For many Americans, feeling “broke” is a part of everyday life. Bills can pile up quickly, kid’s school costs pop up out of nowhere, and unexpected expenses can sink your budget. When all these things combine into a perfect storm of bills, you may be left with little-to-no money for anything else. But it might make you feel better to know that if you’re tired of being broke, there are ways to fix it.
It all comes down to the drive and determination to change your current situation. It is possible, no matter how daunting it may seem. There are ways to make more money, ways to pay all your bills and still have enough money left over for other things. You just need to create the proper habits and behaviors to make these things possible.
1. Turn Bad Habits Into Good Ones
Habit formation is the biggest key to changing your life. If you can take control of your habits and change them for the better, you’ll be well on your way. And several bad financial habits drain our bank accounts.
Spending money that you shouldn’t is a common way to ruin a budget and leave you with the funds you need. It may be tempting to buy the best of the best, but you’ll save more money by paying better attention to where each dollar is going.
Let’s take grocery shopping, for example. Several grocery stores offer low-price options. And most products you need are available in generic versions that don’t carry a name brand or high price tag. It may seem tedious to pay attention to every penny, but those pennies add up. If you choose the cheaper version of every grocery item you need, you may actually save a large chunk of change.
This same principle applies to pretty much everything you need: clothes, office and school supplies, electronics, and more. Shop at local thrift stores or the Salvation Army. Post on social media to see if any friends or family have what you need and are willing to offer it for free. Many apps allow you to buy and sell items in your local community.
To be financially independent, you need to learn how to stop overspending.
Wants vs. Needs
Understanding the difference between wants and needs is a large part of becoming financially stable. Knowing exactly what you need and don’t need can save you money in the long run. Obviously, you need groceries, a roof over your head, and clothes to wear. But do you really need five different streaming services because the shows you watch are all on different ones? Unfortunately, you do not.
It may be tough to part with certain luxuries, but doing so can set you up for financial success in the future.
When it comes to financial stability, sometimes you may be required to deny your impulses.
Learning how to stop yourself before making an impulse purchase is very important. Find ways to distract yourself, change your focus to something else, remind yourself that it’s not practical. If you tend to make large purchases on the fly, there are a few ways to become more mindful.
When you’re thinking about making a big purchase, try to stop yourself by opening your bank account app on your phone first. If you can interrupt the impulse and remind yourself of what’s essential, it may help you to avoid the purchase. Maybe try taking a few moments to focus on your breathing and ground yourself. This may help to clear your mind so you can think more realistically.
2. Improve Your Credit Score
Boosting your credit score is a big part of mastering personal finance. A higher credit score will lead to better loans, credit cards, interest rates, and more. And if you can avoid costly loans and interest rates, you’ll save more money. There are a handful of proven ways to increase your credit score over time:
Become Debt Free
Lowering your overall debt is one of the most significant ways to improve your credit. Even if you only have a little money left over each month, it’s wise to put it toward your existing debt.
Paying Your Student Loans
Student loan debt is a big part of many people’s lives. You may be paying them off for years. And if you don’t make your payments on time, it can lower your credit score. Many lenders will be willing to work with you to make sure your payments are manageable. Do your best to pay more than the minimum payments each month, and they’ll be paid off before you know it.
Paying Off Your Credit Card Debt
Credit card debt can pile up very quickly if you’re not careful. The best way to manage a credit card is to only use it if you have the funds to pay it off immediately. This way, you’ll avoid interest charges, late payment fees, and more. And you’ll get whatever rewards come with using the card. It’s extremely important to pay off your credit cards quickly. And if you’re worried that you can’t, then don’t even use it, to begin with.
Make Payments on Time
Paying all of your bills on time will also help to improve your credit score. When you miss payments, there’s a chance that could show up on your credit report. If the company you’re paying reports on-time payments to the credit bureaus, then late payments can sink your credit score.
Create a schedule, a budget, and a clear plan to pay all your bills on time. Set up auto-pay for any accounts you have that offer it.
Avoid New Forms of Credit/Loans
Taking out new loans, lines of credit or even credit cards can potentially lower your credit score. If you’re doing this too often, it will tell banks and lenders that you’re not financially stable. This will lead to a lower credit score.
The rule of thumb is to avoid opening new loans or credit accounts unless it is absolutely necessary. If you can avoid a new loan or credit card, you should. Find creative ways around this. Instead of getting a loan for a new car, save up for a while and buy a used one. Instead of opening a new credit card, consider a part-time job to increase your income.
3. Learn How To Save Money
Saving money is another crucial part of a healthy financial life. It may help you handle financial emergencies or even avoid having to borrow money when times are tough.
The best way to save money fast is to start small. Open a savings account and add a little bit to it each month. Over time, you may be able to start adding more money. Eventually, you’ll have enough money to take care of a challenging financial situation when it pops up.
It may seem difficult to save if you’re struggling financially. This is where budgeting and planning will help. Create a full budget every month, and find out if you have any extra money you can put away. If you don’t have extra money each month, focus on our next tip, increasing your income.
4. Increase Your Income
Obviously, it makes sense that if you have a higher income, you might not feel broke. But that’s easier said than done in most cases. Getting away from that “broke” feeling will take some hard work and dedication. And it may be even more difficult if you’re living on one income. How you increase your income may depend on how much time you have and how much money you need. Here are a few options:
Finding a New Job
If your current job isn’t cutting it, you might want to start looking for a new one. If your income is not enough money to cover all of your expenses, then that’s a good indication that it’s time to job hunt.
Start by talking to family and friends, post on social media, ask around to see if you know anyone that has a connection to a job opening. It’s not uncommon for people to find jobs through family, friends, and peers. Many websites allow you to search thousands of job openings based on your specific skill set.
It may take a lot of time and effort, but hitting the job search hard could help you get the new income you’ve been hoping for.
Getting a Part-Time Job on the Side
If you aren’t interested in leaving your current job for a new full-time job, you may be able to supplement your income. One good way to do this is to find a part-time job that you can perform in your free time.
You can find these jobs the same way you would find a full-time job. Online searches, friends and family, and driving around your community to talk to local businesses.
A side hustle is basically a part-time job, with some minor differences. Many would consider a side hustle to either be a job that allows you to create your own schedule or possibly one that involves a hobby or passion.
Creating an Etsy shop to sell your art could be considered a side hustle. Even driving for a ride-share app or working for a food delivery app may be a side hustle. These can be great options for adding some extra cash, saving money, and getting your finances back in line.
The Bottom Line
Becoming debt-free and getting the quick cash you need on hand might be a long journey. But all the hard work and dedication will be worth it when you master the personal finance basics. You’ll have an emergency fund for unexpected expenses, cash when you need it, and great interest rates on loans and credit cards.
Making money isn’t always easy, and making enough money for all your bills and expenses is even more difficult. Consider a second job, a higher paying job, or one of the side hustles we mentioned. These strategies, combined with better financial goals and habits, can help you to finally make ends meet.