Woman sitting at a desk budgeting

How to Budget Even if You’re Broke

I make money on some of the products and services I mention on Thinking Frugal through affiliate relationships. I never endorse a product or service unless I believe it will benefit my readers.

If you’re broke, you’re not alone. A lot of people are broke. Even when you have no money, you still have to budget. In fact, budgeting is more important than ever when you are broke. In some cases, you may be broke because you don’t know how to budget.

The only thing that’s important is that you need to create a budget and stick to it. No matter your situation, with a little determination and effort you can create a budget that works for you.  

Make an Extra $100+ Per Month for Free:

Earnably: Earn gift cards or PayPal cash to watch videos, complete surveys, and more.
GrabPoints: Earn money watching videos, completing surveys, downloading apps, and more.
Ibotta: Get paid to shop.
InboxDollars: Get paid to watch videos, shop, complete surveys, and more.
InstaGC: Earn gift cards, or PayPal cash by watching videos, taking surveys, shopping, and more.
Swagbucks: Earn gift cards, or PayPal cash by watching videos, taking surveys, shopping, and more. 

Woman holding paper working on a calculator

Create a Budget Even if You’re Broke

Evaluate Your Financial Situation

The first rule of budgeting is to figure out how you are spending your money. How much money are you bringing in? What are you spending it on? Have you recently been saddled with new expenses like medical bills, car repairs, etc? Are any of those expenses unnecessary? Can any of your expenses be cut immediately to free up your cash flow? How much money can you afford to spend on specific items based on the income you have left?

If you are out of money, the bottom line is, that you only have two options: Either make more money or spend less. There are no other ways around it.


Classify All Your Expenses

The first step to getting a grip on your finances is to understand where it’s going. Separate your expenses into needs and wants. Then prioritize your wants. To do this, create a hierarchy of spending that separates the necessities from the luxuries. Once you’ve done this, you can look at your debts and figure out how to manage them.

Pinpoint Spending Problems

If you find it difficult to stick to a budget, identify your most troublesome category. Do you have a habit of stopping at the coffee shop every day? Do you like to pick up a sausage biscuit every morning on your way to work? If so, find ways to cut out these expenses.

Once you know what these categories are, keep them in mind when you start your budget.

Reduce Your Spending on Wants

Since you’ve now pinpointed your spending problems on your wants, it’s time to reduce them. Allow yourself some wriggle room in your budget. If you don’t, you’ll overspend and want to quit. But if you can be disciplined and downsize your lifestyle, you’ll always have money for the things you need. 

Ways to cut down on wants include:

  • Reduce your cable/satellite bill or completely eliminate it by cutting the cord.
  • Stop eating out at restaurants and prepare meals at home.
  • Reduce your cell phone bill by downgrading your current plan, going to pre-paid, or switching providers.
  • Find entertainment options that are free or discounted.
  • Cancel and subscriptions or memberships that you have.
  • Cut back on costly vacations and opt for close, budget-friendly alternatives.


Reduce Your Spending on Needs

Now that you’ve gone over all your wants and decided where to cut back on those, it’s time to look at your needs. There are ways to cut spending on these as well. 

Ways to reduce spending on needs include:

  • Reduce your grocery bill. Consider shopping at different stores. Many towns have grocery outlets where canned and boxed items are cheaper than traditional grocery stores. Also, switching to store brands or generic brands can save you money.
  • Use coupons when you shop.
  • Consider moving if you rent. If you rent, look around for less expensive places to reduce your rent.
  • Cut back on driving. Try carpooling to work instead of driving to save money on gas.
  • Refinance if you own. If you own your home, check different mortgage companies and banks for lower interest rates and refinance.
  • Cut down your electric bill. You can lower your electric bill by making minor changes- Cook with a crockpot instead of the oven. Turn off lights when you leave a room. Adjust the thermostat a few degrees on your heating/air conditioning. 


Pay Off Your Debts

Obviously, without debt, you would have more money. So now, let’s look at how to eliminate your debt.

The easiest way to eliminate your debt is by paying off the smallest debt first. Once you’ve paid it off, re-channel the payment into the next smallest debt. Keep repeating this until you have eliminated all of your debts.

Contact Your Creditors

If you are having trouble paying your bills, you should definitely call your creditors. You may be able to lower your payments or interest rates.

If you’re not doing well financially, your creditors might be (and generally are) willing to help. Call them up and explain the situation. It could result in lower payments or reduced rates.

Make a Plan and Write it Down

Your budget is the key to success and must account for every cent.

To be realistic, crunch the numbers. You need to set a reasonable budget for all your expenses, including a little for wants. Not including money for a few wants can make you feel deprived and completely blow your budget. So don’t set yourself up for failure.

If you still don’t have enough money each month, even after you have done all of the above, then it may be time to make some other changes.

Make Changes and Look for Opportunities

If you’re still coming up short, it may be time to make some tough decisions. Taking on a side gig or second job could be your best option for adding more money to your budget when you’re short on funds. 

Another thing to consider is asking for a raise at your current job. If that isn’t doable, then consider finding a new job that pays more money. 

While it is not impossible to create a budget if you have little income, you can do it. It’s not easy, but if you break your goals into smaller goals and stick to your plan, you’ll soon realize that you’re in control of your finances, and your financial position won’t seem so out of control.

How You Can Budget With no Income

Even if you don’t have a steady paycheck, it’s important to still think of a budget. You don’t have any money coming in, but you need to make sure you spend your money wisely.

People who don’t have a steady income should still budget. Budgeting gives you the power to prioritize expenses and control your finances. By having this control, you can avoid debt, be prepared for emergencies, save for the future, and build a stronger financial foundation.

Similar Posts