Let’s face it. When you live paycheck to paycheck, the idea of saving — any money sounds like a sick joke. A 2016 survey found about one -third of Americans had less than $1,000 in savings.
You need to save money! This is no joke. Having a savings account is the best thing you can do for your financial health.
A good amount in savings acts as a safety net in the event of an emergency. Life is bound to bring about surprises.
You’re one of the many Americans on the edge of broke? Here’s how to save money when you’re broke.
Fake It Until You Make it
The first step you should take toward saving money is believing in yourself. Right now, you may not think you have a whole lot of money to save.
This may be true.
When you’re beginning to save, don’t focus on how much you’re saving. Instead, focus on building healthy financial habits.
Focus on developing the habit of saving money.
Let’s say you have $0.75 to invest in a savings account at the end of each week. Save it!
Start by looking in the mirror and telling yourself, “I want to be a saver.” Then, open your computer and find a savings account with no fees or minimum deposit requirements.
Put that tiny bit of money into the account. Or, if you use mostly cash, put extra change in a jar at the end of each day.
Continue to learn more about managing your finances as you build savings.
Adjust Your Lifestyle to Fit Your Budget
This may not be what you want to hear, but you may be spending money on things you don’t need.
One area of life people tend to love spending large sums is food. You may find yourself eating out with friends. These bills are even higher if you start adding drinks and desserts.
Everyone wants to indulge from time to time. That’s okay, but you need to be realistic with your financial situation and goals.
Think about the things you may be willing to sacrifice. Are there any ways you could make adjustments to save money?
If you live in an expensive part of town, you might consider relocating.
Cancel Unnecessary Subscriptions
Go through your different subscriptions and decide which ones you should keep and which can go. You might have various music streaming, gym, or wholesale club subscriptions you just don’t need.
Instead of going to the gym, consider working out at home. Instead of listening to music online, consider breaking out your old CDs from the early 2000s. An early 2000’s throwback is never a waste of time.
You may need to go through your bank statements to find these expenses. Search for any recurring transactions.
Once you identify them, go to your accounts and cancel the subscription until further notice.
Save First, Spend Later
Take a look at your expenses and decide how much money you need between each paycheck. Every time you get paid, keep this amount for yourself and put the rest in a savings account.
This should keep you from overspending and force you to only spend what you can afford to.
Try to find a high-yield savings account. Many online savings accounts offer high-interest rates. This is because they don’t have the overhead of physical locations.
Take advantage of your options.
You may need to keep track of your spending between each paycheck. You can make adjustments to the amount you save. Try to put as much in a savings account as possible.
Take a Look at Credit Cards
Credit card debt is no joke. Interest rates lingering around 20% APR can quickly compound your debt if you don’t use credit cards responsibly.
If you have any open lines of credit, you need to take a hard look at your current balances. You should be making at least the minimum payment each month to avoid late fees.
However, if you should be paying more than that if you’ve reached your credit limit. Paying off credit card debt may be a difficult milestone in your financial life. However, it’s important to take it seriously.
Having credit card balances is no good for saving. It’s also bad for your credit.
Before you can think about saving any money, you might need to take care of your credit balances first. Once you do, you can start thinking about saving.
Refinance Your Debts
You might have balances on loans or credit cards that could easily be managed if you refinance. Having these debts can make the pains of being broke much more painful.
Refinancing your debt could allow you to take advantage of lower interest rates. This could lower your monthly payments.
If you have any student loans, you may be able to request a deferment. This would allow you to postpone your requirements if you have a valid reason.
On the credit card front, look into balance transfer cards. These cards may allow you to take advantage of promotional rates. You can transfer a balance from a card with a high interest rate to a card with a lower one.
If you do this, be careful. Try to pay off your balances before the end of the promotional period. This will keep your debts from accruing new interest.
DO NOT Accrue More Debt
One of the worst things you could do if you’re trying to save money when broke is take out more loans. Focus on the debt you already have.
That means no more loans and no more credit cards.
Adding new debt will only increase your monthly expenses and add to the problem. Additionally, if you default on the debt, you’ll damage your credit score and put your future at risk.
If your debts go into collections, you could face harassment from collectors. Collectors aren’t easy to deal with, so you may need to prepare yourself if this happens.
Try Out No-Spend Days
An easy way to identify problem areas is to resist spending money. Try going a few days without spending more money than necessary. Spend money only on necessities, like bills or gas if you drive to work.
In addition to identifying problem areas, you’ll save money in the process. Keep track of the things you need to spend money on daily.
If you need to, keep a journal of your spending habits during your n0-spend days.
Take the idea a step further and try no-spend months. Try to go a full 30 days without spending more money than you have to.
At the end of these days or months, you may come back with insights about where you can cut back.
Free or Used Clothing
If you find yourself needing new clothing, avoid going to malls or retail stores. Instead, go to thrift stores and look for amazing finds.
Ideally, you should try to avoid buying clothes altogether, but this isn’t always possible. You may wear a hole in your pants or shoes.
You can even try getting free clothing from friends and family. You’d be surprised by the amazing pieces of clothing you can find in second-hand stores or your best friends’ closets.
Consider a Side Gig
Don’t rule out the power of a part-time job. Unless your full-time job is demanding, you might have time to make some extra money.
You shouldn’t be ashamed of working an extra job. Lots of Americans do it. Some even do it just to occupy their extra time.
If you manage your time and extra money wisely, you could save yourself from financial ruin.
There is a long list of reasons to put out your last cigarette. Your wallet is crying every time you walk up to the counter and ask for a pack of your favorite cigarettes.
The habit is bad for your lungs and is associated with a host of health problems. Beyond that, smoking is an expensive habit.
Let’s say you smoke a pack a day, and your cigarettes cost $10 per pack. Over the course of a week, that’s $70 you could put in a savings account.
Over the course of a year, that’s $3,650! In some parts of the United States, a pack of cigarettes could cost you $15 or more. You do the math.
You also need to think about health insurance and medical bills. If you smoke, you may pay higher premiums for health insurance. You’re at a higher risk for health problems.
If you want to save money, quit smoking.
How to Save Money When You’re Broke
When you’re broke, the last thing you might want to think about is saving money. You have bills and food to pay for! How can you manage to save anything?
You’ll need to take a step back and evaluate your situation. Consider areas where you could spend less money.
Start building the habit of saving. Even if you start small, at least you start somewhere. That’s half the battle right there.
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