Are you tired of being broke? It’s something you might be asking yourself currently or maybe you are just realizing it’s becoming more of a problem in your life. Now, being broke doesn’t mean you have no options or way out. But it will require some dedication and planning to work your way out of any bad financial habits.
But generally being broke means that you are spending above your means or barely able to cover any living expenses. Don’t worry, you can break the financial funk and get on a better path! Below you’ll get tips that helped me to stop being broke (and can help you too).
1. Change your mindset and attitude
One of the more important aspects to stop being broke and look at money differently is your mindset and attitude. It has to start here, otherwise you won’t stick with the work or changes, especially if there are roadblocks along the way.
It’s easy to normalize your situation and just accept your fate of always being broke. But that mindset will ensure your financial health never changes. Nor will you find yourself caring to make changes because it appears there is no way to change your situation.
2. Make a list of your expenses
Listing and organizing your monthly expenses is not exactly fun, but it can be super revealing to how you spend your money. It’s easy to think you know the money you spend and what income you bring in — but writing it down gives you the concrete numbers. Plus, it can surprise you and unveil quick money saving wins.
3. Start reading and listening
So if you were like me, I had no clue about investing, building wealth, and other financial techniques. Don’t get me wrong, I wasn’t a complete noob when it came to the very basics of personal finance but I had a lot to learn.
The best way to not only help shift your mindset but also to learn is to read books and listen to podcasts. There are tons available for you to choose from, which can be a daunting task in itself.
4. Lower your big expenses
While you want to keep your expenses low, I don’t think you need to cut everything out of your life. However, if you are tired of being broke then you might want to spend more time analyzing your big three expenses. Those are housing, transportation, and food. Often, people find themselves broke because they are living beyond their means. Look at your overall cost of living and housing.
5. Being frugal will be a must (for now)
While I enjoy nice things from time to time, in order to stop being broke you’ll have to live a more frugal lifestyle for awhile. You might even adopt it for the rest of your life, even when you aren’t broke anymore. It’s a personal decision that will be up to you to make.
6. Stop comparing yourself to others
Something I battled with early on was comparing myself to others and what they appeared to have. You know as you see friends or colleagues getting new big houses, new cars, traveling to expense places — and you are wondering how you can keep up.
However, you’ll never stop being broke if you are constantly trying to “Keep up with the Joneses.” You don’t know everyone’s personal situations, many of which are people also trying to keep up appearances or going into debt to do so.
7. Create a debt payoff plan
One reason you may be tired of being broke is the amount of debt you currently have and the interest on it. For many, it’s a vicious cycle where the interest adds on more than you can payoff, so even after years of paying debt off you are making little to no progress.
In order to escape feeling broke, you need to get more aggressive on how you pay off your debt. There are a few options, which will depend on your goals, how much debt you have, and what you can afford to pay.
8. How can you make more money?
Cutting back expenses, living frugally, and having a debt plan will certainly get you on your way to not being broke, but can only help to a certain point. If you are tired of being broke, you need to find ways to make more money.
Making more money will take work, but you have more options than ever before to increase the amount you bring in each month. And not every job or option to make money will be glamorous, but you do what is needed.
9. Write down financial goals for yourself
Your first big financial goal if you are reading this post is probably to stop being broke. But beyond that, you should set short-term, mid-term, and long-term goals that you can work towards too. It can help you stay focused and work towards something worth achieving for your personal finances or your family’s.
Your financial goals will be personal and depend on what you are currently looking to achieve in each goal setting. But do this constantly and when you finish a goal, celebrate it! Even if it’s something small or simple, you are doing more than many people do for themselves.
10. Start investing ASAP
While this won’t necessarily stop you from being broke right away, it starts to build good financial habits. Investing as soon as possible (even with a little money) will help grow and shape your retirement down the road.
Certainly, more money invested will help compound quicker over the years, but you don’t need thousands (or even hundreds) to get started. If your company offers a 401k, take advantage of it even if you can only afford to contribute 1% of your salary.