How To Save Money When You’re Broke

man holding wallet with $1 that he saved while broke

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When you’re broke, saving money might seem like an impossible task. The thing is, this isn’t the case, and there are various ways in which you can accumulate your money and set it aside for future needs. Having the right mindset and following some guidelines can help you immensely. Below are just a few of the best ways to get started with your financial goals.

Make a Realistic Goal as to How Much You Want to Save

When setting your savings goal, you’ll want to be realistic about it so that you can achieve it. Whether you’re saving for a down payment on a home, setting up your kids’ college funds, or for an extended vacation, having a specific goal in mind will help you stick to your plan.

Next, set a deadline for your saving plan, so you’ll know exactly when you’ll accomplish your goal. For instance, if you plan to buy a car, this could be a short-term goal. But if you’re planning your retirement, this will take longer and require more thought into planning and execution.

To help you better achieve your goals, it’s best to break them down into smaller, more achievable chunks. For instance, if you’re planning to purchase a new phone for $1,000 in the next three months, then you’ll need to set aside $334 every month. However, this could feel overwhelming, so you can break this down into a weekly savings of $84 to make it a bit more manageable.

Track Your Spending and Determine Where You Have Excess Spending

When your bank account is running low, the best way to get it back on track is to set up a budget for it. Creating a budget will help you keep an eye on your money and figure out where any leaks are coming from. In the next 30 days, be sure to list down all your expenses, which should include:

  • Rent or Mortgage
  • Groceries
  • Personal expenses
  • Insurance
  • Entertainment
  • Transportation expenses
  • Utilities
  • And so on

Be sure that you know where each dollar is going and at the end of your 30 days, look at how you spent your money. As you look through your expenses, ask yourself the following questions:

  • Did you spend money on anything unnecessary?
  • Where did your money go apart from necessary expenses?
  • Do you have any expenses that can be substituted for low-cost options?
  • Are there any expenses that can be reduced or eliminated?

While this may sound like a lot of work, you’ll discover a lot of things simply by tracking and analyzing where your money goes every week. If you’re looking to save money while you’re broke, it’s important to control your income and expenses. Developing a budget is the best way to do this because it will provide you with an insight into how you can best stretch every dollar and leave some to go to your savings.

Pay Off Credit Card Debt

Get off on the right start by lowering your debt, and the best way to do this is by minimizing your interest rates. The app Trim can help you negotiate your credit card APR with your bank, which will lower how much interest you’re paying each month. This will then save you money as you’re paying down your card or cards.

Here are a few things you can do to get started with a debt-payoff plan:

  1. Get all of your debt statements together, which will include things like:
    1.  Mortgage
    2. Credit cards
    3. Car loans
    4. Student loans
    5. Other interest-bearing loans

You can also add medical bills because while they don’t have interest, they are also counted as debt. Be sure to write down details on these debts, including the balance for every loan, their interest rates, and their minimum monthly payments.

  1. Prioritize the order in which you plan to pay off the balances of your debt. This will make it easier to manage and allow you to eliminate one source of debt at a time. You can either pay off debt with higher interest rates first, or you can go for those with a smaller balance first.
  2. Determine the amount you can pay from your debt each month. By finding ways to limit expenses and by creating more sources of income, you can get rid of your debt quicker.
  3. Start making payments on your debt balances with an exception to the one with the highest priority. For this debt, it’s best to maximize the payment you make with your remaining money.

Now that you have a plan, be sure to put it to work right away. Once you get started, stick to it — staying focused on the goal will increase your chances of becoming debt-free. When you get out of debt, you’ll be able to use your money to instead grow your finances as well as establish savings and even investments.

Use an App to Get Cash Back on Everyday Purchases

Much like using food apps to add deals to your card, you may also find great opportunities on apps such as Ibotta for household items or groceries. Just look through the various cash-back offers available and add them to your account. It’s easy enough to use and you’ll be able to get cashback on any qualifying purchases in as little as 24 hours.

Another app that you can use is Swagbucks, which works for purchases made while shopping online. Rather than buying your clothes or gadgets on a store’s website, be sure to first log in via Swagbucks and browse through the store. You can then click on the store through Swagbucks and it will log your purchase. Any shopping cart you check out within this platform will provide you with a cashback automatically.

Set Up Automated Savings

To save up money is to set up automatic withdrawals from your bank as one part of automating your finances. This can be done through a direct transfer from your checking to your savings account or you can use apps as well. Digit is an app that analyzes your spending and saves some money for you — it then provides an update every day on your bank balance.

Another app that can help you save is Acorns, which takes a set amount of money from your account every week, and then invests it into stocks, mutual funds, or electronically-traded funds that you choose. Either way, automating your savings is an easy and effective way to save your money, even if you’re broke. When you take your money and put it into savings before you even spend a dollar, it helps to prioritize your financial future.

Another way to save automatically is by setting up a direct deposit or auto-transfer so a part of your paycheck will go straight to your savings before it even gets into your checking account. But if your bank doesn’t offer this option, you can do this manually through your bank’s website or using a mobile app like the ones mentioned above. Once you have some funds set aside, this is the time to spend your remaining money on bills and other purchases.

Even if you’re low on money, you might think that you won’t have any leftovers to save. Even saving $5 a day leads to $1,825 saved each year, which can be even more if invested.

Increase your Income

While there are plenty of ways to save money, it’s even easier to do when you have more coming from different streams of income. Finding other ways to make more money will certainly help you reach your goals faster. Here are just a few ways you can look into:

Asking for a Raise

When asking for a raise, document everything you’ve been doing that has helped your company and your boss. Whether you’ve helped the company make more money, save money, or you’ve helped solve problems that no one else has – bring your best qualities to the table when asking for a raise. By showing off how valuable you are to the company, you greatly increase your chances of getting paid more, as the company will not want you to leave for another job that pays better.

Do Part-Time Work

If you have a lot of time to spare, it’s good to look into starting a part-time job or a side hustle. A side hustle is perfect for most as you can spend as much or as little time doing it and you can earn some extra money on the side. Even earning an extra $50 per week through a side hustle can add up immensely over time and help you pay off debt and invest for your future.

Use Consignment Stores to Buy Common Things

People can make money from selling their unwanted things, but you can also save money by purchasing used goods from others. If you’re too broke to save, then you’ll be able to free up some cash by purchasing used clothing, furniture, houseware, and other items rather than buying something brand new at full price from a store. Moreover, thrift stores are also great places to find used goods for a fraction of the price.

If you’re looking for something specific, you can find just about anything on eBay, or you can look for local sellers on Facebook Marketplace. You might also want to visit Saturday morning garage sales, where you’ll find that sellers are a lot more willing to get rid of stuff rather than make a profit out of things. It’s also beneficial to check out the FREE section in online classified ads.

With it, you can set up an email alert to notify you of the latest things that people want to give away for free within your local area. One last thing you can try to free up your cash is to go on a spending strike. This involves not buying any shoes, clothes, or housewares for the next few months. You can use this as a training exercise in how to control your income while prioritizing your financial goals.

Work on Stopping Impulse Spending and Save Money You Would Have Spent

The good thing about tracking your spending is that it helps you develop a sense of discipline — you may start noticing that before you make a purchase, you think about it first. This is where accountability starts to kick in, and the more you think and write about your expenses, the less likely you are to splurge on unnecessary things. However, if you find that you’re still making impulse purchases, here are a few other tricks you can try:

Set Rules for Yourself

To stop yourself from making impulse buys, you need to commit to not making purchases. This can last anywhere between 24 hours to as long as a month or longer. One way to do this is by adding an item to your Amazon wishlist, then ignoring it for the set amount of time you want. Doing this will give you enough time to consider your purchase.

You’ll find that a lot of the time, you don’t need the item, so there’s no longer a need to keep it there. Moreover, you can set a limit on your impulse buys. For instance, you can buy anything you want under $25 but everything above that will need to wait for a day or two. Remember that while the rules are completely up to you, the goal is to save money, rather than looking for ways to purchase things.

Learn More About Personal Finance

If you’re truly interested in getting out of debt and getting started with savings, then it’s up to you to find out as much as you can about personal finance. This won’t just help you on a personal level, but it will also teach you skills that you can use for the rest of your life so that you never have to struggle financially again. There are plenty of online courses on personal finance that you can check out from online course providers such as Udemy, Skillshare, and Coursera.

Have No-Spend Days

Having days where you spend no money whatsoever gives you opportunities to save. Of course, you’ll still need to pay for your bills, groceries, and other expenses, but we’re talking about the Starbucks coffee every morning, the junk food you buy every week, and the money you spend on little transactions like on your phone games or on Amazon. Each of these expenses adds up as you continue to pile them up, ultimately keeping you from your goal of saving.

To help you with this no-spend challenge, be sure to pick out a day or two where you commit not to spend any money. This means no chocolate chip frappe, no Lays, or any small purchases online or on your phone. 

Reward Yourself for Saving Money

The best way to keep yourself motivated through such a hard process is to make the journey fun. You can do this by giving yourself some positive reinforcement along the way. This will help you develop better spending habits.

A great idea for a reward is to set a spending goal, then allow yourself to use whatever money is leftover any way you want. For instance, if you only spent $200 on food last month instead of the usual $400, you can use half the leftover money to purchase something you enjoy and the other half can be transferred to savings.

Benefits of saving money

If you’re able to stick to your saving plans, there are plenty of benefits to saving money, such as:

  • Getting out of debt
  • Having savings for things you want to do
  • Establishing your retirement funds while you’re younger
  • Having financial freedom instead of worrying about money
  • You’ll have emergency funds for unexpected expenses

Wrapping It Up

No matter how you look at it, saving money is always a beneficial move compared to living on a paycheck-to-paycheck basis. Moreover, it helps you live a debt-free life where you can enjoy doing things confidently without worrying about using up all your income before you can even enjoy it. The best part about saving up is that you don’t have to stay broke for long — the moment you decide to establish your savings goals, you get started right away.