When you’re down on your luck, it is essential to make sure that you focus on the essentials first, the Top o’ your Budget. These are the items that you must put at the top of your budget, no matter what financial situation you are in. As Dave Ramsey says, you have to fund your 4 walls before you can tackle anything else. The following are the primary places you need to allocate your funds when you’re slim on funds.
- Food. You cannot survive without food and water. This is an absolute must. If you have only a dollar, or a million dollars, this must be number one on your budget. However, keep in mind that this does not mean it should be your largest part of your budget, nor that you should be buying Kobe Beef if you make $10,000 a year. It just means to buy enough food to survive when you have to stretch your budget. This could be just rice and beans to sustain you for a week or month at a time.
- Utilities – Lights, heat and water. You need your basic utilities to get warm, stay warm, and survive. In the cold of winter in Maine, these are absolutely necessities. This does not mean your $120 cell phone bill, or $135 for cable and internet. This portion is for only the necessities. Everything else must be placed further down the budget.
- Housing – Mortgage or Rent. Utilities are only as good as the shelter you keep. Your next step is to keep your mortgage current, or pay your monthly rent. When necessary, you may have to reduce your shelter to keep it within your budget. Remember, this is only temporary, and it is an extreme sacrifice when needed.
- Clothing. You need to have the clothes on your back, along with clothing for your family to keep on living and being decent in today’s society. Unless you live in a nudist colony, then you can skip this one. But let’s just assume that you don’t, and you do need clothes. Again, this doesn’t mean the newest suit from Gucci or Armani. It means going to consignment shops, Salvation Army’s, Goodwill, or other second hand shops to find the necessities to stay clothed.
- Transportation. This could be something so simple as a bicycle, a bus/train pass, or even walking. But it could also mean a beater car, you buy for $500 and drive until you can save up money to buy a better vehicle. The whole point of transportation while you are broke is getting from Point A to Point B, and that is only to get to where you generate income. If you are driving, the portion of your transportation should also include gas, registration and basic insurance, the latter so that if you get into any accidents or pulled over, you are not digging yourself into a deeper hole with fees.
And that’s the top of your budget. After these, you can allocate to what you need to keep your bills paid, most important to least.
Question: What do you think is important to fund while down your luck?