At Money & Mimosas, we often focus on what to do once you have some money to your name, but what if you are literally starting from zero? We’ve all been there! It seems like no matter what you do, there always seems to be more month than money.
This is very stressful position to be in, but there’s hope. It won’t last forever - we promise! While it may seem hard to believe, you are in a better position than you think you are. For a start, you already have practice in budgeting, even on a tight income!
So, what can you do next?
Go On A Spending Cleanse
Budgeting might not sound very fun, but it you think of it like a cleanse it may feel If you have a tight income, budgeting is the best way to get the most for every single penny and you may even find ways to cut back a little further. Budgeting is all about making the most of what you have, regardless of how much that is, but your budget must be realistic in order to succeed. It is not healthy to set a really tight budget if you feel completely deprived! It’s like dieting- if it’s too strict you will binge and erase all of the hard work you put into it.
Pick Up A Side Hustle
Increasing your income will also help you get out of the living month to month cycle. Side hustles are a fun way to earn extra cash without giving up the security of your full-time job. However, keep in mind that side hustles do require effort and it’s important to always make time for relaxation and rejuvenation. You deserve time for YOU. Instead of a side hustle, you can also negotiate for a higher salary or ask your manager about a promotion. If the idea of negotiation makes you uncomfortable, check out Riva HQ for tips on how to improve your negotiation skills.
Eliminate Your Debt
For lots of people, debt is a huge factor in their financial prospects and can have a real impact on quality of life. If your debt is stressing you out, then it’s time to start prioritizing those payments. However, remember that boosting your savings is most important. Otherwise, if you pay off your debt and have zero (or very little) savings, you can find yourself right back in the same situation using credit cards to make payments. There are a few different ways you can start to reduce and eliminate your debt, experiment with them until you find the option(s) that works best for you.
One of the first options you could consider is how to reduce the amount of interest you are expected to pay. Though seeing a Bankruptcy Law Firm might sound scary, they would be able to advise you on how to modify a loan to help you repay it. You can also reduce interest by switching to another provider offering a deal to new customers. However, you’ll need to factor in any transfer fees and remember to keep an eye out for when the introductory offer expires so you don’t get caught paying a lot in interest!
Start Building Savings
A common misapprehension about saving is that you need to save a lot for it to be worth it. But anyone who ever had a piggy bank as a child will surely know that this isn’t true. It’s incredible how quickly loose change can add up.
One of the first rules of saving when you are broke is that no sum is too small. Even if you are only putting a couple of dollars a week into a savings account during your weekly money date, this will add up over time. Another good method is to take out cash before you go out with friends. It’s so easy to swipe credit cards, but if you only have a cash on you - it will be easier to be more disciplined about your spending.
Any financial advisor will tell you that building an emergency fund should always be a top priority. This is because you never know what will happen and having the financial equivalent of a cushion will help you avoid getting into accidental debt. Again, no sum is too small to add to an emergency fund and the longer you add to it, the more you will have. Just make sure that you don't dip into the fund for anything less than an emergency.
A final tip for saving is to simply take it out of your hands. Set up a standing order to your savings count on payday and send a small sum to your account automatically. By sending the money on payday, you will just get used to having a little less money in your main account and you can adjust your budget accordingly. Just as taxes are taken out before you get to spend, you can do the same with your savings.
If you are reaching zero at the end of every month, realize that you are not alone. But, now it’s time to take responsibility for your financial health and make adjustments to your lifestyle. The good news is that it only takes a few small tweaks and changes to make more of your money and the more you learn, the easier financial management will become.
You may be starting from zero, but you have a lot of potential and within a few months, you might not even recognize your bank account! You’ve got this - we believe in you!
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About Danetha: About Danetha: Danetha is a serial entrepreneur, investor, small business consultant and philanthropic advisor to women who want to make a BIG impact in their community. Money & Mimosas, her lifestyle brand, is a social club and financial education blog for ambitious women. Her work has been featured in Fast Company, Cosmopolitan and Entrepreneur. Danetha has been named a top 40 under 40 accounting professional by CPA Practice Advisor and a millennial entrepreneur to watch by the office of Congresswoman Barbara Lee.