Are you struggling to survive on $1,000 a month?
Does it feel like the cost of living keeps going up, making it harder to get by?
Many people are in the same situation as you are.
A few years ago, I was too.
Back in 2007 at the height of the housing bubble I bought my first home.
It was one I couldn’t afford but I was approved for the mortgage anyway.
I quickly realized I was in trouble when I added up my monthly mortgage payment, utilities and homeowners association fee.
They totaled close to 90% of my take home pay.
I had a friend who was in need of a place to stay and he agreed to move in and I charged him rent.
But even with him paying rent, I was surviving on peanut butter and jelly sandwiches and putting just enough gas in my car to get me to work.
Add in me ignoring my finances and spending on my credit card, and my financial life was in trouble.
I wasn’t following a monthly budget, I was just spending as l pleased, not caring about the consequences.
My thinking was one day I’ll figure it all out.
But this kind of living led to a lot of stress.
I slowly became a different person, depressed and unmotivated.
My happiness was gone.
One day I decided to make a change.
I started to watch my spending and in the coming months, I slowly dug myself out of debt.
In this post, I share with you the steps you need to take to survive on $1,000 and work towards getting ahead with your finances.
How To Survive On $1,000 A Month
Trying To Live On $1,000 A Month
Recently I found the online game Spent and must say it was a blast from the past.
It took me back to the days of thinking through all my purchases, trying to survive on my income.
The premise of the game is that you’ve lost your job and house and are down to your last $1,000.
Can you to get by on $1,000 for a month?
As you play the game, you need to find a job, a place to live, buy food, and deal with everything else life throws at you.
The game only takes 10 minutes to play, so I suggest you try it out.
You can play a few different times as each time the scenarios are different.
Click on the image below to play the game.
When you are finished, you can read my experience below.
How To Live On $1,000 A Month: Lessons Learned
How did I do trying to live on $1,000 a month?
I failed to survive on $1,000.
I ended up running out of money after 12 days.
I thought I was smart about my spending decisions, but life kept throwing me curve balls.
I could have run away from the accident or not answered that collection call.
But I just couldn’t do it. I’m too honest!
The most striking thing that I learned from playing the game is how expensive it is for health insurance.
Many low income earners forgo health insurance because of the cost.
But if any issues come up, they will cost you much more money than if you were paying for health insurance each month.
It sounds simple to buy coverage, and from a strictly personal finance point of view, this is the right thing to do.
But many cannot afford it without forgoing something else.
There are so many tough choices that you need to make.
For anyone reading this post that is living close to the edge, realize you aren’t alone.
It can feel like this when you see others with the latest gadgets and vacation posts on Facebook.
But the truth is, over 60% of Americans cannot come up with $1,000 in the event of an emergency.
If this describes you, here is my advice for helping you to break from the cycle and start growing your wealth.
I realize it isn’t easy to change your financial situation.
But if you have a plan and stick with it, in time you will begin to see some changes for the positive.
10 Steps To Change Your Financial Situation
#1. See Where Your Money Is Going
You really need to set up a budget so you know where your money is going.
I remember the first time I sat down and made a budget.
My eyes were as big as saucers when I saw just how much money I was spending eating out at restaurants.
As I spent my money, I didn’t think $10 here and there really added up.
But it did.
By knowing just how much I spent eating out, I made some small changes and freed up a little bit of money.
Then I tackled the next area.
To get started with a budget, you have a few options.
The one that works for many is a basic spreadsheet budget.
Of course, if you want something automated, my favorite option is Tiller Money.
- Read now: Learn why people love Tiller Money
It’s a spreadsheet budget, but your spending is automatically pulled from your bank account, so all you have to do is update the category.
Thousands swear by it.
You can try it out by clicking the link below.
At the end of the day, it doesn’t matter which budget you choose, just the one that works for you.
Record your spending for a month so you can see exactly where your money is going.
As with my eating out, those little purchases can make a big difference.
Now I know even though a budget is important, some of you still aren’t interested in taking this first step.
The problem with this is that you will never really change your situation if you don’t understand where your money is going.
You will wake up 5, 10, or 20 years from now in the same or worse financial shape.
You don’t want that and I don’t want that for you.
So here is my compromise.
If you really aren’t interested in following a budget, try this out.
When there is something you want to buy, don’t buy it unless you need it to survive.
Otherwise put it back and wait a few days.
Chances are you will have forgotten about it or have realized you don’t want it any more.
Congratulations, you just saved yourself from wasted spending!
If you want to take this idea one step further, take some time to figure out what you value and what makes you happy.
Then spend your money on these things.
When I did this, it was revolutionary.
Before I did this I was buying new cars and other stuff.
I thought these things were making me happy, but they weren’t.
They were my way of trying to show off or fit in with others.
Once I figured out what I valued, I stopped buying stuff and found I had a lot more money left over at the end of the month.
- Read now: Learn how to live a life of wealth
And I didn’t miss these things.
In fact, I was happier because I was spending my money on the things that I really did enjoy.
#2. Have A Place To Call Home
Having decent shelter when you are trying to live on very little income isn’t easy.
Your first step should be to apply to your County Metropolitan Housing Association for help finding housing.
Just know that the process usually takes 6 – 12 months before you are offered a residence.
However, if you are willing to live in a non-desirable part of town, you might be able to find shelter sooner.
Going with this option, your rent is based on 30% of your income.
So if you have no income, then you have no rent.
If you earn $750 a month, your rent is $250 a month.
Plus you will have no basic utilities to pay.
Note that cable and internet are not considered a basic utility.
Another idea is to lower your housing costs by moving into a one bedroom apartment.
This doesn’t sound ideal, but it is a better option than finding a stranger for a roommate.
And don’t get me started on the bad financial possibilities with that.
While trying to live in a smaller apartment isn’t ideal, the less money you have to pay on housing costs makes a big difference.
Finally, you can consider moving back in with family members.
Again, this isn’t ideal.
But you have to make short term sacrifices to get back on your feet financially.
The more you can sacrifice now, the sooner you can start living a better life.
#3. Find Areas Where You Can Cut Back On Expenses
Once you see where your money is going, it is time to try to find ways to cut back.
Some options include buying alternatives, like store brands over name brands.
You can also limit your spending.
You can live off of Ramen noodles for a while.
Buy non-perishables like canned vegetables that will last. Take advantage of food stamps.
Can you lower your transportation costs?
If you have access to public transportation, buying passes to ride will be cheaper than making a monthly car payment, paying for car insurance, gas and maintenance.
Also, make note of any charitable organizations in your area.
Talk with them to learn where the food pantries are located or what organizations can help you with other expenses you have.
When it comes to clothing, all you need are the basics.
You don’t need a lot as your money is more important spent on food and shelter.
For buying clothes you do need, your first stop should be thrift stores.
There you can get good quality clothes for very little money.
It may not be glamorous, but don’t worry what others think and be proud of who you are and where you are going.
As I mentioned earlier, when I was struggling to get by, I was eating peanut butter and jelly sandwiches for lunch every day for months and even for dinner too.
#4. Cancel Unused Expenses
Do you still have a gym membership that you never use?
Maybe get magazines in the mail you never read?
You can save money by ending these subscriptions.
And thanks to Trim, it gets done for you!
Trim will review your expenses and find bills that you can cancel.
They will also scan your bills, including your cable and internet bills and work with you to get a better price than what you are paying.
In fact, they save the average user $30 a month on their cable bill.
It’s a great way to get a quick review of your expenses.
You can learn more by clicking the image below.
#5. Take A Look At Your Big Expenses
This includes your mortgage and student loans.
Can you refinance your student loans to save money?
Maybe refinance your mortgage as well?
What about lowering your insurance premium?
Lowering these large expenses can have a dramatic impact on your monthly cash flow.
They will give you some breathing room because you will free up a few hundred dollars each month right away.
For example, let’s look at auto insurance.
While you can call your insurance agent and try to get your premium lowered, there is a better option.
It’s called Gabi.
When you use Gabi, they will compare your policy to 40 other insurance providers and show you the ones that will save you the most money.
- Read now: Click here to learn more about Gabi
You then pick the provider you want and save money.
The average Gabi user saves $960 a year!
Click the link below to see how much money you will save.
Another possible option is to challenge your property tax assessment.
If you are paying a lot more in property tax on a similar size house compared to your neighbors, you can save a good chunk of money.
And don’t forget about health insurance.
This is a big expense as well.
If you aren’t covered by health insurance at work, be sure to shop around for coverage to try to save the most money.
Even then, because of the high cost of health insurance, you might be tempted to pass on coverage.
This isn’t ideal as you never know when you may need it.
In fact, you might be able to look into and get Medicare.
If you are eligible, your health insurance expenses will be drastically lower.
#6. Make Saving A Priority
When it comes to saving money, make sure you save first.
Too many times people spend first and save what is left over.
It doesn’t take a genius to see that if you are spending all the money you earn you won’t be able to save what is left.
Instead, make it a point to save when you get paid.
You don’t have to save a lot of money, just save something to start building an emergency fund and improve your finances.
How can you save money when money is tight? Here are a few options.
- Inquire at work. Many times your employer will let you split your direct deposit between banks. If your employer allows this, have the majority of your paycheck deposited into your checking account and have a smaller amount transferred into your savings account.
- Set up automatic transfers. Log on to your bank account and create an ongoing transfer. Make it occur once a month for $10. Then the money will be saved without you doing anything.
Where should you save your money?
My favorite is CIT Bank.
They offer an online savings account that usually has one of the highest yields in the country.
- Read now: Click here to learn why I love CIT Bank
By having a high interest rate, your savings will grow faster.
To open your free savings account, click the link below.
By making saving money a habit, it will be easier to increase the amount you save down the road as your income increases.
#7. Find A Second Source Of Income
You don’t need to work a low paying job here.
With the internet, you can turn just about any skill, hobby or talent into a side hustle.
You can easily earn anywhere from an extra $100 to $1,000 or more per month.
It is up to you how much effort you want to put into it.
Just remember, the more effort you do put into it, the more money you can potentially make.
Think for a minute what that extra income would mean to you.
Would it allow you start saving money? Maybe help you pay off debt?
The bottom line is, the more income you have coming in, the easier it will be to make ends meet.
Here are just a few ideas to get you started.
One popular side hustle is taking online surveys.
You get paid a few dollars to offer your opinion on things.
If you do it right, you could make an extra $100 or more a month.
The best survey site to try is Survey Junkie.
They are legit and pay a competitive rate per survey.
You can click the link below to get started.
Another option to try out is Swagbucks.
This is site is my favorite because you can do other things to earn money in addition to surveys.
- Read now: Click here to learn more about Swagbucks
For example, you can play games, watch videos and earn cash back for shopping online.
When you click the link below to sign up, you will get a $10 bonus.
These are just a few ideas to get you thinking.
I encourage you to read the posts below to learn more great ways to make extra money on the side.
- Read now: Find over 50 ideas to start making money today
- Read now: Learn 17 ways to make $1,000 fast
#8. Be Smart When Spending Money
Advertisers trick us into spending money.
They get us emotionally connected to a product so we think we need it.
Then a few days later, we realize we didn’t need it and suffer from buyer’s remorse.
Luckily to beat advertisers at their game, we have a trick we can use.
I call it the pause test.
All you have to do is wait before you buy something.
For example, when you see something you want, wait a few days before you buy it.
In many cases, you will forget about the item or realize you don’t really want it.
When this happens, congratulate yourself as you just saved yourself some money.
While this works for things you don’t need, what about things you do need?
Here are a couple tips to help you save money.
- Ask for a discount. You’ll be amazed at how many times this works. Simply ask if there are any coupons or discounts that can be applied to your purchase. You can even ask if there is a discount for paying with cash.
- Find coupon codes online. Before you buy, look for a discount online by searching for the company and the word ‘coupon’.
- Use cash back websites. You can get up to 25% cash back on your purchases when you shop through Rakuten. As a bonus, new members get a free $10 gift card just for joining.
By taking 5 minutes to be a smarter shopper, you can easily save yourself a lot money.
#9. Start Investing
Putting money into a savings account is great and is critical for covering you in case of an emergency.
But eventually you are going to have to start investing money into the stock market.
I know some of you might be scared to invest, but investing isn’t complicated.
The hardest part of it is keeping your emotions out of your investment decisions.
To be successful as an investor, you buy low cost investments and add money on a regular basis.
The only catch is you don’t sell, even if the market is tanking.
Most investors will sell, because they allow emotions to make their decisions for them.
You need to overcome this fear and keep investing.
Look back to the last crash in 2008.
Most investors fled after losing a lot of money and stayed out of the market for years.
But if you stayed invested through the end of 2019, you would have made all your losses back and then more than tripled your money.
Even in 2020 when the market crashed, it came roaring back.
For example, let’s say you invested $5,000 in the stock market at the start of 2008.
That year the market was down 38% and you would have been left with just $3,075.
But if you stayed invested, you would have made your money back by 2013.
And by the end of 2020, you would have close to $13,000.
The key is to stay invested!
The best option for people on a tight budget to start investing is Acorns.
The reason I suggest this broker is because of their round up feature.
You can invest a set amount each month, as little as $5.
Or you can skip this option and just invest your spare change.
In this case, when you buy something, your purchase will get rounded up to the next dollar and that amount will get invested for you.
So if you buy groceries for $35.18, Acorns will take $0.82 from your linked bank account and invest it for you.
Now before you think saving your spare change won’t add up, understand this.
When I did this, I had over $750 in a year from round ups alone.
A few other readers told me they had close to $1,000 from round ups as well.
Don’t dismiss this idea thinking a few cents here and there won’t add up.
You can get started with Acorns and get $5 in the process when click the link below.
Everyone experiences setbacks in life.
Learn to not get down when a setback happens and instead grow and become a better person from it.
Check out the video below for some perspective and realize that no matter what setback you might be experiencing you still have it better than most.
Work on improving your outlook so you see the positive in every situation.
It isn’t easy and you will never be perfect.
But you will be happier and uncover more opportunities in life when you do this.
Living on $1,000 a month is not easy and your quality of life isn’t going to be ideal.
But if you are in this situation, you don’t have to settle and accept it.
There are things you can do to change your circumstances.
You just have to be willing to put in the effort.
If you can take steps to better your situation, you will begin to see changes.
Use those achievements as motivation to keep pushing through and reaching your goals.
If you make no changes, your current life with the stress and unhappiness will be your life forever.
And without making a change, the stress and unhappiness will grow along with your debt.
Make the sacrifice and better your life.
For me, I made the sacrifices.
I made it a point to put $10 away each month in a savings account with CIT Bank.
I shopped for store brand groceries. I found the grocery store that offered the lowest prices in my area.
I didn’t buy new clothes for a few years and went without the latest smartphone.
Other things I did included:
- I stopped using my dryer and put my washed clothes on a drying rack.
- I plugged all my electronics into a power strip and when I left for work, I would unplug that to save electricity.
- I replaced my light bulbs with higher efficiency LED bulbs to use less energy.
- I shopped cell phone plans to find a cheaper option.
- I took money I received from tax returns, my birthday and Christmas and used that to pay down my credit cards. Once the debt was gone, used that money to build up my emergency fund.
- I found things around the house of value that I didn’t use and sold them on eBay and Craigslist.
I also worked hard at my job and earned a few raises as the economy turned around a few years later.
It all paid off.
Shortly after getting my second raise, my friend moved out to live with his girlfriend.
I was now on the hook for everything.
Luckily, I was able to afford to live on my own through all the sacrifices I made.
Money was still tight, but I was saving money each month and paid off my debt.
This allowed me to keep improving my financial situation and get to a point where money was no longer a stress in my life.
Those lessons I learned during that difficult time served me well.
I became a smarter consumer and a great saver.
It allowed me to leave my employer in 2013 to work for myself.
You can overcome this.
It will be hard and it will take time.
But you will come out the other side stronger and more confident.
This will pay off in more ways than just financially in the future.
And remember, the sacrifices you make today are not permanent.
Sacrifice a little now and be better off for many years to come.