5 Steps to Stop Being Poor and 5 Lessons to Take With You

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Barely making ends meet and struggling to provide for just the necessities can be daunting. When you are in this situation it may seem difficult to find a way out, especially when you are living from paycheck to paycheck with nothing extra left to try to fix the situation. Here are five steps that you can take to get control of the situation and then five things you need to remember once you are out of the situation.

Start Budgeting

When you are barely getting by, you may already know where every penny went, and you may think that budgeting is just tracking your spending. Budgeting is planning how you are going to spend every penny. It means that you know where you are going to spend your money before it comes. It allows you to plan for expenses in advance and to start to put money aside for the bigger expenses that may come just once a year. When you are budgeting, you can also track your spending trends. This can let you choose areas where you may be able to reduce your monthly spending and come up with strategies to help you manage your money more wisely.

If you identify your problem areas, you can change strategies and find ways to save on those specific expenses.

Find Ways to Earn More

If you are not making enough at your current job to cover your necessities and save money, then you need to find a way to increase your earnings. This may mean taking on a second job to help you catch up on your overdue bills. It may also mean looking at a long-term career change that will allow you to make more money. Going back to school for additional training is a good option. If going back to school does not appeal to you, look at jobs in your field or a similar field that offer higher pay.

Some trade jobs offer competitive wages and have better job security than traditional jobs that college graduates take. Explore your options and consider changing what you do. Another option is to work the grave or swing shift which often offers higher pay for the same work.

Make Saving a Priority

Start saving money now. There are two ways you need to focus on saving. First, put money into a savings account that you will not use except for emergencies. You can start out with just $20 a week. This is eating at home one night a week or skipping the movies. It is easier to make financial decisions when you know you have money in the bank to cover emergencies. Second, focus on finding ways to save money on the things you already do. Look for coupons and deals for your area. Do not pay full price for something and check at a few different stores before you buy something.

Smart phones make it easy to price shop once you find something to make sure you are getting the best price on it.

Stop Using Credit Cards

If you want to stop being poor, you need to stop creating debt. The first step is to stop using your credit cards. The easiest way to do this is to stop carrying them with you. If they are at home, you cannot use them when you go shopping. An emergency fund can help you stop using them because you will have money to cover the unexpected expenses. Your budget should also help since you will be planning for your expenses before they happen. 

Get Out of Debt

You cannot begin to build real wealth when you are paying more in interest than you are earning in interest. If you want to change your situation, you need to take the steps that will help you get out of debt. Make a plan to get out of debt. Once you have your budget set up, you can begin looking for extra money to pay on your debts each month. As you pay off one debt, take that money and apply it to the next debt on your list. Once you are debt free, you will have more money available to take care of your other needs.

Lessons You Should Remember Once Your Financial Situation Improves

Never Stop Budgeting

Your budget is your strongest tool, and you can use it to reach your financial goals. Once things improve, it can be tempting to stop budgeting, but you should keep using a budget. You may increase spending in some areas, but be sure you are saving money and working on your goals. This will help you to stay in control of situations even if an emergency comes up or there is a change in income.

Never Confuse Your Wants With Your Needs

Often people make the mistake of confusing their wants with their needs. Sometimes it means overextending yourself for a new car, when you can get by with a less expensive option. It may mean feeling entitled to eat out each day or to buy new clothes on a weekly basis. While it is good to enjoy yourself, you should still be sure that you are hitting your financial goals and milestones before you spend money on these things.

Find Multiple Income Streams

If you have multiple ways that you are bringing money in, then there is less stress or pressure if one of those changes. You can look for ways to earn passive income like through rental properties or take on a part-time job or work as a freelancer. If you are married or with a partner, you may already have two income sources which can make your family more stable. Eventually, your investments may be able to apply income that you can live one.

Stay Prepared for the Unexpected

Planning for the unexpected can help you stay on top of things financially. Medical emergencies, car and home repairs and other unexpected expenses can run up bills and make it difficult to get by no matter how much you are making. One step is to make sure you have an emergency fund. Initially this should be about one month’s salary, but you should build it up to between six months to a year’s worth of expenses. Additionally, making sure you have the proper insurance coverage can help you handle this.

Help When and Where You Can

Remember the times that you struggled and how much a little help here and there could have made a difference. Take the opportunity to help others when you can. There are a number of different places where you can give back with donations of time or money. It is important to help when and where you can.