7 Tips on How to Manage Money when broke

Most of us have been there.

A time when our pockets were bleeding out and we had to budget for our morning coffee and ended up deciding to do without the caffeine for a day.

A time when we’re desperately praying for the month to end so we can get the next paycheck. At this point, saving is not even an option as each coin down to the last is desperately needed.

So how do we manage in that period, what steps can we take to ensure we don’t fall into debt or depression due to our finances or lack thereof?

Let’s find out.

  1. Determine where the money went.

    Even though the milk has been spilled and your pockets are already bleeding out, it is important to determine where the money went.

    Sit down with a pen, paper, and a calculator for this. If you live with someone and share expenses, sit down with them too. Was there an emergency that needed your attention? Was and is your salary delayed? Did you purchase a luxury item on impulse? Did you spend extra dollars eating out?

    These are some good questions to ask yourself. I highly recommend having a spending journal where you physically write down your expenses. In fact, research shows that people who kept a spending journal were better at managing their finances than those who didn’t.

    If it is something beyond your control such as losing a job or medical expenses of an illness that just came up, identify it too and write it down in the journal.

    This being the first step is the most crucial because once you are aware of where your money is going, you can channel it in the right direction and prevent the same situation from occurring the next month.

  2. Budget what you’re left with.

    Since you’re tight on money, let go of the wants and instead focus on the needs. But just like anything else, there are different levels of needs depending on their importance.

    A good example is buying groceries and repairing the car’s engine. They are both primal things that you need, but the groceries carry more weight than repairing the car’s engine. Instead, you could opt for public transportation until you get things off the ground.

    Take a pen and paper, or better yet, use your spending journal. Point out all your needs in a list, then proceed to categorize them into high importance needs and low importance needs.

    Divide up your money and allocate appropriate amounts to the highly important needs first, if there is any left, feel free to allocate it to the low important needs.

  3. Temporarily Cut back on Luxuries.

    In life, we strive for things that make us comfortable. However small or however big, we choose to pay for these luxuries as they improve the quality of our life and make us feel better about ourselves.

    As good and as nice as they seem, cut back on them while broke. This may be the monthly spa visit for a facial and massage, golfing with your friends once a month, Netflix subscription, or even date nights.

    When you’re accustomed to these luxuries, cutting back on them is not as easy as it seems. You’ll probably feel the void left but in time you’ll realize that it was the right thing to do since you’ll have a couple of hundreds to spare.

    Thankfully, you can always renew your subscription once things are back on track.

  4. Learn to DIY

    Do it Yourself. This became a popular trend in quarantine where people were forced to try their hands at things they hadn’t before. There was little contact with the outside world and everyone was encouraged to stay at home to prevent the spread of the Coronavirus.

    Some learned how to paint their own houses and plumb it too. Others perfected various dishes as they could no longer eat out.

    After quarantine, the world has opened up one more and as long as the Covid 19 regulations are met, we’re free to call the professionals to our houses to help us out with repairs, etc.

    I believe that this DIY trend should not die out. There are so many things that we pay money for that we could do ourselves, they will only take a little bit of patience and resilience.

    A good example is taking care of your hair. While broke, instead of allocating money for a salon trip, go on Youtube and learn how to take care of your hair.

    You might find that the price of purchasing hair care products to be far cheaper than going to the salon. Taking into consideration that most of the salons charge an extra $5 sanitation fee due to covid 19, doing your own hair is cheaper.

    This also applies to food. Cooking your meals is cheaper and healthier than ordering takeout. If you have a very busy work life and don’t have time to cook on weekdays, prepare a meal plan for your week.

    Once the weekend arrives, prepare the dishes and stock up your fridge with them.

  5. Swap Credit card for cash

    A lot of people confess that they hate carrying money around with them. They opt for a credit card which is both very portable and safe to use in case of unforeseen circumstances.

    As much as the benefits are unarguably evident, the second you realize that you’re broke, swipe the card for cash. Use cash to pay for expenses such as groceries and transport.

    When using a credit card, the amount paid is usually added onto the debt you have and in turn, you’ll have to pay a higher monthly interest rate. You can’t afford to pay a higher interest rate than you already do, especially when broke.

    So don’t forget to leave the credit card at home while maneuvering through the supermarket to avoid being tempted.

  6. Sell some stuff

    Do you have extra furniture lying around, a scrap computer that could bring in some few bucks, or even an extra bed? This is the time to do away with them while bringing home some money.

    Pick a day when you’re free and can carefully sort through your stuff. To make it more fun and less depressing, you could call a friend over and put some loud music on to hype you up.

    You might find invaluable treasure lying around that might help you finish paying off the month’s rent. Afterward, make sure the items are nice and clean, and pick a date for your garage/yard sale.

    Advertise it on your social media and tell a friend to tell a friend. The more people who know about the sale, the higher the turnup and the more you’ll eventually sell.

  7. Turn your home into an Airbnb

    When Airbnb started in October 2007, a lot of people hadn’t heard of it but as the years went down, it picked up really fast and some of us have a one-on-one encounter with it.

    Airbnb gives people the platform to lease out their houses to others for a specified period of time, be it a night, a few weeks, or a few months.

    All you have to do is follow these simple steps:

    • Sign up at the Airbnb Host page
    Take good pictures of the space you’re listing and upload them.
    Pick your schedule, this includes if you’ll be leasing it for one night, or a longer time period.
    • Finally, pick your guest requirements.

    Picking guest requirements is a very crucial step that should not be overlooked. It gives you the ultimate peace of mind while leasing your house.

    Some requirements include a National Identification card/document, the maximum number of people allowed in the house, and if pets are allowed or not.

    While at it, you could crash at a friends’ or stay with your guests if all parties are comfortable with the agreement.

    Many people around the world have turned to Airbnb to make a few extra coins. You should try it too.

Even though it is incredibly hard to manage finances when broke, it can be done with these few extra steps and tips. Wishing you the best of luck!

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