Managing Your Money When You’re Broke (2024)

Managing Your Money When You’re Broke

Budgeting money is rarely easy, but it’s challenging when you don’t haveenough to pay your bills. You might be between jobs or have ajob that doesn’t pay well enough to address your expenses. Either way, changing how you spend your money when you’re so short on funds is essential.

Follow these steps for effective money management when you’re seriously broke:

1. Be proactive. Don’t wait until the collection agencies start calling. They arerelentless and aren’t known for being understanding. They only get paid whenyou pay them so that you can see their priorities.

• Call your creditors as soon as you can see that you won’t be able to make apayment. You might be able to work out some extension or getreduced payments for a while.

2. Prioritize. Life is all about priorities. So first, please look at your available money and then prioritize your bills accordingly. Your mortgage,essential utilities, insurance, and food will typically come first. Credit cards are usually last onthe list.

• Please consider the consequences of not paying each bill and make a decision.
• Do this step after you’ve contacted your creditors. Your decisions mightbe different, depending on their responses. Now is the time to ruthlesslycut all your unnecessary expenses. Austerity has its time and place, andthe time is now.

3. Cut back on your savings plan. This might be the one time to stop saving part of your paycheck. The expense and ramifications of not paying your bills might betoo great to cut yourself even shorter to make your savings payment.

• You’ve always heard of paying yourself first, but sometimes that’s inappropriate.

4. Avoid relying on credit. When cash is short, it’s a common practice to startusing credit cards to replace a paycheck. Unfortunately, the cost of this money can be incrediblyhigh, and this debt is difficult to eliminate later on. Don’t fall into the trap ofviewing credit as a viable solution.

• Consider how much you’re generally able to save and then project howlong it would take to pay off this new debt. You already have more obligationsthan you can handle. It doesn’t make sense to add even more to theequation.

5. Create more income. If you don’t have a job, take anything you can get for thetime being. If you do have a job, consider adding a second job or getting someovertime. If you have stuff lying around the house that you don’t need, it mightbe wise to sell it.

• The less you fall behind now, the easier it will be to catch up later.

6. Make a new budget. This might be the last thing you’re in the mood to do, butyour financial circ*mstances have changed, or your current budget isn’tworking. Both reasons suggest that a new budget is required. Take a look atyour income and bills and make some intelligent choices. Remember that it’s allabout prioritizing intelligently.

In stressful times like these, it’s easy to succumb to your anxiety and not take action,but understand that this course of action will only make your challenges greater inthe future.

Take a deep breath and do everything possible to get back on track financially. You’ll be surprised how much you can accomplish when you focus yourintention and energy on solutions.

Prioritize your bills, increase your income, and make a new budget. Things will bebetter before you know it.