Are you tired of being broke? Are you always worried about money and are you trapped in the cycle of living paycheck to paycheck?
Being broke can have adverse effects on your emotional wellbeing, your relationships, and your overall outlook on life.
Money stresses continue to be a huge strain on people these days and in an age where housing costs are out of control, student loans are unmanageable and inflation is a constant, people are simply tired of being broke and are looking for solutions.
In this post, I will walk you through the five things you need to do right now if you are tired of being broke. These steps will give you a foundation to build on so that you are able to climb out of this situation and get on track with your finances.
Become Financially Literate
If you are tired of being broke all the time, you need to become financially literate and gain a better understanding of how to manage your money.
Money can sometimes be a source of anxiety to many people as they are afraid of making mistakes or the information may seem incomprehensible but it doesn’t have to be this way.
Luckily, there are many personal finance resources available that can break down finance information in an easy-to-understand format.
So take the time and seek out the resources you need to learn the basics of money management including budgeting, debt management, saving money and building wealth.
Along with following personal finance blogs, you can build financial literacy by reading books and also by listening to personal finance podcasts that will help you depending on your preference.
As you learn more about improving your finances, you will find that you will become more confident, curious and empowered to make wise financial decisions. This will prepare you to take the bold steps you need to make a significant change to your financial situation.
Get Your Finances in Order
While you build financial literacy, you will also need to get your finances in order. What does this mean? It means taking a good look at your total financial picture.
When you organize your finances, you will get a good snapshot of where you stand financially and this will allow you to find the root causes for why you are always broke.
First, grab all of your financial documents – these include bank statements, credit card bills, utility bills, rental receipt or mortgage statement.
Also, take a look at your expenses. Where is your money going each month? Look at your credit card bills and bank statements to get a good look at what you are spending your money on.
Write down each expense and also write down your income every month and look at your financial situation all around.
Are you spending too much on unnecessary expenses or are you living above your means? When you do this exercise, you will finally see what your finances look like and will help you to prioritize your actions and decisions.
Create a Budget
When you are constantly broke, oftentimes the root cause can be traced to a non-existent budget.
Budgets sometimes get a bad rap for being restrictive and hard to follow but if done right, it can actually have the opposite effect.
When you put a budget in place, you are putting in a framework that will help you to track your expenses and track your income.
This will enable you to see where your money is going and allow you to reallocate your funds to what’s important.
A good budget should be broken down into three sections: Income, Fixed Expenses and Variable Expenses.
In the income section, you will put down the amount you get for your salary. In the fixed expenses area of the budget, you will list all your expenses that are the same amount month to month. An example would be your rent or mortgage as that cost oftentimes doesn’t change each month.
For variable expenses, you will need to list all your expenses that vary per month, or have a different cost per month.
Along with listing all expenses, you should also include savings in your budget to ensure that you are allocating money for this very purpose. You can include your savings amount in the fixed expenses section.
Your savings are not an expense however, you can look at it as paying yourself which is exactly what saving money is all about.
One you have a budget that you follow every month, you will be in a better position to get out of being broke and take control over your money.
You can only do this when you learn to manage your money. Very soon you will find that your budget is freeing and not holding you back.
Tired of Being Broke Then You Will Need to Pay Down Debt
One of the biggest reasons people are being broke is because they are carrying a lot of debt.
Whether it’s credit cards, student loans, payday loans, or auto loans – debt can be stifling and it can keep you in a perpetual state of brokeness. If you are sick of being broke, then you need to control how much borrowing you are doing.
The best way to get out of this situation is to simply pay off the debt as quickly as you can. Paying off debt can be challenging and may require sacrifice but it is possible.
The first thing you will need to do is list all your debts – the dollar amount, the interest rate and the time period you have to pay them off. For example, some student loans have a 10-year time period at a 2% interest rate.
Once you have identified your debts, you will now need to decide on a debt repayment strategy for your debt.
The most popular are the debt avalanche and snowball debt repayment strategies. It’s important to note that with both strategies, you will need to make the minimum payment on all your debts.
With the debt avalanche, you pay extra money toward the debt with the highest interest rate. With the debt snowball, you will work to pay off the smallest debt first then once each small debt is cleared, you can put those debt payments you used to make toward the other remaining debts.
Pro Tip: The Key to paying off debt is making a conscious decision to become debt-free. Once you have determined in your mind that you are serious about tackling your debt, you will be empowered to act and make the sacrifice to make real change.
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Choose a strategy that works for you and make a conscious decision to follow through on your debt repayment strategy.
Becoming debt-free is one of the greatest feelings in the world and it will absolutely help you if you are sick of being broke.
Assess your job situation and look to Increase Your Income
If you are tired of being broke, you will definitely need to take a hard, long look at your income. If you find that you are working hard to make ends meet, it may be time to assess your current job(s) and find a better-paying job.
This is what is happening in the Great Resignation as people are realizing that their current employment situation is not living up to the lifestyles they want to live. Many people have also left historically low-paying jobs for better jobs with more benefits, higher pay, and greater opportunities for advancement.
This will be a very personal decision as each person’s situation is different and will differ based on what they are currently experiencing. However, you will need to find ways to increase your income whether it is by looking for another job or starting a side hustle.
Another thing to consider as well is looking at your skillset – if you need to gain more skills, you can use this as an opportunity to get retrained and develop your skills. There are resources available online (Coursera, Skillshare) to help with this as well as your local community college.
If you love your job and want to stay, another option is to negotiate your salary. Make a list of all your accomplishments specifically around how you have been able to help the company streamline tasks or save the company money and meet with your manager to discuss a salary increase.
If you are already well paid and your income is quite high but you are still broke, then the best strategy for you would be to become better at your managing your money and looking at your spending habits.
Seek Professional Help To Fix Your Finances
Being broke month after month is very stressful and if you have tried many strategies that do not work or you feel that you are out of options, another avenue is to seek professional help.
Whether it’s working with a personal finance coach or with the banking advisor at your bank – you will need some guidance to steer you along the right path.
In getting help, you will be able to have someone take a look at your financial situation and work with you through the process to ensure that you are able to put the right framework in place to fix your finances.
Here at Abundance of Jo, we offer guidance and support to struggling young professionals who need help with their finances. If you are struggling with budgeting, paying off debt or need a structure to manage your finances, we can help. Our approach is to give you sound guidance in a compassionate, caring and simple way as personal finances is personal and we believe in helping people retain their dignity in the process.
You can learn more about our coaching services here on the Grow Your Abundance page. If you are interested in our other programs, you can check out our “How to Improve Your Finances” Course as well.
These tips will help you stop feeling tired of being broke
If you are feeling tired and depressed because you are broke, I am here to tell you that there are options and you can get out of this situation.
Apply the tips outlined in this blog post and you will be on track to get out of broke living and start to build wealth. All you need to do is be open-minded and willing to make a behaviour change and watch and see the financial magic happen!
Related Articles on Budgeting and Managing Money
- How to Create a Budget that Works
- Learn how to organize your finances
- How to Pay Down Debt + Free Printable
- How I Paid off $3000 in Credit Card Debt in 3 months
- How to Save Money when you live paycheck to paycheck
- How to Improve Your Finances in 90 Days if you live Paycheck to Paycheck
Are you broke and looking for ways to improve finances? Let me know your thoughts in the comments below!
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