Are you tired of being broke?
Money, or more accurately, lack of money, can be a huge source of anxiety and worry. Getting our finances in order isn’t always easy, and ending up with more month left than money is an all too common experience.
Being short of money is no fun, so how do you stop being broke?
In today’s world it’s become almost normal to be broke.
Don’t have enough money to buy a car? Just buy a brand new one on finance.
Want some new clothes but don’t have cash? No worries, just buy now and pay later.
It’s all just so easy that we carry on being broke and living like we’re not. But later always catches up with us, and what happens then?
When we don’t have any money to fall back on in an emergency?
When that brand new car needs fixing but there’s no spare cash?
When Klarna comes a calling with high interest payments because we haven’t made the payments in time for those cute party dresses we ‘needed’?
Changing your mindset is the first step to stop being broke. Making that conscious decision to be mindful of spending and being purposeful about how you use your money.
Figuring out finances isn’t always fun or easy, but it’s always worth it to avoid being broke in the long term.
Here are 25 practical suggestions on how to stop being broke.
Set financial goals
Where do you want to be? Try not to focus on the negatives of your current situation but think ahead to where you’d like to be and when. Setting goals means you can work out and strategize how to get there. Obviously the main goal for most of us is figuring out how to stop being broke!
Specifically though, what are the things holding you back right now? Maybe it’s not being able to cover the essentials, or running out of money before payday. Or perhaps you can manage to cover the bills but need some money for yourself, to enjoy things.
Make a plan
‘A goal without a plan is just a wish.’
Once you have your goals in mind you can make a plan of how exactly you can reach those goals. The tips below can help with finding ways to save money, bolster your finances and create extra income, all of which can be used to help towards achieving your goal, and stop struggling financially.
Plug money leaks
Chances are, there are a few ways you’re spending money you don’t need to, and plugging those spending leaks is good way to start addressing what’s keeping you broke. A money leak is simply where you don’t quite realise where your money has gone.
Have you ever taken money out of the ATM and then at the end of the week it’s all gone but you can’t quite remember what you spent it all on? There’s a spending leak!
Keeping a spending diary is a great way to not only keep track of where your money goes, but also to help evaluate spending and address money leaks. When it’s all written down you can see where you might be overspending and be more conscious to cut back in those areas, which can help you save money and stop being broke.
Tip: If you don’t want to physically write everything down, then using a money or budgeting app such as Mint or YNAB will track everything you spend and show you clearly where your money is going.
Income or spending issues?
Once you’ve been tracking your outgoings for a while, you’ll be able to drill down into whether your money issues are more to do with income or spending, or maybe a combination of both. If you find the majority of your outgoing money is to essentials, such as bills and groceries, although there are lots of ways to save money and cut costs (as outlined below) you might want to consider looking at ways to bring in extra income.
If you find that you’re spending a lot of your money on things outside of essentials, it’s likely that the problem lies more with spending, and with some planning and budgeting it could be easy to stop being broke every month.
Create a budget
It seems like a boring chore to make a budget, but finances can hinge on how well you can budget money. Knowing what money you have and where it’s going can be the key to financial success.
If you want to stop being broke, creating a budget should be a priority.
Separate money across accounts/pots
A great way to easily keep track of money and keep to a budget is to separate money across different accounts, or pots. A lot of banks will now let you split your account into various spending or saving pots, making it easy to see how much money you have available for each category.
Examples of pots you might have include:
- Eating Out
Make a debt plan
Once in debt it’s easy to stay in debt. The more you borrow the harder it is to pay back. However, paying down debt is a vital step towards not being broke. Even if you can only afford small repayments, every step towards getting out of debt is a step closer to reaching your financial goals.
If you have debts, take a good look at them and see how you can best tackle getting them paid off. It might mean attacking the debt with the highest interest first to cut down the overall amount you have to pay back, or you might want to look at trying to shift some onto interest free credit cards to avoid those high charges.
Improve credit rating
If your credit rating is bad, it can make it hard to qualify for better credit cards, or to be able to get any kind of finance at all. Taking steps to improve your credit rating can improve your financial prospects.
Steps to improve your credit score:
- Make sure you’re on the electoral roll
- Always pay bills on time
- Check your financial links
- Minimise credit applications
- Check your credit file
- Don’t withdraw cash from credit cards
Don’t take on expensive debt
When you’re really struggling, taking out a loan or another credit card can seem like the answer, but taking on expensive debt can be a quick road to more financially difficulty later on. High interest rates can become crippling and lead to more and more debt that’s harder to recover from.
Try to avoid high interest rates, don’t take out credit you can’t afford repayments on, and always, always stay away from payday lenders with extortionate rates.
Pay bills on time
Try to make sure to pay bills on time, as late payments can lead to extra charges and services being stopped. Most bills can be set as direct debits, and if not, setting reminders of when they’re due can help.
Neither a borrower nor a lender be
Both borrowing and lending money put you at the mercy of someone else. If it’s at all possible, doing neither is the best possible scenario.
Ask for help
If you’re really struggling, ask for help! Talking about money seems like such a taboo subject, but we it’s something that affects us all, and struggling with money is really common. There’s no shame in asking for help, and there are loads of organisations who can help, such as Citizen’s Advice, or charities such as StepChange.
It you’re already broke, it might sound ridiculous to try and save money, but building up savings, especially an emergency fund is a key part of breaking the cycle of being broke.
It doesn’t have to be a lot, just start small with whatever amount you can manage and make saving a priority part of your budgeting.
Lower bills – switch and save
There are so many companies offering different deals that it’s usually possible to find a cheaper deal. This is true for energy providers, broadband suppliers, TV subscriptions, insurance providers and so on.
Comparison sites make it easy to find the best deal and switch, automatic energy switching can do it all for you, or alternatively if you’d rather not switch, phoning up and saying you’ve found a better deal will often lead to you being offered a reduction in price to try and get you to stay.
If you’re broke, then being frugal can help to save a bit more money. There are loads of simple frugal hacks that can save money without meaning you have to be cheap. Just being more intentional with spending and trying to cut back where possible can make a difference overall.
Here are some simple frugal tips and tricks that save money:
Meal planning is a really simple way to save money on groceries. It leads to a lower grocery bill as well as meaning you’re more likely to avoid food waste.
- Make a plan of meals for the week.
- Check your cupboards to see which ingredients you already have so you can use them up first and don’t buy any extra.
- Make your shopping list according to your meal plan.
- Stick to the list when shopping.
Shop second hand
Choosing to buy nearly new and used can save tons of money. People often sell on things in great condition that have barely been used, so you can pick up some great bargains and save money. Some examples of things you can usually find second hand are furniture, clothes (particularly baby clothes), toys and electronics.
There are so many places to shop second hand, such as Facebook marketplace, gumtree, eBay, buy/sell apps such as Depop and Schpock, Preloved, and even in the classifieds of your local paper. Charity shops are a great place to browse too.
Don’t impulse buy
If you’re grocery shopping, take a list and stick to it. For bigger purchases, try the sleep on it rule. This gives you chance to work out if you really need or want something.
Why spend more where you could spend less? Always search for discount codes or coupons as you might as well save money where possible! If you’re shopping online, a great tool to use to find discounts is Honey. It automatically searches the web and applies the best discounts to your checkout.
Another simple trick is to just type your search directly into Google – for example search for “Kohls coupons” or “doordash promo code” and see what shows up in the results. Discount code, promo code or coupon are all words to target in your search when looking to get money off.
Save for large purchases
Try to save up for things rather than put them on credit. This is a great money habit to have, and means you’re in more control of your finances, and you don’t spend what you can’t afford. It’s delayed gratification sure, but you’ll feel good for it, and your wallet will thank you in the long run!
Do sweat the small stuff
It’s the small purchases that add up to put the biggest strain on finances. If you’re struggling with money you’re probably not going to suddenly buy something for £2000. But a weekly £25 takeaway, a daily £3 coffee, those small things that don’t seem enough to make a difference can really build up. Consciously deciding to cut down the small spending can have a big impact.
Try the cash envelope system
If you find it all too easy to just swipe your card without thinking about the costs adding up, it might be worth trying the cash envelope system for spending. This is where you take your allotted budget for spending and put that amount in an envelope, which you use for every purchase in that area. When your money is gone, it’s gone. This means it’s easy to see how much you have left and makes it harder to overspend.
Create extra income
Maybe you feel like you’ve exhausted every avenue and simply can’t cut back any further. You’ve tried every money saving trick in the book and still just don’t have enough money left. Getting a pay rise isn’t possible and a new job just isn’t an option right now. A side gig might be the answer to bring in a little more income.
There are so many different ways to earn a bit extra, whether that’s starting a small home business, selling on the side or a part time work from home job. It could be simply offering your services to walk dogs or pet sitting, babysitting or offering virtual admin assistance online. Or perhaps you have an empty room in your house and could take in a lodger to help pay the bills. Think about your skills and experience and what you could offer.
Don’ t compare with others
‘Comparison is the thief of joy’
Don’t compare your situation to others, as it can lead to feeling down and depressed. It can also lead to trying to ‘keep up with the Jones’ (we’re all about the cliches today) which can mean spending money you don’t have just to try and meet others expectations.
Your situation is unique to you, and focusing on your own plans is much more productive than comparing with other people’s apparent successes or failures.
Appreciate what you do have and try not to dwell on negative thinking.
Live below your means
In the end, how to stop being broke basically boils down to trying not to live beyond your means. Unfortunately it’s not always that simple and if you’re living on a low income it can be difficult to fund everything you need with the finances you have.
Budgeting, saving money wherever possible and trying to find ways to build extra income will all help with this, but don’t be afraid to ask for help if you need it.