How to Live on $10,000 a Year

Around 37 million people in the United States earn less than $10,000 per year. That's around $830 every month, and it is entirely possible to live on that if you're frugal, even with rent and other bills to pay. It means watching your spending very closely and relying on cash, not credit, to sustain your lifestyle.


Step 1: Live With Others

There are very many towns or cities where $830 a month can get you a decent apartment or house while still leaving money for food, necessities and entertainment. Generally, you should be spending around 30 percent of your monthly income on rent. That's about $250 if you earn $10,000 annually. If you are unable to find your own place for $250, consider living with others. In larger cities this is the norm. New York, for instance, has more than 8.4 million residents and only just more than 3 million occupied residencies. That means that most people are sharing either with a roommate, their parents, a sibling or with a significant other. The good news is that if you're willing to live with others, your cost of living can drop significantly. It could even be zero if your parents won't make you pay much rent. Cost Savings: Up to $250 a month.


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Step 2: Avoid Credit Cards and Loans

This sounds like a no-brainer. Obviously if you are living on $830 a month, your costs need to be small. But it's not as easy as you might think. Many people are dependent on credit cards, payday loans or personal loans from friends to cover their day-to-day expenses and to allow themselves to indulge from time to time. However, this is dangerous because you would essentially be spending more than you are earning and will find it hard to dig yourself out of that hole.


Step 3: Cut Costs

A smarter approach is to cut back on your monthly expenses. Consider using public transport, which is often a fraction of the cost of using your own vehicle. You could save more than 50 percent of your income by not having to pay a car note, fuel and insurance. You can also start shopping at supermarkets that participate in coupon deals or that offer specials like buy-one, get-one free. For many Americans, eating out everyday is just not an option. Not only is that costly, but you'll find that the benefits of eating fresh produce at home far outweigh the seemingly cheap and easy of the local fast food joint. You could save quite a lot of money simply by buying in bulk, taking advantage of special deals or sharing meals with friends and family. In fact, according to research done by University of Pennsylvania, you can save up to 23% a month by avoiding impulse shopping. Make a list and stick to it.


Step 4: Stick to a Budget

Anyone wishing to save money or to live more frugally should make a budget and stick to it, however this is even more important if you're living on less than $10,000 a month. A budget is a tool for making sure that you aren't spending more than you have. Allocate an amount to each main area of your life: groceries, dining out, rent, transportation, entertainment, health or personal expenses and so on. Keep important ratios in mind. For instance, as mentioned before your rent shouldn't exceed more than 30% of your income and likewise your entertainment costs shouldn't be more than 25 to 30% of your total output. By developing a budget you'll be able to easily see where you can cut back on costs and juggle money around.


Keep receipts of everything that you buy. At the end of each day, total up the receipts and compare the amount you've spent to the amount that you have available for that week or month. Totalling your expenses daily will help keep you on budget.