one of them managed to graduate from Harvard. In fact, janitors can live peacefully in old age with savings reaching millions of dollars at the end of their lives.

On the other hand, high officials who are thick with very extravagant behavior and luxurious lifestyles actually owe a lot of their lives. He went bankrupt due to being in debt until he finally spent his old age in a small cottage in the middle of the mountain.

From the example above, it can be concluded that managing money is not determined by high intellectuals alone, but how we treat money. It doesn’t have to be a large amount of money, even the slightest amount of money if owned by someone who behaves well with his own finances will certainly give optimal results.

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Know the limits

The second mindset  that you need to instill in order to be able to manage your finances properly is to recognize your own financial limitations. People who recognize their financial limits will be able to control themselves from unnecessary expenses. It can also ‘force’ itself to know that it is enough so that it does not continue to compare itself with other people’s financial circumstances.

Cultivate self-awareness

Self-  awareness  is an  important mindset  that also needs to be instilled in oneself in order to manage finances wisely. This awareness can be built by training to strengthen determination every day to consistently achieve healthy finances.

After changing  your mindset , it will be easier for you to start implementing how to manage household finances with a salary of $300. Here are other steps you can try.

2. Recognize Financial Conditions

Try to find out what your current financial condition is. The trick is to record all the assets you have plus the existing debt.

The 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 buildings, businesses or investments that are being carried out, to all other valuable objects that you can later resell at high prices, such as private vehicles and so on.

The debt itself can be in the form of a loan in the form of money or credit for the purchase of goods. If it has been recorded, try to compare the value between the total value of your property and the debt you have. Your finances are classified as good if the value of your debt is much lower than your total assets and vice versa.

3. Set Goals

Without a financial goal you will potentially be impulsive in spending money. As a result, you will find it difficult to control expenses and not know where the money is allocated. Therefore, it is very important to set realistic goals according to your abilities and limitations so that it will be easier to reach the target.

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Instead of setting big goals in the long term, you can start creating financial goals gradually starting from short, medium, and long term financial planning goals. For example, in the short term of the next 3 months, you aim to reduce unnecessary expenses and save at least $30 a month.

Then, continue the goal for the medium term 6 months to a year. Gradual goals like this will help you more easily achieve long-term financial goals like paying off debt or furnishing your home.

4. Create a Routine Expense List

After identifying your financial condition and setting realistic goals, the next step is to make a list of regular expenses for the month. Starting from the most priority expenditure to the least priority. 

This monthly routine expense record is very important to know where your money is allocated. This list also helps you avoid spending more than your income, and evaluate your monthly needs more wisely.  

5. Differentiate Wants and Needs

In making a list of routine expenses, you also need to understand the difference between wants and needs. Desire is usually temporary, not urgent or deferred, and often aims to fulfill pleasure. For example, shopping for luxury goods or doing other entertainment things.

Meanwhile, needs are more related to the main things that must be fulfilled, are immediate, and aim to facilitate daily activities. For example, the need for food, housing, education, transportation, to monthly bills such as water, internet, and electricity costs.

6. Create a Budget Plan

After implementing the steps above, you can start planning a monthly budget as a way to manage household finances with a salary of $300. There are many financial budgeting methods that you can use, one of which is the 10:20:30:40 formula.

This method classifies the largest percentage of the budget for basic needs, then prioritizes other household needs from the most important to the least important, but still must be issued. For example, 40% for routine household expenses such as food and electricity, then 30% for installments or debt, 20% for investment, savings, or emergency funds, and the remaining 10% for alms or social costs.

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7. Prepare an Emergency Fund

In planning a monthly budget, don’t forget to set aside an emergency fund. This preparation is important to anticipate any unexpected situations, such as accidents to sudden home renovations, so that you are better prepared to deal with them. For example, when you budget 20% for investment and savings costs, then prepare 5-10 percent for an emergency fund.

Ideally, each household should prepare an emergency fund of at least 6 times the total monthly expenditure for married families who do not have children, then 9 times the total monthly expenditure for married families with 1 child, and so on.

8. Do It Early in the Month and Stay Consistent

Make sure you immediately allocate the entire budget plan as soon as you receive your salary at the beginning of the month and try to always consistently run it. Getting used to not procrastinating paying bills or your investment budget will save you from cutting your income for unnecessary things. 

Consistency is also important because no one actually succeeds in achieving significant financial goals without this, considering that life needs change over time. In saving and investing, we recommend using a separate account by activating the automatic withdrawal feature.

9. Perform Financial Evaluation Periodically

After implementing all the steps above, don’t forget to do a financial evaluation on a regular basis every month. Check and compare assets and debts, income and expenses, and check your financial capabilities. Through this evaluation, you can easily detect whether your household’s financial condition is healthy or not.

In the end, healthy finances show that you have successfully implemented how to manage household finances with a salary of $300. So, ready to try?

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