Saving money that you don’t have
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Never Broke Again!
Before we jump into the ways to save money when you are broke, let’s start with some motivation. If you are broke now you must understand that it is a temporary state that you can change. You must change the way you think before you can change your financial situation.
Grab a tissue and listen to this emotion story from Lisa Nichols. It will change your life.
How to Save Money When You’re Broke
There are a number of things you should be doing if you’re broke and saving money is high on the list. After listening to Lisa’s super motivational story, you should be super inspired and ready to start saving. Here are a few steps to take to start your savings journey.
Open a Savings Account
The first step to saving money when money is tight is to open a savings account. This allows you to separate your spending money from the money you need to save. Separating your money gives you a clear visual of your savings. It can also make it more difficult to access your savings in case you are tempted to spend it.
If you do not have access or do not like banks you can choose another method of separating your money. The goal is to keep the money you are saving in a secure place that is totally separate from the money that you use for day to day living.
Create a Budget
The second step to saving money when you are broke is creating a budget. A budget will give you a clear picture of what your expenses are and how much you will have to save each month. Creating a budget is an essential step in managing your personal finances.
Download a copy of our free Monthly 50/30/20 Budget Worksheet. It’s a free excel spreadsheet to help you create and maintain your budget.
Set a Savings Goal
After you have a full understanding of your finances, it is time to set a savings goal. Determine the exact amount or percentage of your income that you would like to save. This will give you a hard target that you must adhere to.
Use your budget to determine a daily, weekly, or every two weeks savings goal. Most often your saving frequency will line up with your paydays. This will make it easy for you to set aside your savings immediately when you get paid.
When you initially start learning to save money, the amount you save isn’t important. You need to get yourself into the habit of saving. Don’t worry if you don’t have a lot of money to save. Saving as little as $5 doesn’t sound like much. However, it will put you in the mindset of saving and allow you to find it easier to save more money when you have it available.
A major part of saving money is having money to save. Your first step in freeing up more money in your budget is to limit your spending. This means spending wisely on the items that you need to live.
When it comes to your living expenses, ensure that you a living as frugal as possible. Make sure you are getting the best deals on things like insurance and gas. Also, ensure that you are not wasting money on utilities by leaving lights on unnecessarily or using excessive amounts of water. You should also ensure that you are purchasing frugal foods and making frugal meals.
Eliminating extras goes hand in hand with limiting spending. Extras would include anything that is not essential to your day to day living. This includes cable TV, trips to the nail salon, gym memberships, music subscriptions, and eating out just to name a few. Most of these items are causing you to spend unnecessary money anyway. For example, you can get a great workout at home without any equipment needed.
Take an inventory of the extras that you have in your budget and decide what needs to be cut. I don’t recommend eliminating all extras as making yourself too uncomfortable will cause you to abandon your savings goals. For example, you can cut cable TV and keep a subscription to Netflix. Netflix is an extra however if you don’t have any entertainment at home you might be tempted to go out to dinner and movies causing you to spend more money.
Get a Side Hustle
Another way to have more money to save is to get a good side hustle. A side hustle is a way to make money outside of your main job. You can do this by getting a traditional part-time job or by creating your own side business. There are multiple ways to make extra money online or by doing needed tasks in your neighbourhood.
Side hustles can help you get through times when spending extra money is required like birthdays and holidays. During these times you do not want to stop saving money as scheduled. You also do not want to tap into your savings to buy gifts. A side hustle is just want you need to make the extra money you need for any holiday or special occasion. Here are a few ways you can make extra money before Christmas.
The money from your side hustle can be used to increase the amount that you save or to help with unexpected expenses. Don’t make the mistake of spending more because you are bringing in extra cash.
Finally, selling unwanted and unused items is a great way to gather up extra money to save. There are tons of websites and apps available that make selling your stuff easy and most importantly safe. Utilize sites such as the Declutter, the Facebook marketplace, Letgo, Offer Up and eBay.
Saving is Hard But Doable
Saving when you’re broke is hard but it is definitely doable. Make up your mind that you are going to start saving, figure out your savings goal, watch your spending, and work on bringing in extra money. With these steps you’ll be on your way to filling your savings account and no longer being able to call yourself broke.
Leave a comment and share some of the ways that you save money even when money is tight.
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