How to Save Money When You're Broke

How to Save Money When You’re Broke – You don’t need a 6-figure salary to start saving money and preparing for your dreams and goals!

When my family only made $17,000 a year, I spent hours searching for ideas of new places to save money. I clicked on every single Pin looking for an answer; a new way to save oodles of cash in our lives.

While I found a few great ideas (my DIY laundry detergent recipe came about thanks to Pinterest), so many posts were just… not helpful! Many of the posts included things like “you can save hundreds by changing your gym membership from Platinum Level to Silver Level,” or “try buying Coach instead of Marc Jacobs.”

Sure those might be helpful to some people, but it doesn’t help when you’re broke; when you still wouldn’t be able to add the “budget” option from these posts into your budget without breaking the bank. How do you save when you’re broke? How can you save if you’re poor?

The good news is that there is hope. You really can save money even if you’re poor or broke. The bad news is that it’s going to hurt. It will push your limits and force you to do some serious thinking.

Going back to the good news, though! It really is possible to save. And to save big time, regardless of your income.

How to save money when you’re broke.

Step 1: Stop adding to your debt.

When you’re working with close to no money coming in every month, it’s hard to say no to credit cards. I get it, you can get what you want or need and just pay it off little by little each month. It sounds so nice and easy. The reality is much worse. With interest, you’ll pay more than double your total debt in interest.

Before you can get started looking for ways to save, you’ll need to stop adding more debt into your life.

Step 2: List your expenses.

This is the biggest step: make a list of your top 3-5 biggest expenses. Look at your bank statements and see where you send most of your money each month.

Housing (rent or mortgage)
Food
Entertainment
Cable
Insurance
Hobbies
Clothes
Utilities

Now find ways that you can drastically reduce those top 3-5 expenses. And I mean drastic.

These are things like selling your car that isn’t paid off. Or selling your house to buy a much smaller house with a much smaller mortgage. Maybe you’re renting our house and you need to find a new rental so that you can reduce your expenses.

Or is your biggest expense buying clothes? You need to stop spending money on clothes and start selling your clothes on eBay.

I know this is tough. But the goal is that the sacrifice will pay off!My family moved into an apartment that was half the size of our first one because if was cheaper and closer to my husband’s work (saving on gas, double win!), but far away from all of our friends. But moving into that little apartment

My family moved into an apartment that was half the size of our first one because if was cheaper and closer to my husband’s work (saving on gas, double win!), but far away from all of our friends. But moving into that little apartment allowed us to be able to save up the money (and made us really appreciate) that we needed to buy our house.

Step 3: Liquidate.

Now you’ve stopped your spending, reduced your biggest expenses and are ready to attack the next step: liquidating assets.

That sounds a lot scarier than it should be, but it really means getting rid of everything in your home and life that could bring in some extra cash.

If you have a shopping addiction, it’s time to go through your closet and sell the things you don’t love or use. Not only will this free up a lot of space for you, but it will also bring in some extra money that could be very useful in paying off debts, credit cards, or anything else that might need you to put money toward.

Some great places to sell your stuff for a good price are:

Local high-end consignment stores.
Craigslist.
eBay.
ThredUp (you can also buy your clothes here for a SUPER low price).

Be careful to make sure to have a plan for any money that you make! There’s nothing wrong with saying that you want to go out for a nice dinner, but make sure that you’re taking care of your finances first so that you don’t slip back into old, bad habits!

Step 4: Set up savings that you don’t know are happening.

This is the fun part (at least I think so!): actually saving money and building savings for your financial goals.

If you’re anything like someone very close to me (spoiler, it’s my husband), saving money doesn’t come naturally to you. In fact, you find yourself spending any money that you get your hands on just because it’s there.

I’m going to share the ways that I grew my savings accounts in secret. Even if you’re not a compulsive spender, you can still benefit from these!

Hide money.

Start a savings account in a different bank from your checking account and automatically withdraw money with each paycheck to go into the account. It’s easier than it sounds and it is highly effective. You can’t spend money if you don’t remember that you have it!

Use an automatic saving tool.

I’ve been using Digit since December and as of the end of February, I already had more than $500 saved just from spare change basically.

Digit watched your bank account and automatically moves money from your checking into a savings account when you have an abundance of money or even just spare change after buying coffee. My average deposit into my Digit savings account is something as small as $.19, but it just goes to show you how everything adds up.

Related post: Take Imperfect Action When Budgeting

It’s recommended that you save 10% each paycheck and put it into savings. But if that seems like a lot, try doing something as small as $10 each week. Just do what you can. No one is here to judge you or race you.

Just do what you can. No one is here to judge you or race you. Saving money isn’t a competition. It’s a safety net that will keep you and your family safe if you came into a period of financial trouble. Saving money is a way to make sure that you can make the steps necessary to have the life that you want for your family.

Even if you are living paycheck-to-paycheck, you can save money. You can make your goals happen without needing a 6-figure salary. Take it from someone who’s been there: you can do it!