How can you manage money when you’re broke? Is it even possible? There are many reasons you could be short on cash right now, including being stuck in an underpaying job, losing a job, medical bills, having a failing business, or probably just because you overspent on your last paycheck.
Knowing how to manage your money when you don’t have much of it, to begin with, can be difficult. There are basic needs to meet, things to buy, bills to pay, and everything seems to keep draining your accounts. You live with the anxiety that if you don’t do something, your money will run out. And that is true. If you don’t do anything to manage the little money you have right now, you will end up completely broke.
There are many ways you can save and manage your money when broke or if you don’t earn enough, including budgeting, cutting expenses, and installing the best free money management apps available, among many others. This post will provide you with more tips on how to manage money when you’re broke or spend what you have wisely, and in so doing, get peace of mind and reduce your anxiety about finances.
How to Manage Your Money When Broke
- Create a budget
Not that it isn’t just as important when you are wealthier, but learning how to budget when you are broke is crucial. You can look for the best budget apps available to help you with money management.
Once you find the right budgeting app for you, allocate money to different expense categories such as food, bills, subscriptions, and gas, then prioritize them depending on their urgency and importance. Paying your bills and spending on groceries should be a priority. Budgeting apps are very effective at helping you plan your spending and learn how to manage your money when you’re broke.
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- Resell things you don’t use
Remember that extravagant dress or tuxedo you bought for a special function but never wore again? If you want to learn how to manage money when you’re broke, it’s time to get rid of things you don’t need anymore. It makes no sense for you to be struggling financially while you have things you don’t use anymore in your house that you could sell and get extra cash.
It could be clothes, shoes, furniture, books, electronic gadgets, vehicles, equipment, or anything else of value you no longer use. Reselling gives you more money to work with.
As you choose what to resell, you could take this opportunity to organize and declutter your house, which is a step in the direction of becoming a minimalist.
- Opt for second-hand items
New and branded items are expensive, and buying them while broke will drain your accounts for no good reason. You can often find the same things at a cheaper price and the same quality in other stores.
Since you are already struggling financially, you shouldn’t spend on branded items or new items. Instead, consider replacing them with generic brands or second-hand items as it will help you learn how to save money when broke.
Just like how the items you plan on reselling are probably underused or still new, most of the items sold in thrift stores are just as good as new ones.
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- Compare prices
If you’re already short on cash, you no longer have the option to just go into a store and select whatever you want without checking the price tags. This also applies when shopping online. If you want to learn how to manage money when broke, do not add things to your cart without checking the prices or comparing the prices from different shops that sell the same items you desire.
Check whether any of them have lower prices, offer discounts, or if there are any coupons available for the products you want. If the description and quality are the same, opting for the shop selling the item at a lower price is one way to save money when you’re broke.
Even though the difference might only be a few cents, doing this will help you learn how to manage your money when broke because these cents usually add up. You can’t afford to waste any money when you already don’t have a lot of it. Instead, look for every opportunity to save any extra cent you can when you’re broke.
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- Monitor your spending
Tracking your daily expenses can help you learn how to manage money when you’re broke because it ensures every cent is accounted for. By monitoring your spending, you can see where your money goes and what you spend most of it on. You can recognize when you have been spending on unnecessary or expensive things and cut those expenses to save money when you’re broke.
To monitor your spending, you could create a money management excel sheet, request your monthly statement from your bank, or use the best software and expense tracker apps that can help you manage money when you’re broke.
- Take your time
Do you really need that? When you don’t have a lot of money, impulse buying things should not be an option, no matter how tempted you are by the object you desire. To develop better spending habits and learn how to manage money when you’re broke, take your time before purchasing something.
Pause and think about the value you will get from whatever you want to buy and whether it is worth it. The urge to buy or spend on something is often just momentary, and some of the things we think we need right now, we probably will not feel as much desire to have tomorrow.
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- Eliminate unnecessary expenses
This is one is obvious, and, perhaps, one of the best ways to learn how to manage your money when you’re broke. There are so many things we spend money on that we probably can do without.
Cut your everyday expenses such as electricity and water bills by learning how to conserve energy and water. This could be through ensuring not to leave taps running, taking shorter showers, fixing water leaks, switching off lights and other electronic gadgets when not using them or switching to renewable energy, etc.
When it comes to foodstuffs, one way to save money when you’re broke is by not buying any excess stuff, even if you think you might need them. More often than not, you end up never using them, and then they get spoilt and have to be thrown away. Other ways to cut on the cost of food and save more money when broke include, cooking food at home, not ordering take-out, not eating out, forgoing your daily coffee, and not trying out recipes that require expensive ingredients.
As for rent or maintaining a big house when broke, you can save and manage your money by moving to a smaller house or apartment if the rent and cost of running your current place are too high.
Other things you can cut expenses on when learning how to manage your money when you’re broke and don’t have much of it include, subscriptions you rarely use, cable TV, phone bills, switching car insurance to cheaper ones, and any other unnecessary or overpriced products and services.
- Make more money
If you don’t have much money, don’t wait for it to run out. Instead, if you are broke, you can manage the little money you have by either finding ways to increase it or spending it to make more money.
For instance, you could start a side hustle, take on more work hours, get a second job, or use the little money you have as capital to start a small business as a way to increase your income.
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It is not easy to manage money when you are broke, but finding ways to do it is your best option right now. Install the best money management and budgeting apps available, cut on expenses, and be more careful with your spending to save money when broke. You can’t afford to let the little money you have go to waste by spending it on unnecessary or overpriced items. Use the above tips to learn how to manage money when you don’t have a lot or don’t earn enough.
How do you manage your money when broke or if you don’t earn enough?