While it may seem impossible, the people most in need of a budget are those living paycheck to paycheck. Budgeting when you’re broke is a necessity and is the only way you will pull yourself out of the financial situation (unless of course you win the lottery or inherit a ton of money!).


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A budget is simply a spending plan that helps you figure out how to prioritize your spending and is the ticket to getting ahead financially and leaving “broke” behind.

Know Your Actual Income

Before you can effectively create a spending plan or prioritize your debts, you need to have a very solid idea of how much you earn per month.  Many people earn about the same base pay each week or month, and you can calculate all of your expenses based on this income. If you discover your spending is more than your income, you need to make some cuts and eliminate anything unnecessary from your spending.
If you are someone who receives irregular income, it will be much more difficult to create the typical budget, but you will need to take steps to prioritize what you pay each time you do receive income to make the best use of your money.

Prioritizing Expenses

If you have fallen behind on paying your living expenses and debt, you need to spend some time looking at what you owe and prioritize what to pay first.  For example, if you are behind on your rent or mortgage payment, that should become your priority.
If you can’t pay for some of your bills, call the company or credit and explain the situation. Many companies are willing to defer payments or set up a payment plan to help you get back on track if you call and talk to them first.
If you run out of money before you reach the bottom of your list of expenses, the less important bills are simply going to have to wait until you have more income coming in.

Eliminate All Unnecessary Spending

If you want to change your situation, you need to take a very close look at what you spend money on.  Are you eating in restaurants or picking up take out?  Do you have cable or satellite television?
Consider everything that is not a necessity for survival a “luxury” and trim it from your spending temporarily. Once you have your bills are caught up and your debts paid, your income will go further and you can start adding in these items again. Until then, it’s time to slash your spending.
You may think the $5 lunches or daily trips to the coffee shop or vending machine aren’t enough money to worry about, but if you add it up over time, you would absolutely see a difference in the money you have available to pay for your bills.

Increase Your Income

Can you take on a part time job temporarily? Can you freelance or work weekends to earn extra money? Maybe you can take on a roommate to help reduce your living expenses, or maybe you can dog sit or move to a less expensive apartment.


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