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.
And there are various reasons why you might be struggling financially and living paycheck to paycheck currently.
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).
How Do I Stop Being Broke?
After graduating college in 2010, I was excited to start my career and begin living on my own. Mind you that financial independence is a great thing, but not so much when you are not as prepared financially as you may think.
From that time period of 2010-2014, I call this my “financial dark age.” It’s where I made quite a few bad financial decisions and I did not notice until I started financially struggling.
I deserve no sympathy because it was my own doing and financial ignorance! Here’s just a few mistakes that caused me to be broke:
- Mistake #1: Moving out after graduating with no real savings
- Mistake #2: Buying a new car when I already had student loan debt
- Mistake #3: Being complacent in a new career that was going nowhere (for 4.5 years!)
- Mistake #4: Not actually paying attention to my income or expenses
- Mistake #5: Staying in an apartment I could barely afford at the time
Mind you, my salary was $30,000 per year pre-tax and during those four years, got to $35,000 max. That was the most I ever made in my life at that time, but not enough to live on my own, pay debts, and hopefully still save money.
In 2013-2014, I started to really notice how broke I was. Sure, I had a little in a company 401k that I didn’t understand, but my savings was less than $1,000 and I was living paycheck to paycheck.
I started to ask myself, “How do I stop being broke?!” and “Why am I poor?” Naturally, I was being a little dramatic on the “poor” aspect.
I had a job with health coverage, a 401k, and a roof over my head — so not all was doom and gloom. Looking at the positives is always a good thing, but I couldn’t ignore how pathetic my finances were looking.
How to Stop Being Broke
So how do you stop being broke? That question plagued me for a bit a few years ago and that’s when I began putting a plan in place.
Naturally, I did not have much financial literacy, so I had to research and put my own plan in place. But here’s what worked for me and I think can help you too (hopefully!).
1. Change your mindset and attitude
I think 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.
I can’t tell you what will work for you, but find a way to get motivated and alter your thinking when it comes to money. It will help you for your entire journey and even for the rest of your life.
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. I use a combo of Personal Capital and a spreadsheet, which I can check as frequently as I want.
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.
But to save you time, I’m going to list some of the ones over time that taught me everything in those beginning stages:
- Rich Dad, Poor Dad
- The Millionaire Next Door
- I Will Teach You To Be Rich
- The Simple Path to Wealth
- Your Money Or Your Life
- MONEY Master the Game
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.
- Are you being too much for rent or a mortgage? Can you downsize or move to a more affordable location?
- How about your vehicle? Can you shop around for a more affordable car? Maybe not have a car at all and use a bike or public transportation?
- Are you monitoring your food spending? Start eliminating going out to eat so much? Are you monitoring sales and using coupons when food shopping? Can you shop elsewhere for better prices?
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.
Personally, I’m still conscious of my spending but I don’t follow frugal living as strictly as I once did. But overall this means you are cutting costs, not wasting money or food, budgeting, and spending as little as possible to live.
If you are tired of being broke, then being frugal must be part of your plan to help create some financial breathing room.
- Couponing is your friend
- Become more thrifty
- Buy used and in bulk
- Cut back on entertainment and buying when you go out
- Use cash back apps when you do have to shop to get some money back. Free apps like Ibotta and Rakuten are good options.
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.
I started to tell myself that over and over. To the point where, I did not care what others had and was only focused on my own goals. If you can remove caring about “stuff” just to impress people and realize the majority are falling victim to that trap, you’ll be more focused on saving than spending.
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.
- Debt Snowball – You pay off debt from smallest to largest, helping you knock out small wins that keep you motivated.
- Debt Avalanche – You make minimum payments on each source of debt, then use the extra to the debt with the highest interest rate.
- Debt Consolidation – You roll multiple debts into a single payment, which can lower your interest rates and make payments easier. You can use a free service like Credible to find the best rates and apply.
I chose the debt avalanche option to take care of my car loan and student loans. I was able to pay off my car loan one year earlier and my student loans two years earlier as well.
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.
You have more options than ever to bring in extra income and you can focus on three key areas to do so:
- Improve your career worth
- Start a side hustle
- Look into the gig economy
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.
I took on freelance work on the side, which led to more opportunities. At the same time, I read more books involving my career choices, listened to podcasts, took online certifications, and learned as much as possible.
Since 2014 and by doing that, I have nearly 3x my career income and started side hustles that brought me closer to 5x the total income I had back. Always remember to be careful of lifestyle creep as you increase your income.
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.
That may seem cheesy, but it’s something I really believe helps and keeps me focused as well.
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.
You can also look into other investment platforms where you can invest with as low as $5, round up spare change, or choose manage portfolios based on your goals. A few options to consider:
How to Survive Being Broke
Not only will the above tips help you survive being broke, but they will set the tone for the rest of your life if you stick with the process.
Majority of people are looking for fast results or shortcuts to improving your finances — there is none! (Well, unless you win the lotto or inherit a ton of cash).
You may even think that the above tips seem obvious, but in my 20s they certainly were not and I’m willing to bet many people are not thinking about those things either.
It happens, but it’s why personal finance is so critical.
The most difficult time period will probably be the first 6-12 months. Progress generally is slow, you will still feel trapped, and your patience will test you.
But if you’re tired of being broke, you want less financial stress, and one day you can look back and be proud of how far you made it.
Celebrate victories, even the small wins. And if you have setbacks, don’t get discouraged. Look at what happened and learn from it.
You’ve survived this far being broke and you can survive making tough changes to get to better financial health too.
Are you tired of being broke? How are you working towards fixing your financial life? Was there a time when you were broke? How did you escape it and what did you learn? Let me know in the comments below!