The $200 Budget Habit That Saved Us From Being in Debt and Paying Interest

When we got married my husband was a student. Every month, we had around $200 left after paying the rent and the required health insurance payment. We had already decided not to to go into debt or pay interest but we also wanted to live well on what he was making as a Research Assistant. I desperately needed a budget to fit everything, from food to gas within that $200 budget. So I came up with a budget that had stayed with us for almost two decades and helped to us to live a debt and interest free life to this day alhamdulillah.

You want a budget that’s simple and realistic so you will use it. Let’s go through the following steps to create a simple, workable budget. You can use a piece of paper, a spreadsheet, or a budgeting software to create your own budget. I use a notebook for our budget in my home.

Start with your income-

Add up your expected monthly income plus any side income. If you are paid at odd intervals, just get as closes as you can get and add the amount. For uncertain amounts, choose a number that’s conservatively low. You can adjust the number later.

list your expenses

Create a number of categories where you spend regularly and a special category for miscellaneous and occasional purchases.

If you’re doing it on paper, just use general categories. If you’re using software, you could create more categories as you need them.

I tend to use these general categories:

  • Debt payoff – Paying off any kind of debt is the highest priority as a muslim. It will free up your income for future opportunities when you are not burdened with the monthly payments and interest.
  • Sadaqah– Add what you spend regularly, for example, sponsoring an orphan every month.
  • Home – Rent.
  • Utilities – Monthly bills for water, electricity, gas, phone, internet, cable.
  • Car – Car payments, gas, insurance, repairs, registration, inspection.
  • Healthcare-Doctor visits and prescriptions. Also add the supplements that you take regularly.
  • gas
  • Groceries- All food purchases and household supplies.
  • Classes– The classes that you and your family members take rugularly.
  • School supplies
  • Memberships
  • clothes
  • Pets
  • Miscellaneous– One time big purchase, gifts, emergencies, travel expenses, One time sadaqah and dining outs etc.

I hope you can create your own budget now insha Allah.


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