Not having an emergency fund leaves you vulnerable against unexpected expenses: medical bills, car repairs, bigger taxes than budgeted and so on.
If you also live paycheck to paycheck and struggle to pay your bills on time, it’s even tougher on a monthly basis.
The best way to stop being broke and get your finances on track is to create an emergency fund and grow it afterwards, until you could easily cover at least 6 months of expenses, if anything happened to your income.
Create and follow a budget
If you want to do better, financially speaking, you need a strong foundation. And a a strict budget is such a foundation.
Write down all your income sources and expenses for at least a month, based on categories: groceries, medical bills, transportation, eating out, shopping etc.
Be thorough with your reporting, don’t try to hide expenses or pretend you make more money than you actually do.
In addition to following a budget you should also look to cut any unnecessary spending:
- Think about in what areas you feel you’re overspending or can reduce your expenses such as joining a cheaper gym or eating out less.
- Pay attention to your spending habits and then make it a point to do a better job, only purchasing what you absolutely need going forward.
- Become aware of where your money’s going, so you can identify opportunities to keep more money for yourself.
Turn your hobby into a lucrative side-job
Is there anything you like to do and are (or can become easily) proficient doing it? Maybe you are painting, creating websites or singing as a hobby. Cooking? Tutoring?
There are many hobbies that can be turned into a profitable side-hustle.
For instance, there is a professional PCB design tool by Altium available for you to take advantage of so you can increase your engineering skills and come up with your own prototypes to sell.
Seek opportunities within your industry that capitalize on the latest technology, to save you money and time and potentially garner better results that could turn into profit.
Live within your means
Winter holidays are fast approaching and we are being bombarded with a lot of advertising to buy more useless junk.
Stop!
Do you really need to purchase something?
If so, write it down and look for it during the Black Friday sales.
If not, ignore the entire event. Forget it exists. Buy stuff only if you really need it, not because the TV and internet push this like crazy.
If there’s one action you should take to help you have more money in your pocket it’s to live within your means.
Avoid trying to keep up with others and accept your situation for what it is and stay away from pretending as though you have more money than you do.
These 3 steps should allow you to secure an emergency fund and then slowly grow it.
Have you used these strategies? Are there any new ones you’d recommend?