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We’ve all been there—scraping by, living paycheck to paycheck, wondering how on earth we’ll ever save money when it feels like there’s never enough. But here’s the truth: no matter your financial situation, you can still take small, actionable steps to save money and start building wealth. It might not happen overnight, but with some discipline and strategy, you can turn things around.
Here’s a guide on how to save money when you’re broke, with simple yet effective strategies to set you on the path to financial freedom.
1. Track Your Spending
The first step to saving money is understanding where your money is going. Many people don’t realize how much they’re spending on little things that add up over time. Start by tracking every expense—yes, every single one.
Use apps like Mint, YNAB (You Need A Budget), or even a good old spreadsheet to record your daily expenses. At the end of the month, you’ll have a clearer picture of where your money is going and where you can cut back. This can be eye-opening and is often the first step to gaining control over your finances.
2. Cut Back on Non-Essential Spending
Once you have a better idea of your spending habits, it’s time to make some cuts. The goal isn’t to completely deprive yourself of everything fun, but to reduce unnecessary expenses so you can redirect that money toward saving.
Consider the following:
- Subscriptions: Review all your subscriptions (streaming services, gym memberships, magazine subscriptions, etc.). Cancel the ones you don’t need or use.
- Eating Out: If you’re spending a lot on restaurants or takeout, try cooking at home more. Meal prep on the weekends and you’ll save both time and money during the week.
- Impulse Purchases: If you tend to buy things on a whim, avoid going shopping without a clear list or plan. Give yourself a cooling-off period (like 24 hours) before making any unnecessary purchases.
Cutting these small expenses may seem insignificant, but over time, they can add up and free up cash for savings.
3. Start a Budget, No Matter How Small
Budgeting doesn’t have to be complicated or restrictive. In fact, the simpler, the better, especially when you’re first starting. A basic budget divides your income into categories like housing, food, utilities, and savings.
Start with the 50/30/20 rule:
- 50% of your income goes to needs (housing, utilities, food, transportation).
- 30% goes to wants (entertainment, dining out, etc.).
- 20% goes to savings and debt repayment.
Even if you’re broke, aim to put at least a small percentage of your income into savings each month. Even $20 or $50 a month is a start.
4. Build an Emergency Fund
An emergency fund is crucial, no matter how small it starts. It’s a financial cushion that can keep you from falling into more debt when life throws unexpected curveballs—like car repairs or medical bills.
Start by setting a modest goal. Aim to save just $500 or $1,000. It may take a while if money is tight, but don’t get discouraged. Break it into smaller, achievable steps, like saving $5 a day or $50 a month, and watch your emergency fund grow.
5. Increase Your Income
If your expenses are tightly controlled but you’re still struggling to save, it might be time to look at ways to increase your income. This doesn’t necessarily mean finding a second full-time job, but there are plenty of side gigs you can try:
- Freelancing: Websites like Upwork, Fiverr, or Freelancer offer platforms where you can earn money based on your skills—whether it’s writing, graphic design, or programming.
- Gig Economy Jobs: Driving for Uber, delivering food for DoorDash, or becoming a TaskRabbit for local odd jobs can bring in extra cash.
- Sell Unused Items: Look around your home for items you no longer use—old clothes, furniture, gadgets, etc. Sell them on platforms like eBay, Facebook Marketplace, or Poshmark.
Increasing your income, even by a small amount, can make a huge difference when you’re broke and trying to save.
6. Automate Your Savings
Saving money is easy when you don’t have to think about it. Set up automatic transfers from your checking account to your savings account each payday, even if it’s just a small amount.
Many banks offer features that allow you to automate savings—whether it’s a percentage of your income or rounding up purchases to the nearest dollar and saving the change. This way, saving becomes a habit, not an afterthought.
7. Pay Off High-Interest Debt
If you have high-interest debt, such as credit card balances, it’s important to prioritize paying it off. The longer you carry a balance, the more you’ll pay in interest, which can severely hamper your ability to save.
Start by paying down the highest-interest debts first (the “debt avalanche” method) or tackle the smallest balance first for quick wins (the “debt snowball” method). Either way, eliminating high-interest debt is essential for freeing up cash flow.
8. Look for Free or Cheap Entertainment
Entertainment doesn’t have to cost a lot. Instead of going out to expensive restaurants or spending money on pricey activities, look for free or low-cost alternatives:
- Outdoor Activities: Hiking, biking, or simply going for a walk in a park can be fun and free.
- Library: Take advantage of free resources at your local library, such as books, movies, and sometimes even free workshops or events.
- Socialize on a Budget: Instead of going out to bars or restaurants, invite friends over for a potluck dinner or movie night.
Entertainment doesn’t have to drain your wallet. With a little creativity, you can have fun without overspending.
9. Be Patient and Stay Consistent
Building wealth when you’re broke won’t happen overnight, and that’s okay. The key is to stay consistent, even when progress feels slow. Every little bit of money you save now adds up over time.
Remember, saving is a long-term game. By consistently tracking your spending, cutting unnecessary costs, increasing your income, and automating your savings, you’ll gradually build a stronger financial foundation.
Conclusion
Saving money when you’re broke is challenging, but it’s not impossible. By taking small, consistent steps—like tracking your spending, budgeting, cutting costs, and finding ways to increase your income—you can start to build wealth and get on the path to financial security. It won’t happen instantly, but with time and discipline, you’ll start to see progress. Stay patient, stay consistent, and keep your eyes on the long-term prize: financial freedom.