How to Manage Money When You’re Broke

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Okay, so maybe you don’t have a ton of money. In fact, maybe you consider yourself the “B” word: broke.

Trust me. I’ve been there.

Not long after I got married, my husband and I found ourselves at one of our favorite eateries debating on whether or not we could afford to buy burritos for dinner. The bill would have been only $6.00. We ended up laughing at ourselves because in that moment we felt so extremely broke that we didn’t know if we could spend $6.00 on dinner.

Another time, I was with a friend of mine who told me she only had $12 in her bank account and could hardly wait until Friday to get paid. Talk about BROKE!

Do you ever feel like that? Too poor to buy a burrito, and always waiting for Friday so you can replenish your bank account. It can definitely feel like a rut when you’re that stuck and don’t know how to manage your money when you’re broke.

Burrito or not, your money situation could be due to many things. Maybe you’re in school and have to spend all your money on tuition and books. Maybe you have lots of bills to pay. Perhaps you’re in debt. Or, maybe you’re a shop-a-holic and like to spend money.

The good news is, you don’t have to be broke forever. There are plenty of manageable ways to control your money so that you don’t have to feel so broke all the time. The best part is, once you get your money under control, you can buy a burrito for dinner and not feel like you have to wait for payday. Win-win!

Here is how to successfully manage money when you’re broke!

1. Figure out your current financial situation

First things first, what do your finances look like?

This can be hard. Why? Because it forces you to sit down and take an honest look into your financial situation, which isn’t always pretty. However, this is one of the most important parts of managing your money when you’re broke.

Think about it. How can you manage your money if you don’t know anything about your finances? The answer: you can’t.

I recommend blocking out a few hours that you know will be uninterrupted and start combing through all your finances. Here are some specific things to look at:

  • How much money you (and your spouse/partner) realistically make in a month after taxes
  • What amount of your income goes towards bills
  • How much debt are you in
  • How much money do you spend a month – online banking will be your most accurate information for this
  • What type of unnecessary purchases do you make

2. Track Your Spending Habits

In order to have success in managing your money when you’re broke, you must know where and how you are spending every dollar.

Tracking your spending is not the easiest thing because it can be time-consuming. However, it’s extremely eye-opening.

You don’t realize how many days of the week you buy a burrito (speaking to myself) until you see the itemized purchases in your online banking.

A few years back, I talked to a couple who sat down to track their spending and they realized that they were averaging $700 a month just on eating out! That’s crazy!

However, the only reason that they were able to catch it was because they started to track their spending.

It might be hard to do at first because you probably won’t want to admit to yourself that you sometimes go crazy with spending. But, remember, were broke and we need to learn to manage our money asap!

So, block out some time to take a realistic look at your spending habits. It will be a serious help. Here are some spending habtis to keep an eye out for:

  • Are you eating out too much (most people are)
  • Do you charge everything to your credit card resulting in a high bill
  • Are you spending more money than you make
  • What kind of purchases do you buy
  • How often do you buy groceries (and does all the food get eaten)
  • Do you pay your bills on time
  • Are you getting charged interest rates from credit card companies

3. Get Realistic

This might require you to look yourself in the mirror and have a serious conversation.

Why are you broke?

For my husband and I, it was because we just got married and still had to pay off some of the wedding and honeymoon, on top of me being in school and paying for a master’s degree.

For my friend who only had $12 in the bank, it was because she was a compulsive shopper and didn’t know how to say no.

For the couple who spent an average $700 a month on eating out, it was because neither of them took the time to cook or meal prep for their family.

So, again, why are you broke?

If you don’t make enough money, start making plans to fix that. Regardless of why you’re broke, here are some possible ways to fix that:

  • Ask for a promotion/raise
  • Go back to school to get more education
  • Take a part-time job working only a few hours a week
  • Start an easy side hustle like Uber, Instacart, or Postmates (my husband did this when money was really tight and it helped out significantly!)
  • Pay more than the minimun on your credit card to get out of debt sooner

4. Make Cuts (Yes, this can be hard)

By now, you’ve established that you need help managing your money because you’re broke. You have looked at your financial situation, you tacked your spending, and you got realistic. Now, it’s time to chop, chop, chop out purchases that are hurting you.

This does not have to be forever, but for now, while you’re broke, the easiest way to start catching up is by cutting out the things that you can live without.

Here are my favorite suggestions of what you can cut out asap:

  • Eating out – instead, meal prep!
  • Unused subscriptions, or too many subscriptions (Netflix, Hulu, Spotify, HBO, apps, food delivery boxes, etc.)
  • Expensive bills (cable, phone)
  • Getting lash extensions – just curl them useing mascara!
  • Getting nails/toes done too often
  • Frequentl shopping for things you already have (clothes, makeup, shoes, house decorations)

5. Create and stick to a budget

Having a budget is a smart thing to do. If you want to learn how to manage your money when you’re broke, then you absolutely must create a budget for yourself.

The good thing about a budget is that it can be adjusted as you go and it helps to hold you accountable for your spending.

If you aren’t sure how to make your own budget, download this free budget template right here that will help you track your spending, bills, and goals!

6. Set Money Goals

Have you ever looked at someone and thought, “#goals”? I know I have, especially when it comes to finances.

Sometimes, it seems like everyone else is totally killing it with their finances. They have a good job, great benefits, they can pay their bills, and they save money.

How do they do it?!

They know how to manage their money! Now it’s your turn to become money #goals.

While everyone’s goals might be different, here are some basic ones that everyone should aim for:

  • Decide a date for when you want to get out of debt and work hard to achieve that
  • Save for the things you want to buy instead of charging it or buying on impulse
  • Pay off student loan and credit card debt
  • Open a savings account and deposit money into it monthly

For detailed information on other money goals you should have and how you can achieve them, check out my post: Important Money Goals to Set Right Now.

7. Open a Savings Account

If you want to manage your money when you’re broke, you absolutely need to have a savings account.

I cannot express enough how important a savings account is. Your money should not sit in your checking account. The good news is, chances are you already have a savings account with your bank, but if you don’t have an account open it’s easy to get one with any bank of your choosing.

However, having a savings account isn’t enough. You need to put money into your account often.

My absolute favorite quote regarding finances is from Warren Buffett, “Do not save what is left after spending; instead spend what is left after saving.”

A savings account helps to minimize money risks. While you can’t avoid things like cars breaking down, medical emergencies, or hidden fees, you can be prepared with money that was intentionally put into a savings account.

Personally, I have two savings accounts. One is for fun, and one is for emergencies and will just grow and grow until I want to take a trip or buy something big like a house.

It might seem difficult to set aside money when you’re broke, but it will make a huge difference in your financial life.

8. Pay off debt

Debt is dangerous, we all know that. But how dangerous is it?

It costs you tons of money in the long run, it puts a strain on your relationships, it holds you back form other financial goals, it causes stress, and it hurts your credit score.

Don’t ignore your debt. Instead, face it and tackle it.

Paying the minimum each month isn’t enough. Instead, be aggressive and work to pay it off entirely. This will free your mind and your wallet big time.

Also, if you feel like having a credit card is too tempting for you, CUT IT! Literally, cut it up.

There is no use in keeping around a credit card if all you do is rack up your debt. Remove that temptation entirely and work towards a debt-free life.

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