The only reason you wake up every morning and commute to work even on days you aren’t motivated, is that you have to get some money in your pocket. You don’t want to suffer financial constraints. But as much as people strive to take their income to the next level, they sometimes don’t know how to stop being broke.
Despite the hard work and dedication to their jobs, they still struggle financially. Why is that? It’s simply because they don’t practice the basic principles of managing and saving money.
Earning an income every month is not the only aspect of personal finance that you should focus on. You must also understand how to curb your spending drastically, stash away some cash in your savings account, and then find ways to increase your income. This is how to deal with being broke.
Notwithstanding, this post will outline some of the best ways to get your finances back on track and avoid being broke all the time. Let’s dive in!
Common Signs Of Being Broke
Before you examine some of the tips on how to stop being broke, it’s important to take a close look at the root of your problem—the reason you are actually broke. Here are some signs to look out for to be sure you’re broke:
1. Living Paycheck To Paycheck
If you usually spend all your income before the next paycheck arrives, then you have a major problem to tackle. It means you are living paycheck to paycheck. This is an endless rat race where you work tirelessly without having any tangible results to show for it.
More than 70% of Americans are living paycheck to paycheck. They have almost no savings at all and are unable to reach their financial goals in time. If you are in such a situation, it is a clear sign that you are broke.
2. You Have No Savings Goals
When it seems like you aren’t earning enough money every month, it becomes impossible or incredibly difficult to save.
Say you earn $4,500 per month, and you spend roughly 95% of your income on all your fixed and variable expenses—including rent, debt payments, transportation, healthcare, and whatnot. How do you save effectively with just 5% of your income left? What if you have emergency expenses? How do you prepare for retirement or save for your children’s education? This is another obvious sign that you are broke and struggling financially.
3. You Worry About Money All The Time
Do you think millionaires wake up at night and get worried about not being able to pay for utilities on time? Do you think they panic when it’s time to make mortgage payments? Probably not! That’s because they have enough money to cover their bills.
When you begin to worry about money all the time, it means you’re broke. In most cases, getting worried about money can terribly affect your mental health. You lose motivation to do basic things at work and home. To avoid being in this mess, it’s high time you figure out how to stop being broke.
4. You Are Not Growing
Some families live in a small apartment for several years or even decades. They drive a rickety vehicle and have no hope of replacing it. This is what it means to not grow.
If you haven’t improved your well-being and standard of living over the years, it means you are stagnant—not growing. It’s an undeniable sign that you are broke. This is one of the reasons people retire late and have their kids resort to taking student loans.
If you want to experience growth in various aspects of your life, you have to improve your finances significantly.
5. You Can’t Give
One of the signs of prosperity and financial success is being able to give back to society and help those in need.
Participating in charity programs, making donations, and supporting people’s dreams with your finances shows how successful you’ve become. If you are unable to do these things, it means you’re broke. After all, how can you give when you don’t even have enough for yourself? It’s definitely not a good situation to be in. However, ease your mind. You are about to learn how to stop being broke with the insightful steps discussed below.
How To Stop Being Broke And Take Charge Of Your Finances
There are several money habits that will keep you from being broke. As you practice them consistently, you’ll realize that your financial situation is becoming more stable. Let’s check these ideas:
1. Work On Your Mindset
You have likely heard a lot of people claim that you need to think positively in order to create and sustain positive change. When you’re broke, it’s quite simple to focus on the bad. But when circumstances get hard, changing your perspective from one of negativity to positivity will inspire and uplift you.
Of course, this is not always simple. However, having an optimistic mindset toward money will help you a lot when you are supposed to feel demotivated. Working actively to change your mentality will also alter your actions and improve the decisions you make. Get a pen and paper and put all of your constrictive or negative ideas and beliefs in writing.
Consider how these ideas might have influenced your financial behaviors. Once you’ve finished listing all of your negative money-related ideas, try to come up with an optimistic notion for each one. This is how you transform your mindset to prepare yourself for financial growth.
2. Take Control Of Your Finances
Once you’ve taken the time to build a better mindset, you have to attack your financial obstacles head-on. You must begin by acknowledging your authority over your finances. It’s the first step toward improvement.
Taking charge of the situation and realizing that you are solely responsible for any outcome will result in positive change, regardless of how you got here.
The amount of money you earn and spend is entirely up to you. Just make sure you are intentional about making the right decisions. Besides, you can learn anything about personal finance that you know nothing about to help you take steps to get better.
3. Employ The Right Budget Method
One of the basic steps to learn how to stop being broke is to build a budget. Create time to budget your income if you haven’t been doing so.
When your income is budgeted, you can have a clear understanding of your expenses and cash flow. You can easily track how much gets in and what goes out every month. It is one of the best things you can do to escape financial ruin.
Building a budget is pretty straightforward. Make a list of all the money you earn, as well as all your expenses for the month. Then, subtract your total expenses from your total income. The key here is to ensure that your total expenditure doesn’t surpass your total income.
To evaluate your spending patterns and current expenses, you can see where your money has been going by reviewing previous bank and credit card statements.
4. Adjust To A Frugal Lifestyle
When you start building a budget, you have the opportunity to drastically cut down on your expenses. This is because your budget should contain various spending categories, and you are to examine each category to find areas where you can reduce costs—even if it’s a little bit.
A lot of people think they don’t earn enough and often complain about being broke. But interestingly, the root problem might just be their spending habits. Sometimes, it’s important to become frugal to stabilize your finances. It’s one of the best ways to stop being broke.
Besides, if you want to learn more practical tips on how to be frugal, here is a post with 25 frugal living tips to help you save a ton of money.
5. Use Coupons And Cashback Apps
This is one of the helpful tips to stop being broke. To save money on groceries and other basics for the home, use coupons.
By purchasing specific things or scanning your receipts, you can get incentives or cashback using apps like Ibotta and Fetch Rewards. You must be tired of being broke already. Start couponing to save some money for yourself.
6. Stop Eating Out
Once you are determined to learn how to stop being broke, you have to cut out every unnecessary spending habit. Guess what? Eating out is one of the common money habits that can leave you broke.
Spending on takeout will devour a large portion of your budget. This is why I recommend you make more of your meals at home to save money and prevent overspending.
Also, you should create a meal plan if you want to remain consistent with preparing what you eat at home.
7. Save For Emergencies
If you are sick and tired of being broke, then you must have an emergency fund. You can begin saving and putting money aside for emergencies once you’ve established your budget and cut your spending. Emergencies can arise, and being prepared with emergency funds will keep you from accruing further debt.
When these circumstances happen, some of the tension can be easily avoided by being prepared and setting aside money “just in case.” As you cut back on your expenditures by curbing spending habits, you can save and build an emergency fund. This is how to stop being broke financially if you get hit by unexpected expenses.
8. Embark On A No-Spend Challenge
A no-spend challenge is an activity where you choose not to buy anything for a set period of time—maybe for a week, two weeks, or a month. Although it seems extreme, this practice can help you break bad spending habits, especially impulse buying. At the end of the day, you’ll realize how much you can save by just curbing your spending.
If you are going to embark on a no-spend challenge for the first time, it’s important to take baby steps and be realistic with your goals. For example, instead of taking on a one-month no-spend challenge, try doing it for just a week. After succeeding at your first attempt, you can aim for a bigger feat next time. This is how you learn how to stop being broke.
9. Ask For A Raise
You might want to talk to your employer to get your money up. Even though a lot of employees are usually scared to do this, it might pan out well for you.
However, before asking for a raise, be sure that you’re worth it. In fact, it must be long overdue and the value you contribute to the organization should be undeniable. This way, your employer can be convinced that you deserve such a reward.
10. Make Money From A Hobby
When you focus on figuring out how to stop being broke, the most obvious thing you’d want to do is increase your income. That’s a wise decision. But how exactly do you earn more money? You can either get another job or start a side business. Notwithstanding, a much easier way to earn extra cash is by monetizing your hobby.
There must be something you enjoy doing—something you are pretty good at. Cooking, making crafts, baking, painting, knitting, etc. Do some research and find out the monetization opportunities within your field. This is a great way to support your main income.
By the way, you can check out this post where I explained the top 15 profitable hobbies that make money.
11. Get Out Of Debt [Bonus Tip]
Debt can ruin your finances. Why? It’s because it constantly takes from your income, preventing you from making the most of what you earn.
When you’re in debt, it’s quite difficult to reach your savings goals, let alone attain financial freedom. This is why you must get out of debt as soon as possible. How? Find a reliable debt payoff strategy you can use to pay down your balances faster.
The debt avalanche method, for example, is one effective method that entails paying off your highest-interest debt before any other debt. If you stick to this strategy, you might be able to save money on interest rates.
Other payoff methods include the debt snowball, debt snowflake, and debt consolidation. You can learn about each of them to figure out which one can work best for your situation.
Recap: How To Stop Being Broke
Now that you have learned how to stop being broke all the time, it’s time to improve your financial situation by doing the needful.
The tips discussed here are easy to implement. Don’t wait for anyone to compel you to make the right decision. Start implementing! Adopt these strategies as habits and watch how your finances will gradually get better over time.
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