We all know that figuring out our finances is hard, especially in our 20s and 30s when there isn’t much of it to go around.

Money can’t buy happiness, but it sure can make your life a lot easier and set you up for the future that you want.

What is important to understand that there is a serious difference between being broke and being poor. Someone who is broke is able to cover their expenses, but won’t be able to make financial moves and save money.

A person who is poor struggles to even makes ends meet and may not be able to pay their rent because there just isn’t enough to go around.

When you wake up every day wondering how you’re going to pay your rent this month because you spent too much money on tacos, it can really take a toll on your mental health and cause a ton of financial stress.

Thankfully, there are some simple changes you can make to help you figure out how to stop being broke so you can make financial progress and change your life.

How to Stop Being Broke

1. Change Your Mindset

Before you can make any kind of radical change in your life, you have to make sure that you’re in the right mindset to really do it.

You need to start living for you and stop living for others. Decide that you don’t want to be “normal” anymore and keep buying things you don’t need.

You’re not going to be able to make any real change unless you’re sick of feeling this way and sick of being broke.

2. Set Financial Goals

A really important part of improving your finances is to set intelligent financial goals. Having these goals is what will push you toward making smarter financial decisions in the hard times.

Your goals could be to save for a house down payment, to save for your future (or current) children’s education, or whatever else makes you excited.

3. Create a Financial Plan

Once you have some goals set, you need to start making an actual plan to accomplish those goals. Your goal could be to save $10,000 and your plan could be to save $50 a week. It doesn’t have to be anything drastic!

You can check out this article all about how to create a 5 year financial plan.

4. Figure Out If It’s a Spending or Income Problem

There are two main aspects to being broke that a person can be experiencing. You’re either broke because there isn’t enough money, or you’re broke because you spend too much of the money.

This is known as either a spending problem or an income problem and thankfully both are problems you can fix.

A person with a spending problem is going to buy themselves new clothes and dinners out before they even think about saving money which can be a problem for their future.

When you’re a natural spender you’ll find yourself going and spending money with ease and going shopping as a way to relieve stress, and that’s a habit that needs to be broken if you’re going to learn how to stop being broke.

A person who has an income problem has just enough money to cover their bills without any extra spending on their part, but they don’t have enough money to start saving.

These people need to find themselves some more money. This can be done in a few ways, you can get a promotion or a raise (easier said than done), find a new job entirely, or start a side hustle.

5. Create a Budget

I am well aware that budgeting is not the most fun or more attractive thing in the personal finance world. It’s honestly the worst, but it is extremely necessary.

Having a budget that is based on your spending and your income is going to show you how you spend your money and where you should be spending your money to secure yourself for the future.

Here are a few articles you need to check out if you need to start a budget to stop being broke:

6. Stop Being a Victim

A lot of people who are broke like to blame their broke state of mind on everyone around them. They aren’t willing to take responsibility for their own actions and start making the changes for their future.

If you grew up in a household with parents who were always broke, you can’t blame them. They can’t change how you are now. You need to stop being a victim of circumstance and try your best to change your habits.

7. Don’t Lend Money to Others

It can be really tempting to lend money to our friends and family when they aren’t doing the best. However, if you’re reading an article about how to stop being broke, you probably don’t have enough money to be lending.

The sad truth about lending money to others (even when its close friends and family) is that they often aren’t going to pay it back. I know, it sucks.

As much as you may want to help, you should try and hold off until you have enough money to have a bit of a nest egg so it doesn’t hurt as much when they possibly don’t pay it back.

8. Have Multiple Bank Accounts

When you’re the type of person who spends too much money each month without actually saving any, it might be because you don’t have a separate place to put your money.

As a financial adult, you should have more than one bank account to keep your money in.

When you have all of your money in one general checking account you’ll find yourself spending the money that’s supposed to be your “savings” without you even realizing it.

Read this article: Bank Accounts Every Person Needs

9. Pay Down Your Debts

Making monthly debt payments can take away a really big chunk of your take home pay and can be a huge contributor to you staying broke.

I know a ton of people who read my articles are saddled with student loan debt and that takes a couple hundred dollars of their monthly pay which makes it really hard to be able to start saving.

If you want to stop being broke, you should work as hard as you can to cut down your debts and start paying them off as quickly as you can, even if it’s just a few extra dollars a month.

10. Improve Your Credit Score

Something that really helps with your finances is having a great credit score. Your credit score can unlock lower interest rates on mortgages, credit cards, and more.

It can also help you get approved for apartments and less expensive car loans. Having a bad credit score may be a contributing factor to you being broke, so it’s important that you start improving your score.

You can use the free website Credit Sesame to monitor your credit score and it can help teach you ways to improve it as well.

11. Stop Choosing Convenience

One reason why people end up being broke is that they love making purchases out of convenience. They would rather buy a $3 bottle of water rather than bring one from home, or buy expensive snacks at the store instead of having them packaged from home.

Convenience packages and foods are going to cost you a ton of extra money instead of planning ahead and making your own lunches and other snacks.

12. Learn How to be Frugal

Being frugal isn’t for everyone, but learning some frugal living tips can change the way you see your finances. You can learn great frugal living tips from your parents and grandparents, especially if they grew up poor without a ton of money in the bank.

Here’s a few awesome articles that you can read to learn how to be frugal:

13. Ask for Help

One thing that people need to learn how to do if they really want to be great with their money is to learn how to ask for help. If you can’t afford your rent, ask for a friend or family member’s help.

Your car breaks down and you need a ride to work? Ask! People are going to be willing to help you if you ask for it.

Most people aren’t willing to ask for help and will end up spending more money than they need to because they refuse to swallow their pride and ask for a favor.

14. Make a Commitment to You

If you really want to change your life, you need to realize that the only person who is going to help you, is you. You need to realize that you need to make a serious commitment to your future and to yourself.

Remember the feeling of not knowing if your debit card is going to be accepted when you buy a $2 cookie. Or the feeling of having to pay overdraft fees after a night out with your friends.

You need to make a commitment to making changes and remember that this doesn’t have to be forever.

15. Get a Side Hustle

Making more money is the simplest way to stop being broke because you’ll finally have more money around to save and invest. The more money you’re able to bring in each month, the less stress you’re going to feel each day when you need to pay for something.

Getting a side hustle is the best way to make more money without having to quit your day job or spend months looking for a new one.

Here are a few articles that you could read to learn some awesome ways to make money from home:

16. Stop Trying to Impress Others

A huge reason why tons of people are broke in their 20’s is because they feel like they need to impress people around them.

If you’re trying to have a rich looking life when you’re making minimum wage, you’re going to struggle and be broke for a long time.

Since social media is so prevalent in our lives we can easily compare our lives to the lives of people we don’t even care about and this can make us spend tons of money on things we don’t even want.

17. Stop Using Credit Carelessly

Credit cards can be a really amazing tool to earn cash back and other rewards, if you know how to use them. Most people aren’t taught about the dangers of using credit irresponsibly and end up in serious debt.

Try your absolute best to stop using credit cards unless you actually have the money to pay them off in your bank account. You don’t want to get yourself into debt from credit cards.

18. Cut Excess Monthly Bills

Bills that happen every month are going to take up a pretty big chunk of your income, especially if they aren’t essential to your life.

Of course you need to pay for things like rent, utilities, car insurance, etc. However, there are so many new monthly expenses that you definitely don’t need to spend money on.

Thankfully, there’s a service called Trim that can tell you which subscriptions you have and even work for you and cancel them. This can work for services like netflix, amazon prime, and more.

Try Out TRIM for Free, Your Personal Finance Fairy God Mother!

19. Don’t Get Pay Day Loans

Pay day loans are never a smart idea and they can suck you into being broke for years to come.

A payday loan may seem like a good short-term solution to a cash flow issue, but the interest rates are predatory. You’ll get an interest rate so high that you end up paying hundreds of dollars to pay it back.

If you need money in a pinch, try selling things or picking up some quick side jobs like mowing lawns or raking leaves because it’s a better long-term solution than pay day loans.

20. Try a No Spend Month

One of my favorite ways to convince myself to stop spending money for a while is to try out a no spend month. This usually happens in November for me because I love to save some money right before the holidays.

During a no spend month, you spend money only on your essentials (i.e., rent, groceries, gas, and insurance, etc).

However, you aren’t allowed to buy any non essentials which can jump start your savings and make you question your spending habits.

21. Cook at Home

A lot of people who would consider themselves broke are the same people who never cook at home and have their local pizza place on speed dial.

One of the biggest things that people spend money on each month is food and eating out is a pretty amazing way to waste your food budget in just a few days.

Cooking at home can save you hundreds of dollars a month and will teach you essential life skills that will help save you money for life.

The worst part about cooking at home is not being able to come up with a decent meal plan, so we have a great recommendation for you!

$5 Meal Plan is a service that will send you a weekly meal plan and a detailed grocery list ever single week for only $5 a month, which is well worth the cost and can take the guesswork out of your weekly grocery shop.

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22. Compare Items Before Buying

It can be tempting to just buy the least expensive thing at the store, like the cheapest toaster. However, sometimes buying the least expensive item can lead you to paying more money in the long run.

You should compare the price AND the quality of items before buying and make sure that you’re actually getting the best deal. If you don’t, you may end up in a never ending cycle of buying the same things over and over.

23. Buy Used if Possible

Just because you’re broke, that doesn’t mean that you don’t get to buy things! However, you need to try your best to buy things used to save a few bucks.

You can start shopping at thrift stores instead of expensive shops in the mall. You can get furniture on the cheap, and clothes that are still awesome quality without having to spend your entire paycheck on a single outfit.

24. Assess Your Spending Habits Often

Making financial progress is going to be a long process that will be constantly changing based on your current situation. It’s not a set it and forget it type of situation.

You should definitely be assessing your financial situation at least monthly and making sure to make changes that are going to bring you closer to your goals.

You can even hold a monthly budget meeting with yourself or your significant other to make plans for the future.

Final Thoughts

Being broke doesn’t have to be a forever sentence. You aren’t going to feel this way every day for the rest of your life if you’re able to make small changes for your future.

Start spending more time thinking about how you spend your money or brainstorming ways to increase your income and you’ll be on the road to financial freedom very soon.