Most people have felt the agony of being broke. Nobody sets out to be bankrupt. You frequently revert to broke status due to lousy investment, poor money-making skills, and poor saving habits.
Being broke means not having a steady source of income or living paycheck to paycheck with no savings.
The following are the 9 things to do when you are broke to solve the problem:
- Don’t panic, be in control of the situation
- Identify the problem
- Reduce unnecessary expenses
- Accept the responsibility for where you are
- Find ways to increase your income
- Get a clear picture
- Live below your means
- Develop a high-value skill
- Seek help from those who have succeeded
However, being broke is not the main issue; staying broke is the issue. The actions you take after realizing you’re broke will determine how long you will remain in that state.
If you’re tired and sick of being broke, it’s time to take charge of your finances. Whether you need to work on your spending habits, learn how to save, or find ways to earn extra income, you can always find a way to stop being broke.
In this article, I’ll discuss things to do when you are broke to keep your temporary situation from turning into a state of chronic poverty.
1. Don’t Panic; Be in Control
First thing first, don’t panic. It can be terrifying to realize you’re broke, but most people have been there. Even the most thrifty people experience hard times.
Consider your finances as a strategy game; it might help. Don’t let your circumstances define you, instead, take advantage of that opportunity to rethink your strategies. However, you cant do this with a clear head.
Take a deep breath when you feel overwhelmed. Remind yourself that your current financial situation does not reflect your ability or worth, and you will find a way to manage your financial stress. You’ve overcome worse, so you’ll get through this too.
2. Identify the Problem
Two things can result in brokenness; one, your income may not be enough. Which often happens suddenly due to illness, job loss, or injury.
Two, you may be spending too much. This usually comes slowly. You charge a few things to get by. Then next month, you charge more because you have this month’s money to pay last month’s debt.
It gradually worsens into an unmanageable situation. You eventually become broke despite working.
However, the cause of your bankruptcy may also be a combination of these two factors. You may be spending more than you can afford and then have a salary reduction. If you were not overspending, perhaps salary reduction might have been manageable.
Under this category, you can also think about how to turn desires into financial wealth.
3. Reduce Unnecessary Expenses
Study your overall financial picture and rework its design. Begin by reevaluating your expenditures over the last few months. Where did you overspend, which purchases were necessary, and which were unnecessary?
The best way to reduce or eliminate unnecessary expenses is by tracking how you spent your money in the past 30 or 60 days. You can rely on online banking apps to track your spending. You may be shocked at how much you spent on unnecessary expenses.
Be practical here. You don’t have to eat out every day, but leaving a little money for fun is okay. If you don’t limit yourself, you’re more likely to stick with a tighter budget.
When reducing your budget, make a list of things you’re eliminating. The sacrifices are short-term. You will add them back to your budget once your finance improve.
4. Accept the Responsibility For Where You Are
Life throws us curve balls; therefore, you should always be ready when they happen. It’s essential to have plans and backup plans to avoid wondering what to do when you’re suddenly broke.
Though real-life isn’t like that, you may be aware that curve balls will happen, but you have other priorities, so planning for the worst gets put aside for another day.
You are responsible for your money, so you must also be accountable if you’re broke. Its true life can be unfair, but you can get yourself out of the situation you find yourself in.
It’s essential to understand and accept that you’re accountable for the place you’re at the moment. Placing blame on others for your situation prevents you from taking responsibility for the situation and what you need to do.
People might have contributed to your financial status. However, the only one who can save you is you.
5. Find Ways to Increase Income
Reducing your budget goes so far. Therefore, it’s critical to find other means to boost your income. Everyone has a different perspective on this solution, so feel free to get creative.
You can pick up extra work hours or negotiate a salary raise. But if it’s not possible, you can find an additional source of income. You can go conventional and hunt for a second or third job. Alternatively, you can look for something more adaptable, like how to make money online.
6. Get a Clear Picture
The starting point of your way out of this hellhole is to have a clear picture of where you are. It’s hard to map your route out if you don’t know where to start.
Brokenness often comes with having a lot of debt though not always. Whichever way, you should start by stating your current position, whom you owe, amount and payment terms, and source of cash flow regardless of how small.
Record every detail in writing. It doesn’t matter if it’s on an electric device or paper. It simply needs to be somewhere accessible all at once.
7. Live Below Your Means
If you live below your means, you can free up the difference between your spending and income. The money you spare can pay debts and build emergency funds back up.
Most individuals live to their means and above, incurring debt due to their expenditures. You need to reduce your budget and your lifestyle. You should decide that living within your means is your new routine and stop going into debt.
It all comes down to figuring out what you need and occasionally want while concentrating on your budget.
8. Develop a High-Value Skill
You’re broke because you either overspend or don’t earn enough money. You need to learn the three money skills:
- Money-making skills
- Money-keeping skills
- Money-growing skills
You can’t save or increase the money you don’t have.
Therefore developing money-making skills is the most critical step to stop being broke. And the only option is to have skills others are willing to pay for.
Usually, people don’t have money problems. What they have are skill problems. Therefore if you have skills that people are looking for, they will pay you to get them.
So if you want to quit being broke, start to acquire new skills. If you love art, develop the following high-value skills to generate income:
- Video production skills
- Photography skills
- Design and graphics skills
If you like logical reasoning, you can learn to code. If you love to write, you can improve your writing skill. There is a variety of skills to learn. Simply get more self-education.
9. Seek Help From those Who Have Succeeded
One thing you should never do when you’re broke is to keep it a secret. No one likes admitting to having problems, mainly when it is something to do with money. But you need to communicate the reality of the issue with the people in your life.
The longer you lie to yourself and avoid seeking external help, the longer you continue to engage with problematic behavior and the longer the situation will continue growing.
Seeking help can include soliciting ideas from friends, family, and coworkers on ways to add value to your profession, expand income, and stand out in the industry.
Depending on your financial situation seeking help may also entail requesting financial assistance. Seeking assistance requires you to put your ego aside and swallow your pride.
On the other hand, seeking help can leave you feeling brave, bold, and supported in the long run while also preparing you to receive riches and wealth later on.
How to Know You’re Broke
If you’re broke, most probably, you know it. However, some people may see a crisis when there is none, while others let it sink in. Here are signs that you’re broke.
You Can’t Maintain Your lifestyle
Instead of going out to drink or eat with friends, you stay indoors on weekends because you can’t afford to spend on the unnecessary and maybe essential things. In the meantime, your eating habits have changed for the worse because ramen is more affordable than vegetables and fruits.
You’re Preoccupied With Who Owes You Money and The Precise Amount
You once supported your friend, but now they better pay you soon. If you were not in desperate need, it wouldn’t matter; you might even forget about it. But when you’re broke, every coin counts.
Your relationships with your friends are now deteriorating because they feel like you’re nickel and diming them.
You Worry About Money Always
You are always thinking about money no matter what you’re doing. Perhaps your debt has become overwhelming, or you’re unsure if you will be able to pay the next month’s rent. It’s always in your mind.
You’re in Debt
You have mountains of debt, from personal debt to credit card debt and student loan debt, and it’s only getting bigger. You’re concerned about the debt collectors calling; even if they haven’t started yet, they may soon.
You attract what you think. So instead of concentrating on the fact you’re broke, start to imagine your bank balance growing. Allow it to dominate your mind.
Attract wealth by focusing on changing your money habits, learning to be disciplined and creative, and developing a habit of saving and investing. I hope these things to do when you are broke will put you on the right track to financial freedom.