Every new year we set goals for ourselves to do better. Whether it’s a goal to make more money or to be healthier the only way to achieve those goals is to prepare ourselves. How to avoid being broke in the new year has been written with this in mind. It’s a practical guide on how to avoid being broke through the new year.
Being broke sucks! Take it from someone who has been working extremely hard to achieve financial freedom, not worrying about having money left over in the bank is a great feeling! When you can pay your bills, save every month and have a little left over to spend or save it’s a great feeling and one that I can show you how to achieve.
Studies show that most Americans do not have $1,000 in the bank at any given time. Remember that $1,000 is the minimum that you should have saved as an emergency fund. This number is striking and that’s why it’s so important to start the next year running in terms of our finances.
If you follow these steps I can guarantee that you wont be broke unless there is another underlying problem. These steps are designed to safeguard our financial wellbeing to avoid being broke.
Table of Contents
Live Within Your Means
You cannot spend more than you make. This is the rule of thumb because you should never spend what you haven’t earned. Most people when they get a raise or promotion increase their expenses by the same percentage or greater. They buy new cars, move to new neighborhoods and generally spend more than they should.
In the next year make it a goal to spend less and to live with what you have. In fact if you can start living more frugally you could start to increase your wealth and avoid being broke. Don’t spend your hard earned money trying to maintain an image that no one really cares about.
Find a New Job
Finding a new job is a great strategy to make more money. There is a high likelihood that someone may be willing to pay you more for your services. Do not be afraid to try and see what’s out there. The worst that could happen is not getting the job but you could potentially make thousands more by getting a new job.
If you make more money you can use the extra income to pay off things and avoid being broke.
Create a budget
Budgets are fundamental when trying to avoid being broke. It’s impossible to manage money without a budget. Budgets don’t have to be complicated and I have linked how to create a budget here. Use this guideline to manage your finances better in the new year.
Create a budget and follow it. Following a budget can be difficult in the beginning as you learn how to stick to a strict guideline for spending money over time. The benefits are worth it though as you can actively avoid being broke.
Avoid Debt
Debt is one of the main reasons why so many people are broke. Consumer debt can be crippling when trying to stay afloat. Credit card fees and interest make it such that you never finish paying off the debt. When a big chunk of your paycheck goes towards paying off debt it’s difficult to avoid being broke.
Start using the debt snowball method to pay off existing debt. As you pay off debt make sure you avoid making some of these mistakes that I made. It will help you go get out of debt faster and you’ll pay less in interest. If you can’t afford to buy something with your own money then you shouldn’t use debt to get it.
Don’t Buy Things You Don’t Need
People buy things they don’t need to please people they don’t like. If you are buying something to get noticed or be trendy then you don’t need it. Needing something and wanting something is quite different. We need food to live but we don’t need designer bags to live.
Also if you find yourself buying knick knacks that will probably end up cluttering your home stop yourself. One thing I stopped buying is clothes. Just because something is on sale doesn’t mean I need to get it. It’s still money out of my pocket no matter how good the deal is. By not buying things impulsively you save more which helps you to avoid being broke.
Get Rid of Expenses You Shouldn’t Have
Is there a subscription or bill that you pay for that you don’t use? Is there a cheaper option? Start thinking about things like this in the new year. If you could get a cheaper deal on Hulu or Netflix for example you can eliminate that expensive cable bill. Is the expensive gym membership being used? If not it’s time to cancel it.
Is your phone bill too much? Maybe it’s time to switch carriers. I remember when I changed carriers I ended up saving about $50 a month. That’s $600 a year of extra money in my account. It may not seem like much but over time it adds up.
Maybe you could start cooking home rather than eating out often. If you can get rid or limit such expenses it would save money in the long run.
Make Extra Money
There are so many opportunities to make a little extra using a side hustle. I have written a list of things you can do when you have extra time to make extra money. If you have extra space there’s an opportunity to rent it out and make money. If you have time you can drive for ride-shares and such.
7 EASY WAYS TO MAKE EXTRA MONEY
You could even start an online business. Start a blog and make money in your sleep. You can even start an online store to sell things that you don’t use anymore. If you have a skill that you can sell as a service find a way to make money for yourself using that skill.
Sell Things You Don’t Use
I’m sure you have seen yard sales and listings on ebay, poshmark and such websites for people selling gently used stuff. As a consumer country we often buy and accumulate things that we never take out of the box.
One of my friends jokingly said she has tons of clothes that still have labels on. It may seem funny but for me it represents waste and an opportunity to recoup money that we have already spent.
Save More
Set a goal to save more this year. If you open a savings account that is strictly for putting money aside it will be helpful in avoiding debt. Remember if you save more you have less to spend on frivolous things. This will ensure you always have extra money at all times which will help to avoid being broke.
Start increasing the amount of money you save progressively. Set it up in an account you don’t touch to ensure the money stays there.
Talk About Your Financial Wellbeing
Find someone you can discuss your finances with. It can be a spouse, professional or friend. Talk about your financial goals and what you’d like to see happen in the new year. Having someone to hold us accountable can be helpful in avoiding being broke.
Follow these steps on how to avoid being broke and hopefully you see real changes in the new year. It’s time to secure your financial freedom.
