How to Make Your Budget Work When You’re Broke - Savvy Savers Academy

How to Make Your Budget Work When You’re Broke


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Being broke sucks. I know, I’ve been there.

Budgeting when your broke might seem impossible, but the truth is, you need it more than ever if you’re short on cash. You literally cannot afford to go without a budget.

If you hate the word budget, turn it around and rename it to a spending plan. You’re going to spend your money (that’s what it’s for), so let’s make a plan to spend it with well thought out intention.


Why It’s So Important

If you ever want to make progress, it’s necessary to keep track of where you’re going and how you’re going to get there. If you ignore your budget, you'll stay stuck where you are.

Living without a budget causes you to lose track of where your money is going and won’t help you move in the direction of achieving your financial goals.

A budget is not a ball-and-chain. It’s actually the opposite. Budgeting doesn’t hold you in place, it’s a forward thinking view of the future.

It’s a peace and freedom inducing tool. I find a tremendous amount of peace knowing that all my bills will be paid on time, I have money saved for important things and I can make guilt-free purchases because buying the things I need (or want) is in my budget.

Evaluate Your Spending Habits

I know, scary right?

Where does all your money go? Do you really know (or do you just think you know?)

If you want to make any sort of progress, you need to get a clear picture of exactly where all your money is going.

The good news is, once you’ve done this, you might find there are some easy fixes to get your money under control.

Start keeping track of what you spend each day. Keep your receipts and at the end of each day, jot down how much you spent and where. You’ll also want to track what bills you paid each day.

This is a great habit to get in and shouldn’t take more than a few minutes of your time each day. If you find it hard to remember to do, set a reminder on your phone each morning to remind you to do it and another reminder in the evening to enter your receipts.

Identify Areas You May Be Overspending

It’s time to see where money is slipping through the cracks. You may need to look through old receipts or bank statements to see where your money is going.

A big culprit of overspending is eating out.

Do you go out to lunch during your work break? Do you grab a Coke from the drive through on a regular basis? Order pizza because you don't have time to fix dinner? Add it all up, you might be surprised how much of your money will disappear from eating out.

Another culprit is impulse buys and purchases made on credit cards.

It’s so much easier to spend money when it’s on a card. Check through your card statements and receipts to see if you’re overspending when you use a card.

Related Article: 5 Scary Credit Card Facts That Are Costing You Money

The thing that zaps most people’s wallets dry are those darned irregular expenses that “sneak up” on you when you aren’t expecting it.

I like to call these alligator expenses.

Alligator expenses are irregular expenses that lay dormant for several months or even a year, then sneak up on you and bust your budget.

An alligator is an ambush hunter. It lays in wait, mostly submerged in water where unsuspecting animals don’t notice. As soon as they go for a drink, the alligator attacks.

An alligator expense is an irregular expense that lays dormant for several months or even a year or more. They're usually not accounted for in your monthly budget. Things like registering your car each year, oil changes in your car, kids school clothes, an annual subscription to Amazon Prime, Christmasbq and many other things.

It’s important to recognize and plan for these expenses so they don’t throw your budget off balance. You’ll find your budget is much easier to manage if you plan for these in advance. Being ready for an alligator expense can make or break your budget.

Where do you overspend your budget?

Related Article: 18 Budget Busters You Forgot to Plan For

What to do Next …

By now you should have a good idea of where your money is going.

It’s time to do some basic math. Subtract your spending from your income.

If you’re spending everything you earn (or worse, going into the negative every month), you have just two options:

  1. Cut expenses
  2. Make more money

The third option is to keep overspending and keep yourself broke and in debt. That’s not really an option.

Setting Priorities and Goals

Before you take an ax and start cutting expenses, it’s important to recognize your priorities and start setting goals.

Related Article:​ 9 Surefire Ways to Finally Reach Your Financial Goals

Think about what you’d like to accomplish with your money. It can be as simple as the ability to start saving a little money each month or you might want to pay off debt as fast as possible.

Setting priorities and financial goals will help keep you motivated to stick to your budget.

When you start charting out your budget (um, spending plan) prioritize all your necessities first and keep your goals in mind as you get ready to limit the amount you plan to spend on variable expenses.

Cutting Expenses

Take a deep breath, this is the hard part. Don’t think of it as a restriction, think of it as a way to save money and help you reach your financial goals. In all likelihood, cutbacks are also only temporary. Cutting back isn’t designed to punish you, it’s putting long-term needs over short-term wants.

Here are some areas to consider cutting:

  • TV/Cable – Can you get away with just using an antenna or maybe an inexpensive streaming service like Hulu or Netflix?
  • Internet – Call to see if there are any new packages that will give you a better rate
  • Cell phone – call to find out if a better plan exists or perhaps shop around and switch carriers. If you need to, you can reduce to a prepaid cell phone and use it only when necessary.
  • Utilities – Make sure you are only paying for what you use. Unplugging electronics that aren’t in use, taking shorter showers or less frequent showers, or installing a programmable thermostat to keep the temperature in control are a few things you can try to reduce your bill. *I don’t recommend cutting to the extreme. Some things are necessities and you should be able to remain comfortable in your home.
  • Groceries – start shopping with coupons. You’d be amazed at how much you can save by using coupons. 

FREE Guide Book: The Couponers Ultimate Quick Start Guide (for Beginners).  Learn how I keep my grocery bill to $400/month (or less) for my family of four. 

  • Eating out – Eat from home as much as possible. Try to completely eliminate eating out. Use my strategies for saving on groceries to keep food and household costs minimal.
  • Car – If you have a car you can’t afford, sell it and get one that’s less expensive. Try to get rid of car payments and save up to pay cash for your next vehicle.
  • Insurance – Contact your agent to see if you qualify for a reduced rate or a better plan for your family. You might also opt for a higher deductible, but make sure you have your deductible amount saved in an emergency fund.
  • Unused memberships – Gyms, magazines, or anything else you pay a fee and don’t use.
  • Housing – This option isn’t for everyone, but would it make sense to move closer to your job so you don’t have as long of a commute? Could you get a place that has lower rent? Only choose to move if it makes sense for your family.
  • Pets – I understand this is off limits for many people, but here are some things to think about. If you are thinking about getting a pet, should you wait until you have a more stable financial situation? Would it be a better choice to adopt your pets because your living arrangements or budget doesn’t allow for them? Again, do what’s best for your family.
  • Pay off debt – Paying off debt is a great way to reduce your expenses and give yourself a pay raise.

Related Article: Secrets to Paying Off Debt as Quickly as Possible

  • Credit cards – Contact your credit providers to see if you can get a reduced interest rate on your cards. If you choose to transfer your credit card balance to a new card for a lower rate, cut up your old card so you don't use it anymore and rack up a whole new set of bills to pay.
  • Refinance student loans – It might make sense to consolidate your student loans into one payment if you can get a better interest rate. We refinanced with SoFi which saved us a lot of money every month. We had student loans scattered with different payments, so it was also nice to reduce it down to one single payment.

Make Extra Money

The final step to overcoming financial short-comings is to increase your income.

If you’re currently struggling financially, this probably isn’t the right time to start a new business venture or fall for gimmicks. What you need right now is a stable and consistent income. When you’ve got a stable income, a well-managed budget and financial discipline, you’ll fair far better with passive income ventures.

For now, focus on selling things, getting extra work and/or finding better employment.

Sell Items You No Longer Use

Look through your home for valuable items that you no longer need or no longer use. You might sell things online or host a yard sale.

Don’t just sell things for the sake of selling, make sure you have a plan for the money you will bring in. Your best option might be to use the money to pay off (or down) a debt like a credit card. This way you free up some money in your budget when you no longer need to make payments.

Another option would be to stow away the money for an emergency so that you don’t need to rely on a credit card and don’t break your budget as soon as misfortune peeks its head in.

Options for a Second Income

There are some typical options for a second income such as becoming a server at a restaurant, delivering pizza, or working in a retail store part time. Look around to find something in your area that you can work into your schedule and can help for short-term financial relief.

If you’re looking for work you can do from home, try who offer customer service positions or (stands for Small Office Home Office Jobs) for opportunities.

One side job that most people will qualify for and can legitimately start earning money quickly on your own hours is to drive for a ride share service like Uber or Lyft. My husband has done this, you can read more about his experience in this article.

Related Article: Uber vs. Lyft – Should I Become a Driver?

Find Better Employment

I know sometimes this is easier said then done, but it’s important to keep your ear to the ground and watch for new and better opportunities to make a better income.

Here are some tips to finding better employment:

  • Decide what kind of job you want based on your qualifications. Keep your focus in this direction so you don’t waste time on jobs that aren’t right for you.
  • Put in some leg work. An idle search on the internet here and there won’t find you a job very fast. You’ll need to make a valiant effort of finding resources and making contact with several prospects everyday if you’re serious about finding a new and better job.
  • Network with others. Talk to others you know to see if they’ve heard of anything or know companies that are hiring. Companies love to hire through referrals because there is a level of trust between the candidate and someone who already works for the company.

Final Thoughts

I know a lot of people cringe when they think of keeping a budget, but in all honesty this is one of the best things you can do to make your financial situation better.

Manage your money so it doesn’t manage you.

Have you been keeping a budget? If not, what prevents you from doing so? I’d love to hear from you in the comments!

Key Points

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    Track your spending
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    Identify areas you may be overspending
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    Create a budget based on goals and priorities
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    Cut expenses back to fit inside your budget
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    Find ways to earn extra money and pay off debt quickly

Cameron is a Financial Coach who works with couples and individuals to achieve financial freedom and peace of mind. She believes being in control of money = less stress + more fun! Join her on the journey to think about money less and enjoy life more.