Whether or not you’re broke, it is always good to have MONEY, right? Otherwise, you won’t be here. It doesn’t matter whether you are middle-class, wealthy, or struggling to make ends meet, money acts the same, and it takes commitment and time to have it in abundance. However, you can learn to manage your money, even when there’s not much of it.
Here are steps, for you to follow.
Why should you follow what I tell you? I’ve been broke. Also, I’ve been hell-of-a-rich. So, I have things to say. And now, I am happy!
I’ve written about how to save money when you are earning greatly, but when you’re broke, it might be harder for you to save. In both cases, the basic ideas are the same, but your breakdown of spending, I guarantee, is going to look a bit different.
So here’s what you need to do to get back on track:
First: Know your situation – Does more money goes out?
If you’re struggling to make ends meet, then I bet that more money has been going out than coming in for you. The solution to this is simple: spend less or/and earn more. To figure out how to do this, you should first take an assessment of your incomes and expenses. This will help you to get a reasonable and realistic money balance.
Do you earn enough? If yes, then you should manage your expenses. There are certain types of people who are always horrible with money. They ask loan 3 days before payday. If you’re that kind, then you should stop this self-embarassment, because it only gets worse by time.
You don’t earn enough? If you don’t make enough, then maybe you should change your job. Do you have excellent skills? Or do you need to improve them? Needs for qualifications change by the time.
Do you want to know how I got my current state of self-sufficiency? One thing led to another; I learnt everywhere. I knew the way and where I was heading, and that’s the most important thing.
If you feel that you don’t earn enough, then you’re probably wasting your time by doing the job which isn’t meant for you.
Think about it. It is not a cliché that company CEOs are always looking for people with excellent skills. I sold car parts for several years. However, I was good at internet marketing. I learnt more and more as I was ready to change my occupation.
Do you spend too much? Then you should change your habits and make yourself right budgeting plan.
You don’t spend much, but doesn’t have money as well?
|Your earnings are OK||You earn too little|
|Do you spend much?||You should look for your need and wants. You are wasting money on things you don’t need.||Bad scenario. You don’t have money to save. Actually, you have. Keep reading.|
|Are your spendings OK?||Make yourself a proper budget plan. It can save you an enormous amount of money.||Change your job. Use your other skills if they make you more money! Or educate yourself.|
How to get better with money? Categorize your expenses.
Have a look at your expenses over the past few months. Categorize them by needs and wants – be honest, it’s important for your financial future. If you’re not sure, take a look at Maslow’s hierarchy. Do you have basic needs covered before you go for upper level?
Don’t forget your debts, which should be your priority in priority list.
If you have a clear vision about where your money goes, then you can see how much money you really can save, i.e., money which you just waste on buying things that you don’t need.
When I just started managing my earnings more shrewdly, I found it painful to realize that I had been wasting approximately 15% of my incomes. 15%, it’s hell-of-a big amount of money, to INVEST. That’s all about it.
Cut back your spending:
No, it won’t affect you fun level. You will have as much as fun as before, and you don’t lose anything. The only thing you will lose is the bad money spending habit, which is a positive thing.
So you still have a “breathing” or “fun room” in your budget. If you go too tough, then you might risk quitting altogether. But don’t forget: the key to managing your money is downsizing your lifestyle. Getting over your ego is the main thing:
If you can’t afford to pay bills, take a look, what might be your luxuries or “want” category. Here are just some examples of unnecessary expenses, which take away money every month:
- Vacations – Regardless of which type, in tourism or out tourism
- Cable-TV – Do you really have THAT much time to see movies or serials, which are on the computer also?
- A data-heavy cell phone plan – Why not use your computer?
How To Save Money on Bills
Once you’re done with your wants, take a look at your needs. You may find a good saving spot from there. You will find some useful saving tips when you look following bills:
- Credit Cards
- Other Irregular Bills
Think of these, do you really need those?
This is how you will get some ideas from monthly savings from bills.
Save Money – Be Frugal
If you want to stop struggling to make ends meet or just want to be a smart saver, then frugality is your friend. It is Art to make the most out of your money and to watch out for the things you spend it on. For example, you could:
- Fix your meals: New York Daily News wrote about some of the best grocery options when you’re broke.
- Do Thing yourself: It’s is one of the best ways to cut down costs. Do you have a house-keeper? Start cleaning yourself! Do you take your car for easy fixes? You can do these by yourself, etc. You know, YouTube is full of DIY guides. Personally, I’ve learnt many new things from there. Now, I fix my bicycle, I change my car oil, and do many more things by myself. One thing is the money you save and can use somewhere else, another thing is skills, which make you more valuable.
- Save on housing costs. Can you negotiate your rent? If you can, do it. If you can’t and want to so much lower your biggest expenses, then you may want to look for a cheaper. There you can get the most of managing housing cost. I know a guy who leases a car which is 3/10 of his salary and rent an apartment which costs 5/10 of his salary. So he only has 2/10 of his salary for food and other necessities. He knows that this situation is bad, but he won’t get over his ego. He is young and wants to impress.
Your situation may vary, but the whole point is to adopt a frugal lifestyle and look for those kinds of opportunities to trip costs.
Keep in mind that if you have this mindset, then it’s easy.
Prioritize Your Debt-Savings Goals
Many people wondered, whether to focus on debt or savings in the first hand. They got answered that it depends on their situations. But I don’t think so. Why? You should prioritize both, but keep in mind that debts come just before savings.
Debts aren’t your money. It is money which has been given to you to use and pay back later. If you don’t pay back in the first hand, your debts can accumulate, which is something you don’t want.
If your debts are paid, then it’s time for savings. In life, setbacks are inevitable. So, try to build yourself an emergency fund. Think, what might happen if you lose your job? Or something happens to your husband/wife, and you can’t pay the loan you brought together.
There is insurance for this case also.
If I were you and I borrowed money, I would immediately start to collect money to pay back. All the time I owed someone, I thought that if I had saved money, then I wouldn’t go through any awful feelings.
If it’s Already Too late – Tackle your Debt
But if you’re late for payment and interests have turned overwhelming, what do you do then? You must take this situation seriously. Putting your hand in the sand won’t work.
Picking a Repayment method
You must start with a wise repayment method. To do this, first pick a plan:
The “Debt Avalanche” plan:
Pay first debts with the highest interest rates. With this method, you can save thousands of dollars on interests. So, it might be a good idea to pay the debt with the highest interest rate first, regardless of whether the interests are small compared to the debt itself.
“The Debt Snowball Plan”
Make small debts your priority and pay them first. Seeing your debts paid down will help you build the needed momentum to keep going. This method has been found to be the most efficient when paying back debts.
Credit Card – Reduce the Interest Rate
Did you know about it? It is possible to reduce the interest rate on a debit card. According to Bankrate, a survey found that 56% of consumers who called their credit card companies to ask for a lower interest rate got positive results.
“A five-minute phone call to your credit card issuer could save you hundreds, even thousands, of dollars in interest charges. There’s no incentive for them to lower your rate unless you call. The squeaky wheel gets the oil,’ says Brad Dakake, a consumer advocate with Massachusetts Public Interest Research Group.”
But beware of scams. There are also prerecorded calls from companies that claim to be able to negotiate significantly lower interest rates than your previous. All they have is the scam-plan about your money.
Why should your credit card issuer give you a better rate? The answer is that the competition in the industry is quite high. And you know, there are hundreds of credit card issuers with better rates. But which credit cards are worth buying? See here; I have TOP 5 best credit cards.
Request Payment Plans or Extensions
Let’s say you’re behind on debt, rent or bills, what do you do? Do anything except nothing. You should work out with your provider, lender, or landlord.
You should not be afraid to request payment plans or bill extensions. These requests are often granted, but they are in their place. If you worry about eviction from your apartment, meet your landlord and see if you can get extensions on any other expenses to free up your money for keeping your home.
I got entrepreneurship loan for my grandparents. No exact payback date. I started to pay back, but when I started my other project, my incomes reduced significantly. It was a bang for my ego, but I walked up to the loaners and told them about the situation, and I explained to them that the next payment would come late.
For them it was okay, but for my ego, it was a big bang. Half of the same size of that payment went for my side project, which was necessary to make it work one day. I managed to make it work and almost doubled these payments.
What would have happened if I hadn’t spoken with the loaners and I had fed my ego? My side-project would have got hurt, so would my future payments.
Although, it might derail you from your other financial goals, but, still, be over your ego. The most important thing is to keep your debts organized and come up with a plan on how you will tackle each of your debt!
Avoid the mistakes – Draft your Plan
Every cent is accounted which makes your budget pretty tight. In this case, traditional budget strategy may not be for you. But don’t miss blowing your budget either. Here are mistakes to avoid:
- Not being realistic: See your numbers realistically! Set a reasonable amount for each of your expenses. If you plan to eat for $25 a month, then you need some extreme measures. In reality, they probably won’t work. But don’t set your finance up for failure.
- Cutting out the fun: Like I told you, saving should not be fun-killer. And it isn’t. You must give yourself a breathing room. You should reserve money in your budget for fun. You can go to a cinema, theatre, out with friends, but it should be with the right amount of money. Like overworking, cutting too much of savings can lead you to unhappiness. And if you feel unhappy, you might want to quit saving.
It is always good to get the feeling that you’re on the right road – Like J.D Roth said “I began by listing my debts in the order that I wanted to repay them. Next, I listed my expected sources of income. Finally, I brainstormed a possible plan to ATTACK!”
Brainstorm your very own plan to attack: Once you pick your debt repayment strategy, allocate an amount toward every debt. Do a simple math. Determine how long it will take to eliminate each debt with your budget plan. Don’t forget to set yourself smaller milestones, so that it’s easier to pay out your debt.
Some ideas of debt repayment milestones:
- 1 month followed debt repayment methods
- 2,3 – nn months followed debt repayment methods
- 1 debt paid
- 2,3 – nn debts paid
- 10% of debt paid
- 25%, 50%, 75% of debts paid
- Don’t forget to pat yourself on the shoulder
Use opportunities as advantages
In this part, where I felt no boringness, things went to go uphill. I now know, that there is always something to do. Like some new information to gain to take advantage of opportunities.
There’s a good output on how to save money when you have more money. Then you need to save less, or you just have more money to invest.
For example, you might be able to:
- Sell your stuff
- Ask for a raise
- Get a better job
- Find a side gig
I will soon write about those things further, but at the meantime, you can subscribe, and you’ll get the freshest news.
Yes, these options aren’t available to everyone, but still, as we know now, money saving is all about being resourceful. Every money saver knows that at the beginning it’s hard, but if you get the catch, you start looking for opportunities to earn more and save more money. It’s important to seize those opportunities because sometimes they might look just like sacrifices.
My personal example. When I was a kid, I thought that our family was very poor. Somewhat we had the first computer in our area and new (used) mountain bikes. My mother worked in health, which was unpaid, and father was in electrics.
As I got older, I started to realize that we didn’t mingle, except having guests from far away. It was all about money saving. Father bought a 10-year-old Audi, which cost 1.5 of his annual salary.
They didn’t fulfil all our needs, but that was the case because of the little salaries. Despite earning low salaries, they still managed to get us basic needs. My father and mother told me that they looked for every means to make extra money – father, by repairing electrical devices, and mother, by selling darkening curtains, which were catalog ordered then.
If you’re depressed over your lack of funds, keep in mind that many of the success stories started with being broke. Mine too. Come up with a plan and set small milestones. Seize your opportunities and you’ll see that it will help you take control. Once you do, you might be surprised by the result you will achieve.
If you’re depressed over your lack of funds, keep this in mind: many of the best success stories started with being broke. Come up with a plan. Set small milestones. Seize opportunities. Overall, this will help you take control. Once you do, you might be surprised at what you can accomplish.