How to Budget When You’re Broke

To some, budgets are boring or seemingly pointless. But, in reality they are critical to making progress with your financial goals, such as buying a house, traveling, or getting out of debt.

For those who consider themselves broke, budgeting may seem nothing short of impossible. After all, how do you properly allocate a resource you don’t have much of in the first place? While this may seem like a catch-22, there is never a more important time to create a road map for your money than when you have very little.

There are several steps you must take in order to make budgeting a success.  Here are the most important:

  1. Assess your situation. Include everything that comes in and everything that goes out.  Keep an eye out for irregular expenses as well, making sure to plan for those over time.  Failure to do so is one of the major reasons why budgets fail.
  2. Cut, cut cut.
    • Make a list of your problem spending areas and focus your attention there.
    • Find ways to cut back on your recurring bills.
    • Embrace frugality.
  3. Prioritize your money goals.
    • Have an emergency fund.
    • Pay down your debt.
    • Break your financial goals into smaller ones that are more manageable and attainable.
  4. Look for opportunities to increase your income. Your paycheck doesn’t have to be your only way to earn. Search the Internet for ideas related to side jobs and other creative ways to boost your income.  Doing so will give breathing room to your budget, allowing it to gradually grow with your changing lifestyle.

About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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