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How to Create a Budget When You’re Broke 6 Easy Steps (+1 Awesome Budget Tracker)

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You can create a budget if you’re broke: 6 easy and pain-free steps.


Whether you have $1 in the bank account or $1,000, a lot of us are feeling the pinch. Monthly and day-to-day expenses add up quickly, leaving us feeling “broke”.

While there are plenty of money guides, blogs, podcasts, books, and gurus out there (and they likely have similar advice and loads of fancy financial credentials), we just wanted to share some free, helpful, and easy-to-try tips to get your budgeting on track.

Creating a budget shouldn’t be painful or hard. As with food diets, if you go on a “money diet” that’s too restrictive, you’re just setting it up for failure.

Here are 6 helpful items to mull over.


1. What are your money goals?

What do you want to accomplish with your money? It could be paying down debts or saving for a down payment on your home. Or maybe it’s always having a cushion of $500, or more, in the bank to handle an unexpected expense.


2. Write down your monthly expenses.

We get busy, and it’s easy to forget to track our spending. For the big-ticket items (car payment, insurance, daycare, groceries), they’re easy to remember. But there are lots of smaller items we forget about them. Either we forget to include them in the budget, or we don’t even remember spending the money at all. Like coffee runs, an extra candy bar at the supermarket counter, or that last-minute fast food run.

Find a tool to track your expenses. It can be as easy as using a simple monthly expense tracker, using a notepad, or installing a free smartphone app. I use a blend of these tools. And I also know some people who rely on their phone’s camera alone. They just take pictures of every receipt and store all of them for the month.


3. What are your needs vs your wants?

After figuring out what your need, figure out what are your monthly necessities like tuition or mortgage. What are your monthly non-necessities, like an ice cream run or pizza delivery?

If you’re trying to determine whether or not something is a necessity, ask yourself honestly: will there be real-life, negative consequences if I don’t purchase this item? What will happen in 3 weeks if I don’t purchase this item? What about 3 months?


4. Create a budget that works for you.

A budget is really just a bunch of addition and subtraction. Add up the income, subtract the expenses. And you want to make sure that you are spending less than what you are making after taxes, that’s your net pay or take-home.

There’s a lot of great budgeting software and templates out there, but this is a helpful template that we like for budgeting.

You can print off this sheet as is (make sure to make multiple copies for all the months ahead). Or if spreadsheets and online docs are more your lane, can also check out great Google Sheet Budget tracker to help you organize your money.

There probably isn’t going to be room in your budget for all of your wants. But you can probably keep some of them, maybe even a lot of them. Because you shouldn’t feel completely miserable on your budget. If you are, just like with a food diet, you’re going to crash and crash hard.

If you love your Starbucks run, can you get a less expensive drink or a smaller size? Can you go 2x a week instead of 4x a week?

Instead of bringing your kids to a play zone or an arcade, can you bring them to a free indoor play area at a fast food restaurant? Look for ways to cut back. Identify the “wants” you’re spending on, and look at options to cut back.

You’ll have to be honest with yourself. Maybe your take-home isn’t enough to cover any of your wants. Maybe it can’t even cover all of your needs, or it leaves you with no room to build a cushion. You may have to make cash money online or pick up a side hustle, or look at refinancing loans or bills to lower the monthly payments. There are free apps like Cleo that look for ways to save you money on your bills.


5. Know your temptations. And limit them.

Temptations are everywhere. For me, one of my biggest lures is fast food. Two-thirds of us eat there weekly (with 25% of us eating there 4 or more times a week). And it probably is a temptation for you too. 71% of US residents say that food is their biggest impulse purchase.

To avoid, don’t shop at the grocery store hungry. Plan your meals for the week. (It’ll be easier to ignore flashing golden arches as you drive home if you already know what’s in the fridge and have a plan for what to make for dinner.)

I like to look for weekly deals at my local supermarket, and then I try to match them with grocery coupons to double up on the savings. When I know I’ve got a good deal in hand, literally, I’m that much more likely to stick with my planned list once I’m at the store.


6. Keep going!

With a budget in place and an eye on outsmarting temptations, you’re on the right track. Patience is important. You’re transitioning to a new way of doing things and restricting or challenging yourself can be hard.

The important thing is not to give up. Just because you have a setback or two, doesn’t mean you’re going to fail. Everyone falls from time to time, just pick yourself up and keep going!


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