With the rising cost of living, it can be hard to keep up with your bills. You may wonder not only how you’ll pay for groceries this month, where you’ll get money for gas, but also how to budget when you’re broke.
All these extra expenses and more are adding up quickly, making balancing your budget difficult. But don’t worry, there’s an easy way out.
There are so many articles about how to save money, but what if you’re already living paycheck to paycheck? I know that it’s difficult because of the economy and everything around us, but we have to live our lives as best as possible.
Sometimes, people don’t realize they’re broke until their bills pile up. It can seem like a never-ending cycle, and sometimes, it looks like there is no way out.
But there is! There are ways to get back on track and find happiness in our lives again!
Follow the steps on how to budget when you’re broke for 12 steps to having more money. It doesn’t take much time, is relatively easy to do, and will make you feel much less stressed.
Find Ways To Earn Quick Cash
It would be best to have some cash before tackling any more of these steps. A nice stockpile of extra money in your bank account to pay for necessities so you can get out of this pinch.
Look for a side hustle. Sell some unused items, mow lawns, or babysit children. You can also ask your employer if they have any other opportunities you might be qualified for – there are often extra hours that need to be filled at work. These types of positions usually come with pay increases as well.
To make a quick buck, you have to be creative. People use many different ideas to get money quickly, and it is up to you which one will work best for your needs.
There are always ways to get more money, and whether that means finding a second job or mowing lawns is up to you. Perhaps the best option is both – find something with flexible hours for your day gig while moonlighting at night!
There are many ways of earning extra cash these days: working overtime on your 9-5, picking up freelance work online, baking cookies for special occasions,…the list goes on. The real question concerns what kind of balance between time and the extra income works best for you.
Stop Using Credit Cards
This is the vicious cycle you’re in. You have no money, so you use credit cards for everyday needs like food or your electric bill. Then the interest builds on those credit cards, and you pay minimum payments.
The merry-go-round stops here. Now that you have a nice little pile of cash stop using those credit cards. Cut them up, put them in a water bowl in the freezer, or give them to your Grammy. Whatever you need to do to stop using them.
Start The Cash Envelope System
The cash envelope system is a simple yet effective budgeting strategy that provides constant access to your monthly income. Keep your money stored in actual envelopes and set aside one for each category of spending- the grocery bill, entertainment, etc.- so you can be more mindful about how much or little remains after making purchases from said categories.
This doesn’t mean you must carry envelopes everywhere (unless you want to). You can turn your existing wallet into a cash envelope wallet to make cash management more effortless.
This is an excellent way to control your spending and be aware of every penny spent while trying to regain your life and give you some breathing room.
Prioritize Your Bills
First things first: take care of your four walls. Make sure your rent or mortgage is paid. Then, catch up or settle on your electric and heat, car payment, and car insurance. They will impound your car if you don’t pay your car insurance in my state.
Then, make sure you have food and gas.
Next, you’ll want to go over all your bills and see what needs to be paid first. Look at your cell phone bill or other regular payments from your checking account. If needed, set up a payment schedule based on when you get paid so that if any of the payments are late, there is some time for catch-up in case they were not already caught due to low funds available at the beginning of this pay cycle.
Call those bill companies immediately if you’ve been paying your bills late. Then, write down the due dates so you don’t fall further behind. They may be willing to work with you or set up a payment plan.
Be honest with them and let them know you’re working hard to catch up and have a strict budget and a solid plan.
Look Back At Last Months Spending
You are in charge of your money, and it’s up to you to take care of it. Tracking your spending is essential in ensuring you can budget well for the future.
Take time this month to go over your income and expenses so that you can make sure that everything balances out just right. If something doesn’t make sense, you can always contact your bank or credit card company to see if they can adjust any of the charges.
Most times, we spend more on things that are not important. This month’s expenses can be looked at by returning to the previous months. Watch out for variable expenses that don’t come out at the same time each month or different intervals.
Look closely at unnecessary expenses. You might have bought some things that aren’t necessary for this month. This will help you see how much money is gone and free up money that can be used in other areas. The hardest part is figuring out what you need and don’t. You might even have some money left.
You will need to take note of these things to know where you spend your money and how to budget when you’re broke.
Prepare For Rain
Once your bills are caught up and you’re not in danger of having your electricity turned off, ensure you’re prepared for an emergency.
Use that side hustle money to save for a rainy day. Even if you have $1,000 in a savings account and your car breaks down with a bill of $1200, you at least have most of that and can muster up another $200.
Plan for the unexpected expenses that will inevitably come up, and know what you’ll do if they’re not planned for. There’s nothing worse than asking Grammy for your credit card back because your car broke down on the side of the road or realizing a pipe burst at home just before payday, so be sure to have some cash saved up for those emergencies.
The most important thing you can do to save your finances if a financial setback is to have an emergency fund.
Setbacks are inevitable, and if you’re not prepared for them, they could devastate your budget or even ruin it altogether one step closer when learning how to budget when you’re broke.
Change Your Money Mindset
What is your money mindset? Your unique beliefs and attitude towards money drive your decisions about saving, spending and handling it.
The truth is that your personal attitude towards how you handle money has an enormous effect on what will happen with it for you – this mindset can make or break everything else about your finances!
The term “money mindset” refers not only to our attitudes toward earning and spending but also includes any beliefs we may hold about ourselves as well as those around us when they come into contact with anything related at all – even if tangentially associated with wealth management decisions such as saving versus investing; taking out a loan versus borrowing; taking a risk or not.
The first step is to examine the beliefs and attitudes that you hold toward money and those of people around you in relation to it.
Negotiate All Interest Rates And Payments
Communicating with creditors about your challenging financial situation might be worthwhile. I understand that being vulnerable to people you owe money to might be uncomfortable, but doing so could very well work to your advantage and put you in a better emotional place to move forward.
Consider asking about lower interest rates, deferments, and payment plans to relieve some of the stress you’re feeling about your finances.
Cut Out Any Unnecessary Spending
If you’re looking to cut back on your budget, start by examining which items in your life are weighing down the most.
For some people, it may be coffee; for others, it might be going out with friends or buying new clothes all the time. Make a list and then look at each item individually: do I really need this?
Could I make an exception here and there if necessary? And don’t forget that food is one of our top expenditures- so examine how much we spend on groceries (or even eating out) every month when trying to save money!
If you’re spending (or overspending) on unnecessary things, this might be why you’re broke! It might be time to adopt some more frugal life hacks. These will help you when learning how to budget when you’re broke.
Ignore Long Term Savings And Investments
This isn’t forever, just for now. Right this instant, your goal is to reduce financial stress and gain control of your money habits. Long-term savings and investments are significant, but you need to focus on eliminating that money stress right now.
This means ignoring the long-term goals of building a retirement fund or buying that new car. When it comes down to it, getting out of the money hole is more important than investing right now.
Come back to this when you feel more stable.
Create A Monthly Budget
Start with tracking your spending. Review the last month and consider following forward for 30 days to see where your money goes.
What do you need to cut down on? Do you really need that daily $25 Starbucks run, or can you get by without it, even if it means making your coffee at home in the morning instead? Cutting out small expenses will add up over time and save you money so that you’ll have some leftovers to put towards your debt or save for emergencies.
You’ll need to know how much you make and your monthly expenses to create it. Once the numbers have been crunched, be sure that there’s enough money for not only the bills that need to be paid but the ability to tackle the financial black hole and the one thing that will suck the life out of any possibility of building wealth – debts.
Keep a realistic budget and use it to set some cash aside for each of your expenses, like $25 if you’re eating cheap or more than that if you can afford it. Use those numbers as guides so things don’t get out of hand because they’re probably not going to work otherwise.
The most important part about getting through any financial situation is being smart when managing money. These budgets must be achievable; otherwise, people may fall back into old habits instead of moving forward with their money goals and how to budget when you’re broke.
Getting rid of debt is the best way. I know how to budget when you’re broke. Eliminating all those payments frees up hundreds of dollars every month. Imagine what you could do if you didn’t owe anyone anything.
If you have a lot of credit card debt, starting with that and paying it off as quickly as possible can be a good idea. You should never carry any balance on any account – credit card companies’ interest rates are astronomical! Plus, it can hurt your credit score.
Debt is something that many people face today in America: from credit cards to student loans – it’s not such an easy task to manage this on top of everything else we’re juggling nowadays.
So how do you start? You’ll have to devise a well-thought-out plan or method that best suits you (every person has different needs when tackling their financial burdens head-on).
There are two recommended methods to help break things down – Debt Snowball and Debt Avalanche.
The first – Snowball – is a more forgiving approach that helps you to reduce your debt by starting with the smallest balance due then moving on to the next highest until all are taken care of. This awards you some quick wins and will keep you motivated.
The second method, “Avalanche,” as it’s called – starts from the highest interest rate down to the lowest.
Each is just a personal preference.
Whatever you choose, don’t risk your finances unraveling by ignoring your debt. Late fees and interest can turn a small debt into an overwhelming one. Your debts should be your priority, so pick the right repayment plan for yourself with our helpful tips!
Final Thoughts on How To Budget Smart When You’re Stupid Broke
So, have you started practicing these tips to get your financial stability back on track? If not, the time is now. The more hard work and dedication that goes into making these changes in your life and habits, the better off you’ll be financially in just a few months.
There are many ways to budget when you’re broke. Some of them include catching up on your bills, using cash to stay within the bounds of what you have, being frugal and creative with how you use your money, and paying off debt.
Decide on some financial goals for yourself and carry through.
If you can’t afford groceries and need food to feed your family, please look for a food pantry near you here: Feeding America.
If this sounds like it applies to you, then start practicing these personal finance tips today so that financial stability can be achieved sooner rather than later.