How To Save Money When You’re Broke
How To Save Money When You’re Broke
At this moment, a majority of Americans have less than $1,000 in their savings. A recent study revealed that most American families couldn’t come up with $400 in 24 hours for an emergency fund.
As a result of their financial situation, many people feel broke and believe they cannot pull themselves out of their savings account’s constant ebb and flow. Those who find themselves on the financial playground teetering on the brink of being broke may find some relief in knowing they are not alone.
With a bit of strategic planning and creative financial choices, it is possible to save money, achieve financial freedom, and stop the constant fluctuation in your savings account and in your life. Below are tips and ideas on how to save money when you’re broke to help you start saving money and build up your savings account.
Open a Savings Account
If you have not already done so, open up a savings account to hold all your extra money in. Keeping a separate bank account for checking and savings helps make spending less tempting because you have it. Find a savings account with no fees and no minimum balance required.
At the end of every day, evaluate how much extra cash you have and put it in your savings account. Even if it is just $0.25, put it in your savings account today. Right now! What are you waiting for?
Eliminate the Credit Card
Having easy access to credit cards means you might not be keeping close track of how much money you spend. It is effortless to pull out the credit card to pay for something and then pay it when the bill arrives. However, this encourages you to spend more and, if the bill is not 100 percent paid off monthly, you end up spending more on interest. Cancel your credit cards to eliminate temptation and stop the annual or monthly fees associated with having the cards. (Or at least pull them out of your wallet, so you do not use them.)
In the world we live in today, it is very easy to sign up online for a monthly paid subscription for just about anything:
- Take a moment to determine your subscriptions, including streaming services, gym memberships, wholesale club memberships, and delivery services.
- Decide which ones you use every month and are getting your money’s worth.
- Go through and start canceling the subscriptions you rarely or no longer use.
The money you save from canceling these subscriptions can quickly add up, and that extra money can be deposited into your savings account.
Increase Your Income
If you find yourself struggling to pay your monthly bills or any debt you have, you may want to consider getting a part-time job. This job does not have to be permanent but can significantly help you build savings and pay off that debt. Find a job that allows you to work flexible hours around your full-time job. The best options for a second job include retail, restaurants, or hospitality locations. In addition, many work-at-home jobs allow you to create your schedule and work on a freelance basis. Then, when you have successfully built up your savings account, you can either quit your second job or keep it, so you can continue growing your savings.
Downsize and Sell Stuff
Chances are you have accumulated many things you no longer use or need in your home. Spend an afternoon or weekend cleaning out every drawer, closet, nook, and cranny in your house, looking for things you can sell.
Selling clothes, furniture, electronics, and other items you no longer need can help you boost your savings quickly. Sell your items in a yard sale, online or get an inexpensive booth at a local flea market. When you are done selling your items, put 100 percent of the money in your savings account.
Make saving money a game and turn it into a rewarding challenge. Set savings goals and tie rewards to each one. For example, when you save $100, take yourself out for ice cream. Or when you save $500, buy yourself a special gift. Select rewards that keep you motivated to reach each goal, but they should also not cost too much to affect your continued financial goal.
Reevaluate Your Means
Before you can determine how to save money when you’re broke, you need to determine which level of broke you genuinely are.
For example, are you broke because you use your extra money to pay for things like going to concerts, getting a manicure, buying the latest video game, a gym membership, or going out for dinner? Or are you so broke you cannot do any extras and don’t even have two pennies left to your name after paying all the bills?
If you are the first kind of broke, it is time to reevaluate your spending habits because this type of broke is not technically broke. Instead, it is a matter of living beyond your means and is easily remedied.
Sit down and write down everything you spend your money on, including your grocery bill, utilities, rent/mortgage, entertainment, personal care, miscellaneous spending, etc.
Then highlight the necessary items to survive, such as rent/mortgage, utilities, car payment, etc. Next, calculate how much money you spend on things that are not necessary, and that is how much you could save if you stopped with all the extras.
You do not have to give them up permanently; you have to do it until you build up your savings to where you want and need them to be.
Adjust Your Grocery Shopping Habits
To help save money, change up your grocery shopping habits. The first thing to do is start working on meal planning and write out what you plan to cook and eat throughout the week. Next, use your grocery store’s weekly ad specials to base your meals on to help save money by making meals around items on sale that week. Then stick to your grocery list when shopping and avoid any extras which can increase your grocery bill. Additionally, consider buying generic or store brand items, which can save you a considerable amount of money and are just as good as the name brand products in the store.
Establish “No Spend Days”
Be dedicated to controlling your spending habits and start saving money today. Look at your calendar and select specific days of the week when you will not spend any money.
It is best to choose two or three days, such as Monday, Wednesday, and Friday, but you can do any combination you wish. On these days, you are not to buy any coffee, vending machine snacks, lunch, etc. Instead, the money you would have spent on these items is put into your savings account.
Create a Budget
The best budget to work with is a zero-sum budget. A zero-sum budget is when you subtract your monthly expenses from your paycheck, including money to go into your savings account, and the end balance should be zero.
Your budget should include rent/mortgage, utilities, food, entertainment, and savings. Every dollar you earn must be given a designated place to go, whether for bills, expenses, or savings. This process helps you establish the amount of money to go into savings, even when you are on a tight budget.
Focus on Your Debt
Having excessive debt could cost you more money in interest and fees. Before you can effectively start saving money, work on paying off as much of your outstanding debt as possible. The best method to do this is the snowball effect by paying the minimums for all of your bills and putting your extra money towards the one with the highest interest and fees. Then when that is paid off, apply all that extra money to the next bill. Continue doing this until all of your debt is paid off; then, you can use all the extra money you had into your savings account.
Use All Cash
Switch to cash-only for specific spending purposes, such as groceries, gas, and entertainment. Give yourself a particular amount each month and place that cash in envelopes labeled for each purpose. Then, when the money’s gone, you have to wait until next month to spend more money for that specific purpose. This method helps limit unnecessary spending because there is no more spending if you have no more cash in the envelope.
Track Your Spending
For the next week or month, track where every penny you earn and spend goes. Keep all receipts, and write down everything, including where, for what, and how much was spent.
Then, at the end of the timeframe, sit down and see exactly where your money is going and where you may be able to cut back. You might be surprised how much free money you are spending on things you want instead of need.
Set Some Rules
Curb your need to impulse buy by setting rules associated with spending money on extras.
For example, make a rule that if you see something you want as an impulse purchase, you must wait 24 hours before buying it. Or better yet, you must wait two weeks or 30 days before you purchase it.
Setting a waiting period gives you time to evaluate your need to buy the item honestly and helps you reevaluate your spending habits and needs. If you still feel like you have to have the thing, and you have the extra money after your set time frame, purchase it.
Another rule you can set is establishing a spending limit on impulse purchases. For example, allow yourself to purchase an item under $25; otherwise, you have to wait for 24 hours before purchasing. You can also limit how many under $25 purchases you are allowed per week or month.
Once you establish your impulse buying rules, do everything in your power to follow them. Once you have hit your savings goal, you can eliminate or change the rules.
Do Not Worry About Unexpected Expenses
When an unexpected expense, such as car repairs or a doctor’s visit, comes up, do not let this get you upset. Of course, this will impact your savings, but unexpected expenses happen, and that is why you are building your savings account up in the first place. So pay the bill, take a deep breath and continue with your savings goal.
The thought of saving money when you are broke may feel like a losing fight that you will never win. However, with some creative thinking and some adjustments to your lifestyle, it is possible to build your savings account to help you no longer feel broke.
Believe in yourself and know you can do whatever it takes to have a decent saving built up and eliminate the feeling of being broke.