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Tips On How To Save Money When You Are Broke

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I am broke, you say – how am I supposed to save any money? Well, there is a difference between being broke and being poor. Someone can make $50,000 month and still be broke broke if they are spending a lot of money on unnecessary items. For instance, spending a small amount per day on a coffee at the local coffee house or extra cash on treats at the convenience store every morning is not only a bad habit, it’s the easiest way to bust an already tight budget.

So you are wondering how to save money when you are broke? The best way to save money when you are broke is to document everything you spend money on and look for places to cut back. You can do this by keeping receipts and making a budget.

If you are having a hard time saving money in an emergency fund, adding to your retirement funds or bank account, or meeting the current high cost of the food budget and gasoline on your current income, you’re not Right now, many American households are struggling to make ends meet with less money.

According to Bankrate, “A well-funded savings account can be useful in an emergency, providing needed funds to cover unforeseen expenses that might otherwise require borrowing. Currently, however, less than half of U.S. households — about 4 in 10 — are able to cover an unexpected $1,000 expense like a car repair or medical bill.”

Ways To Save Money While Broke

It seems like a small thing that won’t make much difference, but the best thing to do if you want to save money is to track your monthly spending habits (every single penny you spend!) so you can spot unexpected expenses.

Getting a receipt for every single thing you purchase will make budgeting much easier, but it can also be a hassle. However, there are some better options. 

For instance, you can use any number of apps to document each purchase. Or, you can go old school and carry a pen and paper or notebook to record your spending. Both are equally effective as long as you remember to document the item and cost immediately after the purchase.

Knowing exactly what you purchase and spend each month is one of the best ways to identify problem areas.

Saving money may only need a few small tweaks or it may require major changes to your lifestyle. Being able to see where your money goes gives you the power to make those choices. 

A good start for finding additional money each month is:

  • Taking lunch to work instead of eating at a restaurant or fast food place
  • Eat out a little less often or limit happy hour after work
  • Buy groceries on sale or from a less expensive store
  • Review (and possibly cancel) recurring monthly bills that are taking your extra money. For example, you may be making a monthly payment for a gym membership or paying late fees on your credit card debt.
  • Cut down on fancy coffee, energy drinks, and snacks on the go. Instead, buy them at the grocery store and bring them with you.
  • Another good option is to try using only cash instead of a debit card or a credit card. It makes it less convenient to purchase something and you’ll be less likely to make impulse buys. It can also reduce or eliminate another monthly bill. On top of that, it “hurts” to hand money over, wherein most people find using a credit card to be painless – until the bill comes in.
  • Make saving money fun and easy, like in the $5 Challenge.

Saving money when you are broke will require some discipline. However, saving money when you are broke is easier than trying to do so when you are poor.

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How Can I Save Money When I Am Poor?

Saving money when you are poor is not as simple as just identifying excess spending. If you are wondering if you are broke or poor, then you are probably broke. It may be harder to save when you are poor, but the good news is it is not hopeless.

Being broke means you may have to give up some fancy coffee occasionally. Being poor may mean you don’t know what the inside of a fancy coffee house looks like. 

But fret not, there is help and there is hope. First things – let’s get some help if you need it. Here are a couple of places to start.

This is not an all inclusive list, but it should get you started in the right direction. If you are not quite to that point yet, then let’s find a way for you to save some money.

Your first step is the same as for those that are broke: document everything that costs money for at least one entire month (doing this every month is better!). The next step is to start a budget. 

You may not have many, if any, areas to cut back on. But, seeing everything laid out on paper is still a must.

If you haven’t already been doing it, use the advice above for saving money. However, you may need to take things just a bit further. These are some more ways to spend less of what you don’t have.

  • Cut your cable TV and watch free streaming TV or a low cost streaming channel.
  • If you have a landline, get rid of it. If you really need it, get voice over internet (VOIP)
  • Use cash back apps and rewards cards for fuel and groceries.
  • Use coupons and/or Groupon. Just be careful not to buy things you normally wouldn’t just because it is cheaper.
  • Buy items used instead of new.
  • Find cheap or free things you can do for fun and entertainment.

These are all good ways for anyone to save money. Depending on your income, you may need to get more creative though. Hopefully after completing a budget, you will find you are just broke, and not poor.

However, if you do find that money really is tight, do not be embarrassed or ashamed. We have all been there. I have been in debt and spent sleepless nights worrying how to pay my bills. I have had to do things like pay credit card bills with other credit cards.

If you really need help, please ask for help. Then later on, when you are in a better financial position, pay it forward. You might even consider becoming a Financial Coach to help others.

Speaking of Financial Coaches, let me insert a plug for – I help people tackle personal finance challenges. You don’t even have to leave your couch.

What Is The 30 Day Savings Rule?

If you are still reading – good! That means you are interested in, and maybe even serious about,  saving money. That is why I’m here. I truly do want you to be happier and less stressed about your personal finances.

Let me throw another saving opportunity at you. Have you heard about the 30 day saving rule? In theory, it is extremely simple.

Actual execution is completely up to you. The 30 day rule simply requires you to wait 30 days on any purchase that is not a necessity. Sounds simple, right?

So, the next time you are surfing online and see something cool to buy, STOP! Instead, commit to yourself that if you still want it in 30 days, you can have it at that time.

This works because it cuts down on those impulse and “gotta have it” buys. Plus, by waiting, you might just find a new “gotta have it” item that is even better (but, then you have to wait 30 more days for that item).

One version of this method has you write your item down and keep that paper available. I do not recommend this. If it was an impulse buy, after a month you may forget about it. But if you write it down and keep looking at it, you are just reminding yourself to buy something you really don’t need.

Are you ready for an easy challenge? Don’t just stop yourself from making that impulse purchase. Transfer the money you would have spent on that item to a savings account.

You might even want to open up a new account just to keep the money separate. Try finding an account with the highest interest rate. 

Okay, you are correct – in today’s world there is no such thing as a high interest rate on a savings account. But, maybe you can find something that gives you a 1 percent return. If your current account only pays ½ percent, you’ve just doubled your return.

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How Much Should I Save Each Month?

So now you are thinking you have this saving thing down! Piece of cake, right? But you may be wondering, “just how much should I be saving each month?”

There is no one right answer. I could tell you to save as much as possible. I could also say that you need to save a certain percent of your pay.

The truth is that it depends on you and your circumstances. Ugh! Don’t you just hate when someone uses that line?

Let me explain just a little.

Imagine you are 55 years old. You have not started saving for retirement, have no pension, and want to live on $40,000 a year.

Now imagine you are 25 years old. You have a great job that offers a retirement of at least 80 percent of your salary.

These two people do not NEED to save the same amount. To be honest, if I was the 25 year old, I might have a hard time saving much at all.

Or, the 25 year old may be thinking they want to have their pension and a couple of million dollars in the bank. The 55 year old may not care about retirement and just wants to buy the latest Play Station. 

Just to be clear, the Play Station is for the, um, grand kids… Yeah, that’s it. But they will keep it at their house just to make sure it works…

Joking aside, it really does come down to what your financial goals are and how close you are to reaching them. Yeah, yeah, yeah, but you just want to know a ballpark figure, right?

All right, you win.

A good ballpark figure to reach for is to save 10 to 15 percent of your take home pay.

Some people will think, “Whew, I got that covered.” Others will say, “Holy cow! How am I going to save that much?”

I have a reply to both of those thoughts. First, you don’t have to stop at 15 percent. Push yourself to save more. Your future, older self will thank you.

The second reply is that you don’t have to start at 15 percent either. Start where you can and work your way up.

I am going to throw out one more challenge for anyone still reading. Let’s call it the 1 percent challenge.

Here is what you do. Multiply the amount you bring home in a paycheck by .01. That will show you what 1 percent of your pay looks like.

For example, let’s say you get paid $1,000. It does not matter if it is per week, month, or year. Well, it sort of does. If you are getting paid $1,000 per year and can still save, you rock!

Anyway, $1,000 x .01 = $10. Now replace the $1,000 figure with your actual salary amount and decide if you can live without that 1 percent before your next paycheck. If you can, funnel that amount to a separate account so you don’t spend it.

Congratulations! You just saved 1 percent more than you had been saving! Now repeat for a few paychecks and see how it goes. If you don’t miss the money, start adding another 1 percent to your savings every paycheck. 

Now you are ready to work with a budget like the one I offer, so you can start saving even more money. There are an endless number of ways to save money regardless of whether you are broke or poor.

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Remember, don’t worry if you are getting a late start. The second best time to start saving is right now.

Also don’t feel embarrassed or ashamed about your situation. Just be determined  to do something about it. Even if that means asking someone for help.

See what I did there? I transitioned into another shameless plug for My Online Debt Coach. Honestly, I will not judge you. I have been where you are. I just want you to be financially happy and stress free.

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