How You Can Stop Being Broke all the Time
"I just got paid and I'm already broke." Does that sound familiar? There are tons of memes that revolve around that first sentence; that's how you can tell it's a widespread and shared problem. However, it is possible to get out of that vicious cycle. Here's what to do:
Set a SMART goal
First, determine what your goal is. Is it to build up emergency savings or save for a trip or pay down debt? While it's completely up to you, I suggest choosing a goal (or goals) that will have the most positive impact on your financial situation. Whatever you decide, your goal should be specific, measurable, attainable, realistic, and timely.
Track your spending
One of the biggest issues people have with their budget is that they don't know where their money goes. It's important to track your spending for at least a month to get a good idea of how you spend and where it all goes.
Create a realistic spending plan
Once you've determined where your money goes, it's time to create your budget or spending plan. In order to achieve your financial goals and to not feel broke, you will likely need to pick areas where you can reduce spending. That may sound painful, but what's worse: having to cut back on the little things or always feeling perpetually broke and not being able to do what you want? Plus, reducing doesn't necessarily mean completely eliminating. So look at non-necessities like cable, memberships, entertainment, dining out, coffee. If you get coffee from a coffee shop once a week, eliminating that could save you $20/month or more. Every little bit helps!
Stop keeping up with the Joneses (or trying to)
So many times we feel bad about our situations because we're comparing ourselves with others. Social media doesn't help either because we can see every hour of the day what we're potentially missing out on. We need to quit worrying about that and focus on ourselves because everyone is in a different situation. Plus, that friend that just went to Grand Cayman may have charged it all on a credit card and will be paying it off for five, 10, or maybe even 15 years. The grass isn't always greener even though it may seem like it.
Create a plan to pay off debt
Credit card or other debt may be what's holding you back from really enjoying life. Having to make debt payments can prevent you from being prepared for emergencies, going to that concert, getting that massage, and much more. Plus, it's just plain stressful worrying about debt. Paying it off will give you some breathing room and will help you achieve your financial goals even faster.
LSS Financial Counseling offers free financial counseling. We can help you create a plan to conquer your debt, possibly with a Debt Management Plan, which would help you pay off debt faster and save money. Call us for your free session at 888.577.2227 or click to GET STARTED ONLINE.
If this isn't one of your goals right now, it should be soon. Having an emergency savings account can be the difference between paying for that broken appliance or vet bill versus having to purchase something on credit, which creates debt and another monthly payment. So start saving - no matter how small. Setting up automatic deposits into a separate savings account is the best way to save. But, it's not the only way. Save change or what you reduce in spending, set that aside each week or month. Then, if you get some kind of windfall, like a bonus or tax refund, consider putting at least half of that into savings. You can also look at selling things you no longer need/use to build up savings.
Get your family/friends involved
Include your partner/spouse/kids in the activities to achieve your goals. It will keep everyone accountable and teach your kids smart money habits. Or create a financial challenge with your friends and see who can save more by a certain date. You're more likely to be successful if you have some support. Not to mention if your friends/family know you're trying to save money, you can do things together that won't break the bank.
It's no fun to feel broke all the time and it doesn't have to be that way. You need to create a plan, take action on it, and then stick to it as best you can. And nobody is perfect, so if you stumble a little bit just get back to working on your goals when you can.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.