5 Budget Tips While Being Broke
by Emily Guy Birken
One of my favorite illogical money refrains is when someone living paycheck-to-paycheck exclaims “I don’t make enough money to have a budget!”
Nothing could be further from the truth. Budgets, money tracking, and careful thought about your spending are most important when you have very little money. Thinking you’re too poor for a budget is a way of avoiding tough decisions. But making those difficult choices will actually help you feel more in control and happier about your finances.
If you’re living on the financial edge, try these budgeting strategies to make sure that you control your money, rather than vice versa:
1. Make friends with your calendar. It doesn’t matter whether you use the kitten-themed wall calendar you got for Christmas, a web-based calendar, or the calendar on your phone—but you must begin to organize your money according to time. Record when you receive your paycheck, when bills are due and when automatic payments are made. This can help you to find the thin spots in your finances during the month.
From there, you can often request changes to due dates in order to make certain that you have the money when you need it. For example, if you know that having “extra” cash in your checking account will be too much of a temptation, move your bill due dates to coincide with your paychecks, so that any money leftover after bills are paid isn’t needed for the next round of expenses.
2. Track your spending for a month. Your next step is ridiculously simple, and yet it can be very difficult to do. For an entire month, record every single cent that you spend. Whether you go low-tech with pen and notebook in hand, or high-tech by using a free money-tracking program on the internet or your smart phone, a month of tracking will give you a much better idea of where your money goes.
Another positive side effect of tracking your spending is that it gives you a moment to think about your purchases before you make them. You might just walk on by the coffee shop when you realize you don’t really want to write down the cost of $4 coffee on your tracking sheet.
3. Cut judiciously. Once you know why there’s too much month left at the end of your money, you’ll know what to cut out of your monthly expenditures to get back to living within your means. Some cuts will be easy. Restaurant meals and snacks can be cut out in favor of cooking at home. Insurance costs can be made more manageable by raising your deductibles. Services you don’t use—like that gym membership or the extra data plan on your phone—should also be on the chopping block.
But don’t forget about cutting costs in basic areas, as well. You can often lower your utility payments by making sure you turn off lights and unplugging power vampires, for example.
4. Don’t worry about saving—for now. Having an emergency fund is an essential part of being financially healthy. But it’s ridiculous to have money set aside when bills are piling up and you’re missing payments. So wait until your budget is balanced before you start saving some of every paycheck.
5. Increase your income. If you have cut your spending to the bone and are still having trouble making ends meet, then it’s time to consider other sources of income. That could mean asking for overtime at work, starting a second job, selling off some of your possessions, or looking for more lucrative work.
If you want to live within your means, you need to be mindful of your income and spending. Otherwise, it’s impossible to get off the cycle of living from one paycheck to the next.
