How to Budget When You Are Broke

We live in difficult times, and we are faced with an uncertain future. That alone makes planning to buy a home, buy a new car, or even have a baby a scary thought. If you are among the millions of Americans who are living paycheck to paycheck, the thought of spending money on anything other than necessities can become overwhelming. So what can you do to reduce your debt and make your life a bit more enjoyable?

While money should never rule your life, it is hard to focus on anything else when there are bills to pay. In order to dig yourself out of this situation, you are going to have to sacrifice for a little bit longer. In the end the light will shine and keep shining if you tighten your belt now.

For some Americans having just one job would be a welcome idea. However, the harsh reality is that many people suffer through a second job because this is what they have to do to make enough money. The hardest part of getting on a budget is the beginning. Once you have become accustomed to making do without the extra income, then you can begin to get back on track.

Restoring Order Amidst Chaos
Chaos not only destroys lives, but it also can cause you to lose everything. You have to take on the mindset that today is the first day on your road to recovery. The first thing you should do when establishing a budget is to clear a spot on your table and take out every bill you have. Write them down in order of importance.

For example, mortgage or rent should be first on the list. Then move along to the car payment, utility bills, any loans, credit cards, garbage bills, and so on. This may be the first time in quite a while that you have actually seen what you need to pay out each month, and it may be alarming, especially when you consider the other figure–your paycheck. Instead of panicking, you have to believe that you are about to make your life easier. Once you have all of your necessary expenses listed then you need to get another sheet of paper and list your monthly income, every penny of it. Then take a deep breath because you have just begun to organize your life.

Staying in the Black
If you have subtracted your expenses from your income and there is a surplus, you will be okay. A little bit of cutting back and you will begin to notice a bit more money is available each month. If, however, your numbers show that you are in the red–or that you don’t bring in enough to cover your expenses–then you will need to figure out what you can pay and make arrangements with creditors for the others. This will require a few phone calls, but with the economy being what it is, most creditors will work with you.

If you currently have just one job, you may have to face the prospect of taking on a part time job until your debt is under control. Unfortunately, this seems to be the norm in most families these days. The good news is, if you take that extra money and use it solely towards your bills you can get things back in order faster than you might imagine, and your part time job will only last a short period of time.

Many people now find that they are simply just broke. While you may wonder how this happened, you have to understand that it did not happen overnight. When costs rise on nearly everything and you still retain your old spending habits, it is only a matter of time before the well dries up. However, undoing what was done is possible. By evaluating your income versus your expenses, you will be able to see where you can cut back, at least until you become a bit more conscious of your spending. A few changes in your current habits and you can be on your way to financial freedom.

When you find yourself with more expenses than income, as many people do, what works for you? How do you curb your spending and make sure that the important bills come first? Feel free to share your ideas!

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Dominique Brown

Dominique Brown is a financial planner, landord, personal finance blogger and video blogger. He is the owner of where he talks about everything from being a new father to his worst financial mistakes. He has been featured on The Huffington Post and H&R Block. You can find him either on Twitter, Facebook, Youtube or Instagram.


  1. says

    Hi Dominique,

    We have to learn how to budget. The consequences can be very serious if we are not careful. The last thing that prudent individuals will want to happen is to become broke. We have to make changes especially when it comes to spending habits.

  2. Lynne says

    Very informative post. Discipline and proper spending are the keys to avoid being broke. Will definitely share this article to others.


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