Feel Like You’re Always Broke? 4 Steps to Take to Fix Your Situation

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

If you’re struggling to keep up with the costs you have to pay, you’re not alone. Read on for tips that could give your budget some breathing room. 

Feeling as if you’re constantly struggling with money can be really stressful. Unfortunately, this is the reality for many people, who consistently find themselves looking at low bank account balances.

If you’re one of them, there may be plenty of reasons beyond your control, including the fact that inflation has surged in recent years and wage growth hasn’t kept up. But while there are certain situations where it’s really hard to fix a shortfall, there are some steps most people can take to not feel so broke all the time.

In fact, here are four of them to try.

1. Track your spending for 30 days

Do you know how much you actually spend or where your money is going? One study from Mint showed that 65% of Americans had no idea how much money they spent in the prior month — and close to 1 in 3 people (31%) wished they had spent less.

Figuring out where exactly your money is going is a key first step to getting a handle on your finances. This can let you know where you’re starting from and help guide you toward changes you can make to improve your situation. Try using a budgeting app to see where you spend all your money every month.

2. Deal with any burdensome debt

If you have credit card debt or other high interest debt, this can make you feel like you are broke because you are sending so much of your money to creditors. You’re paying interest, of course, but your current income is also going toward past purchases so you don’t have as much to spend today.

When your debt is a burden, start by seeing if you can refinance or consolidate it. This would involve getting a new loan at a better rate and paying off costlier debt. If you use a personal loan to consolidate, you’d have one fixed monthly payment and a set payoff schedule so you’d have a definite debt-free date. Plus, paying off your debt may be more manageable for you.

3. Cut fixed expenses

Making tons of small cuts to spending and depriving yourself of all the things that bring you joy is a big reason why you may feel broke. But you don’t necessarily have to keep living this way.

Rather than trying to chip away at the small stuff, you should aim to cut your fixed expenses and keep them as low as possible. Fixed expenses are costs you have to spend money on every month, like your rent or car payment. If you can keep all your fixed costs to about 50% of your income, that would leave you with 50% left — 30% to spend on everything else and 20% to save for your future.

One big benefit of cutting fixed expenses is you only make a change once and then you continue to benefit from it. In the long run, is it easier to save $100 a month by buying and driving a cheaper used car one time, or by giving up your favorite latte every morning, skipping lunch out at work every day, and not going out to bars with friends every weekend?

4. Focus on increasing income

Finally, perhaps the biggest change you could make if you’re feeling broke is to focus on increasing your income. If you could ask for and receive a raise, switch to a better paying job, or get a promotion by learning some new skills, you’d have a lot more money to spend — and that always makes it easier not to feel broke. Plus, a higher income will give the ability to both pay off current debt and save for your future goals.

Give these techniques a try and see if they can help you feel better about your financial life — and leave you with more money to do the important things.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More