Sadly, many of us have been in this situation before or are still in it: the realization that there is no money. You are poor, broke, money is very tight.
How do you get out of it? Where does one start? It’s a tough situation that requires rational, level-headed thinking and a few deep breaths.
As the saying goes, taking the first step is the hardest and that first cut is the deepest. It might be painful and a hard pill to swallow, but you are taking steps to fixing it, which is excellent.
So, without further ado, I have listed 15 tips to help you get started on taking control of your financial situation.
1. Set Financial Goals
Here is the thing: if you don’t have goals or a plan for your money, you don’t really care where your money goes. You live in the moment and have no motivation to save money or even think about money.
Money is a fickle thing and if you don’t allocate every dollar, you will end up losing that dollar to some frivolous iced coffee drink and pair of earrings you really don’t need.
2. Stop Keeping Up Appearances
You buy the newest fashion, you vacation at the most popular places, you eat at the best restaurants and end up avoiding your bills with great skill.
You throw yourself into great financial trouble and for what purpose? Just to keep up with the Jones’?
Stop caring about what other people think you should own or do and start asking yourself what you want. What makes you happy?
Obviously not being broke makes you happy. Figure out who you are and what you want out of life. And let the Jones’ squander away their own money. Be happy for them, but don’t try to be like them. It’s never as pretty behind the scenes as they try to make you believe.
3. Ask for More Shifts at Work
One reason you might be broke is because you don’t make enough money to cover your most essential costs of living.
If that is the case, then ask for more shifts at your current job. Or if that doesn’t work out, look for a second job to help you cover those bills.
4. Stop Working Too Much
A friend of mine once told me that he makes a lot less money in his current job, but he also saves a lot more now than he did while working at his previous, better paying job.
During his last job he was miserable. He worked long, grueling hours, but was compensated by a large paycheck, which was supposed to fix everything else.
He took that money and treated himself. He worked hard for it, so he deserved all those nice things he always wanted. That sense of deserving plus the long, hard hours at work were the components for a perfect financial storm.
Even I fell into that trap many years ago, working an awful job during the week and treating myself on the weekends.
I was supposed to take the extra money and put it towards paying down my student loan, except many times I noticed there was no money left over to make those extra payments.
To make this long story short, there exists a danger in working too much: we want to feel like it’s actually worth all the stress, plus we pay for more conveniences, because we don’t have the time to cook or clean or be functional human beings outside that office building/work site.
5. Make More than Minimum Payments
You are broke, because those interest charges keep you from making any progress on paying off your debt.
Making those minimum payments keeps you from getting charged with a penalty fee, but in reality those payments are only the cost of the current interest rate plus a bit more.
So, technically you are keeping your debt at a constant amount while giving the bank extra money.
You need to make larger payments in order to ever make a dent in that debt of yours. I suggest at least twice the amount of the monthly minimum payment, but the more the better.
6. Start a Budget
You can’t really reach your newly made financial goals and pay off your debt until you have figured out your current financial situation and made a budget.
Taking charge of your financial situation by baring all your debt, expenses, bad habits and naked, ugly truth you have been avoiding for so long can be panic-inducing.
I totally get it. I have been there and it is terrifying. But what’s more terrifying is staying ignorant and making the situation even worse.
You have a life to live, don’t waste it by hiding from something that can be fixed with a little hard work and determination.
I have written numerous articles on how to create a budget using different methods, such as How to budget if you have no savings, How to budget with cash envelopes, How to use the envelope system without cash and How to budget with glass jars.
I am confident you will find a method that will work for you. The hardest part is getting started.
7. Identify your Weaknesses
Are you an emotional shopper?
I know Hollywood loves using that trope for women: she feels down and insecure about herself, she needs to treat herself in order to gain that motivation to do whatever she needs to do to get that happy ending at the conclusion of the movie, so she shops until she can barely move under the weight of those shopping bags.
It’s bad. It’s terrible. Don’t do the things we see on TV.
Anyway, maybe you are a collector or like to travel business class, even though your credit card can barely handle the charge.
Whatever your weakness or bad habits are, you need to identify them and systematically work to reduce them, because they are slowly getting you a one-way ticket to the poor house.
If you must go to the mall, because it helps you de-stress, leave your credit card at home.
Go to the library instead of the bookstore to pick up a book you haven’t read yet. Trick yourself into making small, but significant and positive changes towards healthier money habits.
8. Stop Using Your Car for Every Errand
If you must keep a car at all, don’t use it for every quick run to the store around the corner you have to make. A car runs on gas and gas costs money.
Instead walk to the corner store, or take public transportation to work. It’ll save you a lot of money in the long run and you also get some exercise out of the deal.
9. Have an Emergency Fund
The reason you might be broke is because there were some unforeseen expenses that you had to charge to your credit card.
Without an emergency fund, your credit card or line of credit will become your emergency fund. Sadly, a credit card company likes to charge lots of interest on an outstanding balance.
I know it might be difficult, but putting aside a little money will help you avoid using the credit card and furthering your debt.
10. Keep Track of Your Spending
Inform yourself of where your hard earned money goes and you will be surprised how all those little purchases (coffee-to-go anyone?) can eat up your budget.
Keeping track of your spending gives a two-fold advantage on taking charge of your finances. First, it lets you see exactly where you are wasting your money and gives you an opportunity to cut unnecessary expenses. And second, it helps you make a better budget that you can stick to more easily.
11. Start Investing in Yourself
Keep yourself educated, either in a formal way through online courses and upgrades to your degree (although try to avoid student loans) or in ways that could lead to you having a side business.
Educate on how to blog with the objective to make money. Invest in a hobby you have always been good at in order for you to monetize it.
Even inform and educate yourself on the current market and investments opportunities, if that is something you are interested in.
The most important thing to take from this is to never stop learning.
12. Stop Living in a Home You Can’t Afford
Throughout my adult life I have come across this stigma or rather fanciful expectation that once you are out of school and have a steady job, you must buy a house.
Just recently someone I know bought a house (and is getting married at the end of the end having a destination wedding, of all things) and he made this off-hand comment on how he knows a house now, but he has no clue how to furnish it.
On top of that they are having difficulties finding a right destination wedding package for their sparse budget. And a honeymoon is completely out of the question.
People start panicking when it is suggested that they should move into a more affordable house or apartment. Apparently it is the ultimate admission of having failed at adulting.
No, it’s not! It is a smart financial decision to make when trying to make positive changes in your life.
A house is only a made-up symbol by society of some social status that doesn’t exist anymore.
13. Stop Grocery Shopping When You’re Hungry
I am so guilty of this one. After work I’ll just pop into the grocery store to get things for the upcoming week, go home, make dinner and have a cozy night.
Sure, but while at the grocery store (with a rumbling stomach) I’ll pick up the most random food items that have miraculously become irresistibly delicious and buy enough groceries for a family of five – it’s just my husband and myself.
Make yourself a snack and a cup of tea or coffee before heading to the grocery store that always smells like delicious roasted chicken. Your wallet will thank you.
We tend to waste so much food on a daily and weekly basis, which really is just throwing out money. Plus it is not the best thing to do for the environment.
14. Stop Eating Out
Groceries can be relatively expensive, but having someone else prepare those food items for you brings the price up even more.
Eating out is expensive. Depending on which meal you are buying and where you are going it can range from $15-$40 per meal.
That’s a lot of money!
If you do that every day, no wonder your funds are very low. The simple solution is to stop eating out.
There are thousands of recipes and videos available, telling you how to make your own version of teriyaki beef with broccoli, apple turnover and delicious homemade mulled wine.
Get creative and get acquainted with that kitchen of yours. It’ll be worth it.
15. Stop Using Credit for Everything
Have you ever looked at your bank account and thought you were in good shape until you saw your credit card bill?
Yup, been there myself.
It is so easy to get sucked into using your credit card for everything, because that particular card type promises your annual cashback. So, how could you not use it.
This point ties in with point number 10 “Keep track of your spending”, because if you don’t, you won’t be able to pay off that credit card bill by the due date and they will start charging you interest for the amount that is left on it. That’s not good.
If you have a habit of using your credit card and trying to keep track of your spending, which can be difficult when flashing the plastic is an option, then leave the credit card at home.
Stop using it until you have gotten your financial situation under control. It might be difficult at first, but it really does make a difference in your financial status.
Pay off what is left on your card, make a budget, stick to it, and only use your bank card or cash to buy the things you need. No extra shopping trips, if it isn’t in the budget, because money you don’t have, you can’t spend.
Being broke sucks. And I know sometimes life deals you a really bad hand and you are being thrown into a situation that did not warrant your actions.
Regardless of what got you into your current situation, it’s time to take control of it and fix it.
The 15 tips I listed above will give you a good overview of where to start making those changes that get help you get out of your financially tight situation.
Stick to them, make those changes and things will get better.