What To Do If You Are Broke: A Guide For Money Troubles

What does it mean to be broke in a financial sense?

Being broke means having no funds available to you – you can be broke if you have debt, as well. While being broke means you are either out of money or in debt, the word is sometimes used more loosely to describe someone who does not have a lot of money or someone who can barely afford life necessities.

Who can be broke?

Anyone can be broke or become broke. There is no guarantee that a wealthy person will not go broke because they can lose their riches. At the same time, someone who is barely scraping by can go broke or become rich. Either of these people and anyone who falls in between can go broke or become rich/richer.

How to stop being broke

The reality is there is no guaranteed way to stop being broke nor to prevent yourself from going broke. This is life; anything can happen and some things may be out of your control. However, there are things you can do if you are broke that could possibly help you stop being this way. These strategies could even help make you rich (but don’t go too far yet). First, do these things if you are broke.

1. Budget your spending

Try to do this on a piece of paper. Write out a list of all your monthly expenses (what and how much). Calculate the total and find the difference between it and your income (also include anyone else’s income who may be living with you and/or helping with expenses).

Create a financial plan based on the expenses you laid out. If you have extra money at the end of the month you should be saving that money and possibly putting it in no-risk savings accounts where it can earn interest. If you want to save some extra money or if your expenses are more than your income, consider doing a financial overhaul to find ways to save. This brings us to our second point.

2. Eliminate or control unnecessary expenses

With your expenses considered, start looking for ways to make these more manageable. For starters, look to see if you have any costs for products or services that you shouldn’t have or don’t need. Cancel services that you don’t absolutely have to have.

Next, check to see if there is any potential to lower amounts of certain payments. You might have a very expensive mobile phone plan. Try researching to see if you can move to a more affordable plan. You might want to shop around for other service providers, as well. Careful of any contracts you may be locked into. This applies to many other monthly expenses, as well. Internet, home phone, TV, etc. – all of these are common monthly expenses that often have opportunity for a cheaper plan or switching to a cheaper provider.

There are also more extreme ways that can help control expenses. You might want to consider selling a car and/or downgrading it. If things are serious, you could consider downgrading your home.

If you live a more expensive lifestyle filled with luxuries this can rapidly drain your funds. Check your expenses to see if you’re spending too much money on enjoying life and try to find ways to stop spending any money on this (or at least not too much). Having fun does not need to be expensive! There are plenty of fun activities that are free. You don’t need to eat out too often, either (if this is an issue for you). Try making some home-cooked meals to avoid spending in restaurants. Shopping might also be a financial burden for you. Shop only for things you need, not just for fun or to acquire luxuries.

3. Work more hours or get another job

A work-life balance is important but so is making sure you are financially stable. If things are or get serious maybe you should look for more hours at work or a better job. You might be able to get a promotion at work to climb up within your company. This is often easier than finding a new job because you’d be working with an organization you’re already a part of.

Another option here is getting a second job. This might not be ideal from a work-life balance standpoint, but it could be necessary to help yourself get by. If you need to, start applying to other jobs (part time or full time, depending on your availability). You might need to fine-tune your resume to improve your chances.

4. Start or grow an inexpensive business

Having your own financially rewarding business can help add some extra income or be your main source of income. What you do here depends on what you are skilled to do. There are many options for business ideas, many of which can be done right from the comfort of your own home. Look into easy business ideas and do thorough research on how to start these and/or make them profitable.

5. Do freelance work

Freelance work is often easier than getting an actual job because there tends to be less stringent “hiring” processes. Freelance jobs also offer the opportunity to make some extra money. Some of them give freedom in terms of work schedule, which can make it more manageable if you have a main job or other responsibilities. Do some research online for companies that hire freelance but do be careful as some of these might not be legitimate.

6. Save money

This one may seem obvious but it is also important to mention. If you can save any amount of money (no matter how much) then you should do so. Determine if you can put your saved funds in no-risk savings accounts that pay interest.

Having money saved up can be a game changer in the event you are short on cash in other areas and need to tap into your savings. Avoid reaching into these unless you absolutely need them.

7. Resolve debt

Debt can be a massive burden if you are broke. This is especially the case if you are paying high interest on loans or a mortgage. The sooner you can pay off any money you owe, the better. Avoid taking money out unless you are aware of the interest and are able to make payments.

Debt in the form of credit cards is no exception here. Make sure you are paying your credit card off at whatever pace is comfortable for you. Your credit card should have no monthly fee, and balances that you can pay early and avoid interest on. Bonus points in this area if you can find a credit card that offers points or cashback.