This post may contain affiliate links. Please see my disclosure for more information.
FREE Monthly Budget + Expense and Bill Tracker
The easiest way I've found to stick to a budget is the good old fashion pen and paper method. This budget template + expense and bill tracker helps keep things simple.
The last thing you want to think about when you don’t have money is how to budget what little you’ve got.
Trust me, I know.
But that is the time when you need a budget the most. The best and fastest way to improve your finances and alleviate at least some of the stress regarding your current financial situation is to sit your ass down, take an objective look at your money, and make a plan.
When I was in college, I was broke as %#?&! Student loans paid my tuition, and I worked part time to pay for everything else (rent, utilities, groceries, gas, car, fun, etc.).
The only reason I didn’t rack up a huge credit card bill was because of my badass budgeting skillz. I was relentless about tracking my expenses and making sure I never spent more than I was making (which wasn’t much).
It was such a relief to finally graduate, get my first full-time job, and have real money to spend!
Then I left to pursue my passions and now I’m right back where I started. -_-
So if you’re reading this right now, know that I have been where you are (twice!) and it doesn’t have to be so bad.
If you’re unemployed, underemployed, or just trying to get back on your feet, here’s what you need to do.
Pssst! I’ve got something for you —
Compile the Data
The first step is to analyze your current situation. Get out a sheet of paper (or open up Excel) and write down all of your needs.
Needs can vary from person to person. If you live close to work, you may not need a car because you can walk. But if you have a 40-minute commute and public transportation isn’t an option, then you may not have much of a choice.
You know the basics:
- Shelter (rent/mortgage)
- Food (human and animal food — groceries, no eating out)
- Utilities (water, sewer, electricity, etc.)
- Debts (student loans, credit cards, car payments, etc.)
Why did I include debts under your needs?? Because you are NOT going to let whatever financial hardship you’re facing ruin your credit or cause you more debt in the form of unpaid interest. You need to stay on top of your debts.
Other possible needs: insurance payments, gas, parking fees, etc.
Find your total needs.
Now list everything that doesn’t fall into one of the aforementioned categories. These are your wants, which may include:
- Subscriptions (Netflix, Hulu, Audible, etc.)
- Parking fees
- Dining out
Find your total wants.
Total Needs + Total Wants = Budget Total
Monthly Income – Budget Total = +/–
Are you in the red or the green? If your Monthly Income is less than your Budget Total, you have two options: reduce your spending or make more money.
Reduce Your Spending
The easiest place to reduce your spending is often your wants. Reevaluate your monthly bills and subscriptions. Is there anything you no longer use or want?
When I did this, I had forgotten all about my Netflix subscription. I don’t watch TV much and when I do it’s usually with my partner (who has his own Netflix subscription). So cutting Netflix was a no-brainer for me. $10 saved.
Here are some ways you may be able to reduce your wants:
- Cable (get a smaller package or nix completely)
- Clothing (shop secondhand or go on a spending freeze)
- Dining out (eat out less frequently, use $5 Meal Plan to eat healthy at home)
- Subscriptions and Memberships (re-evaluate which ones you use and see what you can cut out)
- Entertainment (opt for free or cheap entertainment, invite friends/family to do something at home)
Then find out how you can save money on your needs:
- Shelter: Consider negotiating a lower rate for your rent, moving to a different place, or refinancing your mortgage.
- Food: Pre-made/pre-packaged foods are more expensive. Buy more whole foods and start planning your meals ahead of time with $5 Meal Plan.
- Utilities: Look for ways to cut your electricity costs, spending more time outdoors, using less AC, and unplugging electronics that aren’t in use.
- Debt: If you have federal student loans, consider signing up for an income-based repayment plan. If you’re already on an income-based plan and have had a change in income, let your loan provider know. Ask for a lower interest rate on your credit cards, and look into refinancing your auto loan.
Increase Your Income
I realize this option isn’t accessible to everyone, but most people are capable of earning more money than they currently do, even if they don’t realize it.
Whether you’re a stay-at-home parent, full-time working professional, or anything in between, there’s almost always something you can do to increase your income.
And when you’re in a pinch, even a little bit extra can go a long way. If you need a little inspiration, check out these 10+ ways to make extra money fast.
Prioritize Your Debt
Don’t put your debt on the back burner. Work it into your budget and at least keep making your minimum payment.
I know it’s hard to stay motivated to pay off your debt when you can hardly afford the bare necessities, but you will be glad you didn’t give up. It’s easier to stick with it now than to get back to it later when you start making more money, at which point you will likely have accumulated unnecessary interest.
And as soon as your fortune turns back around, get back on track with your regular debt repayment plan.
Creating the Final Budget
A budget is a living and breathing organism. When you’re broke, your budget is like your baby; it needs constant attention. Even the slightest slip up can cause you to incur more debt or not have enough money to pay your bills.
Don’t let that happen!
Track your spending and stay on top of your budget:
Excel Spreadsheet: I used an Excel spreadsheet for my budget for years, and it works just as well as anything else. However, it can be more time intensive if you’re tracking every expense.
Online Budgeting System: When it comes to online budgeting, I’ve tried everything. Personal Capital is by far my favorite online budgeting tool. The interface is clean and smooth and they have way more options for managing your money than just tracking spending. It’s the best all-around money management tool out there, and it’s free.
Budget Printable or Notebook: Some people really like to see everything written down. If that’s you, be sure to download this free budget printable and monthly spending tracker:
Tips for Sticking to Your Budget
Plan for lump sum expenses.
Examples of these include insurance and subscription services. There are a number of ways you can plan for these. The way that I prefer is to break them out into monthly expenses and set them aside in a separate savings account. You can also use a cash envelope system if you’d prefer, but I wouldn’t recommend this unless you have a secure place to store your envelopes, like a fireproof safe.
Automate bill pay.
Especially if you’re following a debt payoff plan. Some people are uncomfortable with the cruise control option because they’re afraid of overdraws, but if you’re checking in weekly and abiding by your budget, then it shouldn’t be an issue. Automating your bill pay means you’re more likely to stay on track because it takes the decision out of your hands. (No more hovering over the “submit payment” button thinking, Well, I could pay $100 less just this one time and get that new pair of shoes I’ve been wanting…)
Don’t compare yourself to others.
This is your financial journey, and yours alone. Don’t go comparing your situation to your friends or family or that couple you just read about that paid off $87,273.09 of student loan debt in two weeks. You’ll get there, too. It just takes self-discipline and some time.
Have a “miscellaneous” category.
You absolutely cannot think of every expense you will incur in a given timeframe. Don’t try. Write in a miscellaneous category for those small irregular expenses, like school supplies for Junior or a new chew toy for Rex.
Don’t forget about fun.
Some people can grind at their debt non-stop for years and years, spending every waking moment finding new ways to earn money so they can pay down their debt. But most people burn out very quickly if they find they’re not allowing themselves the freedom to enjoy life.
Don’t sabotage your success by not budgeting for fun, just be conservative with your spending and look for ways to have fun without going broke. I get it – money’s tight. But even an extra $20 per month to spend on whatever you want can keep you from feeling deprived.
I’m a financial coach and author + owner of Goodbye to Broke. I love all things personal finance, money management, and healthy living. And I talk to my dog way too much, if we’re being honest.