Everybody wants to know how to not stay broke and poor.
Let’s face it, struggling to make ends meet sucks. You feel like you’re on a hamster wheel, spinning and spinning but never actually getting ahead.
The good news is there are some simple ways you can change your situation and start building wealth.
You have the power to transform your financial life and finally stop living paycheck to paycheck.
In this article, you’ll discover five proven strategies to not stay broke and poor so you can start creating the financial freedom you deserve.
These techniques have worked for countless others and they will work for you too.
So what are you waiting for? Keep reading to learn how to not stay broke and poor and start living the life you want.
Develop a Budget and Spending Plan: How to Not Stay Broke
If you’re tired of living paycheck to paycheck and want to turn your financial situation around, listen up. Developing a solid budget and spending plan is key.
First, track your income and expenses for a few months.
See where your money is actually going each month. Look for expenses you can reduce or eliminate, like eating out or entertainment. Every dollar counts when you’re trying to get out of debt.
Once you have a clear picture of your finances, set a budget that limits your spending to less than your income.
Allocate your money to essentials like rent, food, and transportation first. Then distribute the rest among wants and savings.
Aim to save at least 10-15% of your income each month. Start an emergency fund with enough to cover 3-6 months of expenses. Then save for large purchases so you can pay in cash rather than financing them.
Check your budget and spending at least once a week to make sure you’re staying on track.
Look for ways to increase your income, whether it’s asking for a raise at your job or developing a side gig. Every extra dollar you can add will help speed up your financial progress.
Pay off high-interest debts as fast as possible, starting with credit cards. Once you’re debt-free, your budget will be simpler and saving will be easier.
Pay Off Your Debt: The #1 Way to Stop Being Poor
Paying off your debt is the fastest way to stop feeling broke. When you owe money, a big chunk of your income goes to paying interest and minimum payments each month.
So tackle your high-interest debts first.
Credit cards
Credit card debt is a budget killer. Make paying it off a priority. Stop using your cards and pay more than the minimum each month.
Even adding an extra $20 or $50 will help. If your rates are high, consider consolidating or transferring to a lower-rate card.
Personal loans
If you have personal loans at high rates, focus on paying them off next. Refinance if you can get a lower rate. Make extra payments whenever possible to become debt-free faster.
Medical bills
Talk to the providers and hospitals about setting up a payment plan.
They often work with people. Pay what you can afford to pay them off over time. Ask if they offer any bill reduction or forgiveness programs you may qualify for.
Student loans
Student loan debt takes longer to pay off but there are programs to help. Apply for income-driven repayment plans to lower payments.
Pay extra when possible and look into loan forgiveness programs for public service employees.
Increase Your Income: Make More Money to Escape Poverty
One of the best ways to escape poverty is to simply make more money. Easier said than done, right? Here are a few ways to increase your income and start building wealth:
Develop Valuable Skills
Learn skills that are in high demand and pay well. Some options include coding, digital marketing, teaching English online, freelance writing, and virtual assisting.
These skills are learnable and many have low barriers to entry. Once you’ve built up expertise, you can land higher-paying jobs or start charging more for your services.
Ask for a Raise
If you’ve been in your job for a while and have taken on more responsibility, ask your boss for a raise.
Come prepared with examples of your contributions and a reasonable salary range based on your position and experience.
The worst they can say is no, but they may come back with a counteroffer. Negotiating a higher salary, even an extra $1,000 or $2,000 a year, can make a big difference in your financial situation.
Develop a Side Hustle
Start a side business to generate extra money outside of your regular job. Think about your skills, interests, and hobbies and how you might monetize them.
You can sell items online, drive for a ridesharing service, rent out a spare room, walk dogs, tutor students, or provide freelance services.
Building a side hustle, especially one with growth potential, is a great way to increase your income and gain financial freedom.
Reduce Expenses
Spend less each month so you have more money left over to pay off debt or save.
Look for expenses you can trim like eating out, entertainment, and utility bills. Make a budget to track your spending and set limits in different categories.
The more you can reduce your costs of living, the more money will be available to improve your financial situation. Even saving an extra $50 or $100 a month can help turn your situation around over time.
Cut Out Unnecessary Expenses: Small Changes That Help Your Wallet
Cutting out unnecessary expenses is one of the easiest ways to stop bleeding money each month.
Take a close look at your budget and spending habits to find expenses you can reduce or eliminate. Every dollar counts when you’re trying to turn your financial situation around.
Eliminate subscriptions you don’t use
Do you pay for streaming services, meal kits, beauty boxes, or gym memberships that you rarely use? Cancel them. That’s an extra $10 to $50 each month that can go towards paying off debt or saving for important goals.
Cook more and dine out less
Dining out is expensive. Cooking at home is much more budget-friendly.
Try cooking 2-3 extra meals each week that you can eat as leftovers for lunch. Meal prepping and cooking in bulk on the weekends is an easy way to save money and time during the week.
Cut the cable cord
Cable packages are pricey, often $50 to $150 per month. Switch to streaming services like Hulu, Netflix, and YouTube TV to save big. You’ll get plenty of entertainment options for a fraction of the cost.
Buy generic or less expensive brands
Switch to less expensive generic or store-brand items for things like food, household supplies, toiletries, and over-the-counter medications.
The quality is often just as good but at a lower price. This swap can save you 30-50% on your grocery and essentials budget each month.
Save Money Automatically: Set It and Forget It for Financial Freedom
One of the best ways to stop being broke is to save money automatically. Set up automatic transfers to move money from your checking to your savings account each month.
Start with whatever amount you can, even if it’s just $25 or $50 a month. The key is to make it automatic so you never even miss the money.
Increase the Amount Over Time
As you pay off debt and reduce expenses, increase the automatic transfer amount.
If you started with $25 a month, bump it up to $50, then $100, and keep going. The more you can save automatically each month, the faster your money will grow.
Look for Other Places to Trim Your Budget
In addition to increasing your automatic savings, look for expenses you can reduce or eliminate.
Things like eating out, entertainment, and hobbies are common areas where people overspend. Drop unused subscriptions and memberships.
Buy generic or store-brand items instead of name brands. All these little savings add up over time and the money you save can increase your automatic transfers.
Invest Your Savings for the Best Returns
Don’t just save your money, invest it to make it work for you. As your savings balance grows, you can invest the money in the stock market through index funds to earn higher returns.
Historically, the stock market returns 6-7% annually after inflation. At that rate, your money can double every 10 years. The more you invest, the faster your money will grow through the power of compounding.
Conclusion
So there you have it, five proven ways to stop being broke and start building wealth. It won’t happen overnight, but if you make a plan and stick to it, your situation will change.
Focus on increasing your income, spending less than you earn, paying off debt, investing for the future, and avoiding expensive habits.
Building wealth is a marathon, not a sprint. Start today by picking one thing from the list and get to work.
Then keep going and build momentum. Before you know it, you’ll have an emergency fund, less debt, and money working for you. Stay consistent and committed, learn from your mistakes, and keep your eyes on the prize.
You’ve got this! Keep putting one foot in front of the other on the path to financial freedom.