How To Budget When You're Broke


How To Budget When You're Broke


It can be challenging to manage your money properly.


It can be extremely challenging and frustrating to try to manage your money when you have more going out than you have coming in each month. Just thinking about a budget may give you a headache, but avoiding your finances will only prolong your financial stress. When money is tight, it is absolutely necessary to take time and truly understand what is coming in and what is going out each month. By taking the time to establish and stick to a budget, you can gain control of your finances and work towards an effective plan that will lead to more financial freedom.

Set Goals

Think about what you want to improve or change about your financial situation the most. Perhaps you want to rid yourself of debt, build savings, or have more flexibility with your finances. Setting a goal is essential to the success of your budget. Having something to work towards will give you motivation and keep your new budgeting skills in check. Once you have your budget in place, you can set realistic timelines as to when you can achieve your goals.

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Track Your Spending

Over the course of a month, track all of your spending. You can do this by keeping a log and recording every transaction, savings all receipts and/or monitoring your banking statements. At the end of the month, you will have a more realistic idea of where your money is going. While your fixed expenses, such as rent/mortgage and car payment generally remain the same each month, your flexible expenses, such as groceries and entertainment, tend to vary from month to month. Tracking expenses will enable you to best estimate your flexible expenses and also give you the opportunity to see if you have any spending leaks in your budget.

Compile a List of Expenses And Compare to Your Income

Now that you have a realistic idea of your expenses, compare it to what you have coming in each month. Record this information in a log or spreadsheet as this will be your guide moving forward. Your budget will enable you to understand where you stand financially. Are you breaking even, falling short, or is there money left over? Using your budget as a tool will help you stay on track and figure out the best strategies to get your money to work for you.

Determine What You Can Change

Take some time to analyze your budget and spending habits to determine what changes you can make to help get you closer to your goals. Generally, the best way to balance out a budget and/or increase your savings capabilities is by increasing income or decreasing expenses. Review your spending habits to see if you have any spending leaks or areas you may be able to cut back by developing new habits such as cutting coupons or meal prepping. Consider ways you may be able to increase your income. Perhaps you can take on a part time job, or maybe you can turn a fun hobby into a money earning side hustle.

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Stay Consistent

Sticking to a budget can be difficult, especially if it is not a habit you have had in the past. Always keep your goals in mind as they will help keep you in check. Patience is essential, as it will likely take time to adjust to your new budgeting lifestyle. Before you know it you will feel the benefits of your budget when you start to make real progress toward your goals.

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Laren Lovett new smallLauren Lovett has been with Navicore Solutions for over 10 years serving as a Certified Credit Counselor, and currently as the Grants Manager. While in these roles, she has witnessed the positive impact that the organization’s counseling services has on improving the money management skills and housing security of individuals and families in need.

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