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Problems of a Restricted Budget

Living with and operating from a restricted budget can be challenging. There are many things that others take for granted which you may no longer be able to afford on your budget. Having a restricted budget, however, is often the precursor for instilling frugal financial habits and can prompt creativity. As with any personal money management, consider the balance of income, expenditure and savings.

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One of the key items in creating any form of personal budget is income -- determining the total amount of money being brought into your house. Your planned expenditures cannot exceed what you can afford. You may have to find creative ways to supplement your income with money -- perhaps from activities such as garage sales.


Once you determine total income, identify outgoing money. This helps reduce the likelihood of your expenditures exceeding your income, which is the root cause of debt and one of the most difficult parts of working to a restricted budget. In addition to accounting for regular payments, such as bills, you also need to include unplanned social events in your budget. One of the main drawbacks of a restricted budget is that these types of social events are no longer essential spending.


Though saving money may be challenging, saving for emergencies is important. Emphasise saving as part of your restricted budget.

Unique Challenges

One of the biggest problems of working with a restrictive budget is exercising restraint and having a view of the wider financial picture in both the short and long term. Having a detailed understanding of your budget and the self-restraint to stick to it require a strong will. A restricted budget involves making sacrifices in your expenditures and learning to be creative in income and spending.

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About the Author

Jemma Smith has been writing since 2004 and has been providing online content, articles and informative guides since 2007 for financial companies such as and Life Insure. She holds a Bachelor of Arts in psychology and sociology awarded with distinction.

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