Are you sick of having no money? If so, here are 10 things you should do to stop being broke, and finally start winning with money.
In personal finance, having no money is pretty much the worst case scenario.
I would know.
You see, a few years ago, I was living in a one bedroom apartment that I could barely afford, buried in all sorts of debt, and living, if not beyond, right up to the edge of my means. Seriously, I remember quite a few times when I was worried whether or not I would have enough money to buy myself food for the week. Praise the Lord I didn’t run into any financial emergencies through that time, because to top it all off, I had almost no savings.
I even got to the point where even receiving my paycheck — which should be a wonderful, joyous event — became what I would call a defeating victory.
Because whenever my hard-earned money came through my door, I had to immediately turn around and use it to make debt payments, rent payments, bill payments, payments, payments, payments!!! Aaaggghhh!
I wish I could say this was a short-lived period of time in my life, but honestly, I am embarrassed to say that it lasted over two years.
Eventually, I became so sick and tired of being broke that I decided to throw everything I thought I knew about money out the window, and start from scratch. Add that to the fact that I was about to get married — and hated the idea that I was pulling my new, loving wife into a world of financial struggle — and what you get is a man with some serious motivation to change his financial way of doing things. Because let’s be honest, my way clearly wasn’t working.
The good news is that after a lot of hard work, my wife and I were able to get out of debt, build up a nice big pile of savings, and escape that ‘no money’ lifestyle. And, at the risk of sounding like a late-night infomercial, you can too! (Wait, is this the part where I’m supposed to sell you something for the never-before-seen price of $19.95?)
Seriously though, you can. It just takes hard work and a better plan; which, I’m assuming, is your entire reason for reading this article.
So with that in mind, if you’re sick of having no money, here are 10 critical steps you should take if you want to improve your financial situation. These are the steps my wife and I took to reset our financial life, and I am confident they will help you too.
Let’s get started!
1. Get On A Written Budget
A written budget is the starting point for every financial decision you make. From deciding which brand of cereal you should buy this week to determining how much you can spend on a new-to-you car, every decision goes through your budget.
Therefore, the sooner you create one, the better.
Though, I understand that if you don’t have much experience with a budget, it can be a little overwhelming to start. But, no matter how overwhelming it might seem, it is not a financial step that you should overlook or skip. I mean, the reason I put this at the beginning of the list (and named this entire website after it) is because it is the most important.
Now, I’m going to be frank with you, there is a right way and a wrong way to budget.
So, if you’re new to budgeting, or you just haven’t had much success with budgeting in the past, be sure to read our post, How To Make A Budget In 10 Simple Steps. It lays out the exact process you need to go through in order to create a winning budget, and will help eliminate a lot of the overwhelm in the process.
Beyond that, if you want to really want to dive deep into the world of budgeting, be sure to check out a few of our other helpful posts:
- The #1 Key To A Successful Budget
- 21 Simple Tips To Make Budgeting Easy
- 10 Reasons Why Budgeting Is So Important
- How Does Budgeting Help You Save Money?
- 50 Budgeting Tips (For Every Stage Of Life)
2. Take Responsibility
After you create your budget, it is incredibly important to take responsibility for your financial past. As easy as it might be to blame your financial life on your circumstances, upbringing, or anything else, it won’t do you any good. Placing blame is an absolute waste of time.
Instead, you need to accept the fact that your decisions and actions led you to your current situation, and you are the only one that can change things.
The sooner you take responsibility for every aspect of your financial life, the sooner you will start making positive progress.
3. Cut Your Expenses To The Bone
If you are sick of having no money, then you are going to have to make some significant changes. In other words, if you want to win in your financial life, then you are going to have to make some sacrifices. That means cutting your monthly expenses to the bone.
And now that you have a written budget, this will be much easier to accomplish.
So, open up your budget, and identify anything you can stand to live without. I’m talking about cable, dining out, online subscriptions, seasonal expenses, and pretty much anything that isn’t a necessity.
The more you are willing to cut, the faster you will be able to turn your financial life around. So grab your financial hacksaw and start cutting those expenses!
4. Save Before You Spend
One of the most important financial habits you can adopt is saving money before you spend it. In other words, whenever you get a paycheck, before you spend a dime of it, you should move the money you budgeted for savings into your savings account. Then, you should live off of whatever money is leftover.
This is often referred to as ‘paying yourself first’, and it is one of the most critical steps you can take if you want to turn your financial life around.
I know this might seem a little backwards, but this is how wealthy people operate their finances. And if you want to be wealthy, it stands to reason that you should do what wealthy people do.
By the way, if you really want to maximize your savings, we recommend opening a savings account that earns a solid interest rate. And for that, we recommend the CIT Savings Builder. As long as you deposit a minimum of $100 into your Savings Builder account each month (which shouldn’t be too difficult now that you’re paying yourself first), you will earn an annual interest rate that crushes the national average. Oh, and with a minimum opening deposit of $100, you don’t need to be rich in order to open an account and start saving!
5. Learn The Difference Between Needs And Wants
One of the biggest reasons people end up in financial trouble and sick of having no money, is because they don’t clearly understand the difference between a need and a want in their life. And while, at first glance, the difference between the two may seem simple, when it comes to spending money, we humans have a way of convincing ourselves that certain ‘wants’ are actually ‘needs’.
For example, you may need a car in order to commute to work, but that doesn’t mean you should buy or lease a brand new car and saddle yourself with a bunch of debt. Anything beyond a car that gets you from Point A to Point B safely is a want. The smarter decision would be to save up a few thousand dollars and pay cash for a car. It might not be the world’s most beautiful, or technologically advanced vehicle, but it is all you need.
The quicker you learn the difference between a need and a want in your financial life, the better off you’ll be.
6. Stop Comparing Yourself To Others
Along the same lines of learning the difference between wants and needs, if you are sick of having no money, it’s important that you stop comparing yourself to others.
Here’s the thing, there will always be somebody with a nicer car, bigger house, and more expensive clothes. But that does not mean they have more money than you. In fact, more often than not, it probably means they just have a lot more debt than you.
And even if they do have a ton of money, it shouldn’t make a bit of difference in your financial life. And you certainly shouldn’t try to keep up with them and spend beyond your means.
The less you compare your financial life to other people’s, the more content you will be with your own. And when you are content with your situation, you will make much better financial decisions.
The only comparison that matters is when you compare your current financial situation to your past. And in that case, you should always be working to improve. That is the only time when comparison is beneficial.
7. Get Completely Out Of Debt
I’m just going to come right out and say that debt is pretty much the worst thing you can throw at your financial life. And while some people will tell you that there is good debt and bad debt, I fervently disagree.
Debt adds stress, complexity, and risk to your financial life, no matter what. And the sooner you get out from under it, the more fulfilling your life will be. (Remember, I speak from experience.)
Now, I realize that this section of this article might upset a lot of people, but the proof is in the pudding (whatever that means).
Consider this, in order to calculate your net worth, you add up all your assets (i.e. the things you own with financial value), and then subtract your liabilities (i.e. any money you owe to somebody else).
Now, I’m no mathematician, but wouldn’t the best case scenario be a situation where you had all sorts of assets and no liabilities? I mean, on the most basic level, I’m pretty sure the key to building wealth is addition, not subtraction. Take that, debt.
The other thing is, whenever you have to make a monthly payment, you are restricting your cash flow. And every monthly payment you make towards debt is money that you can’t put toward saving and investing.
I mean, can you imagine how much better your financial life would be right now if you had never gone into debt, and instead, invested all that money? Let’s just say there wouldn’t be any reason for you to be reading this article right now.
So, with all that said, if you want to turn your financial life around, one of the most important steps you can take is to pay off all your debt, and then never go into debt again. I know it might be against the grain of our society, but I promise you, it’s worth the effort!
If you’re serious about kicking all your debt to the curb, and living a debt-free lifestyle, we have a bunch of articles to help you on your journey. Here are a few of our most popular:
- 21 Tips To Pay Off Credit Card Debt FAST
- How To Get Out Of Debt Fast (Even On A Low Income)
- The Dangers Of Debt: 13 Reasons You Should Avoid It At All Costs
- Save Money Or Pay Off Debt? (Here’s What We Did)
- 10 Inspiring Books To Read While Getting Out Of Debt
8. Make Money On The Side
When it comes to budgeting and personal finance, it’s easy to get so caught up in cutting expenses, that you forget about one of the best ways to improve your financial life: making more money. And these days, the opportunities to do so are pretty much endless!
For starters, you could sell a bunch of your stuff. I mean, if you’re going to be cleaning up your financial life, you might as well take the time to clean up your home as well and get rid of all that crap you never use.
Another great option if you want to increase your income is to get a second job. This is perfect if you need an immediate boost in your income, or even a short-term increase while you work to get out of debt or build up some savings. You can easily make an extra $1,000 to $2,000 per month by working a second job. And that amount of money can seriously fuel your financial efforts.
The third option, and my personal favorite, is to start a side business. Whether that means mowing lawns, developing websites, managing social media for local businesses, or blogging, you can make a lot of money on the side with a small business of your own. Just be sure to start a business that doesn’t require much money to get going. The goal is to make money, not spend a bunch of it on a business that isn’t generating revenue yet!
Posts Related To Making Money:
- 10 Tips To Make More Than Minimum Wage
- Is A Second Job Worth It? (Benefits vs. Drawbacks)
- How Do Blogs Make Money (10 Proven Ways)
- 25 Proven Ways To Make Extra Money
- Top 10 Reasons To Get A Second Job
9. Prepare For Emergencies
Here’s the thing, no matter who you are, how much money you have (or don’t have), eventually, you are going to have an unexpected emergency pop up in your life. Whether it’s a broken down car, a family emergency, or a medical expense, the only predictable thing about life is that it is going to be unpredictable. And if you don’t have any money stored up, you are putting yourself in a risky situation.
For instance, if you were to suddenly lose your job (which can and does happen), would you have enough money in savings to pay your bills for a few months? If not, then saving an emergency should be high on your priority list.
Simply put, if you want to protect yourself, your family, and your lifestyle, one of the most important things you can do is save for emergencies.
Side Note: At minimum, you should have the equivalent of 3 months worth of living expenses sitting in an emergency fund. But truthfully, I recommend you pile up at least 6 months worth. Three months goes by pretty quickly, and it’s nice to have that extra cushion.
10. Invest As Much As Possible
After getting on a budget, getting out of debt, and piling up a six-month emergency fund, your next step is to start investing as much of your income as possible. And, since you have freed up a lot of your income in the previous steps, you should have plenty of financial margin in your life to do so.
This is one of the most fun moments in your journey to change your financial situation, because this is the point where you really start playing offense.
And once you start investing, it is hard to stop. I mean, when you start to see your investments grow, all you’ll want to do is keep feeding that beast. It’s really fun!
So, beef up your retirement contributions. Speak with a professional financial advisor, and get to work. Your net worth is about to take off!
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