No one wants to be broke, and definitely, no one sets out to become broke. A few debts here and there, bills pile up, can barely meet ends, and then it hits you that you will go dead broke if things remain the way they are.
Once broke, you CANNOT concentrate on getting or maintaining good gigs. The reality is you can’t run on empty. You need to survive… in order to thrive.
It takes discipline to master the art of not going broke and it’s my pleasure to bring you 4 actionable tips to ensure you never go broke:
Track your expenses
It is important to understand exactly where your money goes to as this will help you predict and spend wisely. It will also notify you when you’re going low on cash.
To stay ahead of your spending, keep a record of all your expenses and monitor how much you spend in real-time; whether on essentials like food, housing, transportation, utilities, clothing, internet, or non-essentials like entertainment and a steady wine supply. An app like PiggyBank can help you monitor your expenses.
Once you have a good understanding of where your money goes to, you can start cutting back on lavish habits. For a start, I’d recommend cutting down on all non-essentials until you can save up, and then buy them without breaking a sweat.
Also, something as salient as cooking your own meals versus eating out can have a huge impact on your wallet. Place yourself on a budget and live below your means. Avoid buying things on impulse and don’t go into debt to buy things you cannot afford.
Another way to minimize your spending is to assess the monthly services or memberships you subscribed to, which you don’t use, and make sure you are not paying for them unintentionally. It is advisable to look for cheaper alternatives if such subscriptions are things like gym memberships, where you exercise once in a while.
To spend less, you will also have to imbibe the habit of comparing brands for better and affordable deals. This may not be fun at first but you must bear in mind that going broke is not an option especially when you are starting out in your freelancing career or transitioning between jobs.
Put your savings first
Most of us like to save what is left after spending, but it should actually be the other way round – spend what is left after saving.
You can decide to save 10 – 20% of your earnings and then draw up a budget on how to spend the remaining while remembering to spend frugally. It is important to have a goal while saving as this helps to strengthen your motivation for saving. Some of the goals for saving could be – saving for emergency funds like unexpected medical emergency, saving in order to accumulate future investments or even saving for retirement.
Saving is much easier if you set up automatic withdrawals from your account and apps like Cowrywise or Piggyvest do just that.
Investing is a passive way of making money but it also requires patience as long term investments have greater benefits. These days, the market is overrun with get-rich-quick investment scams and I suggest that you seek expert advice when investing in things like stock.
You can also invest in financial instruments like mutual bonds, treasury bills or fixed deposits which can have rewarding returns based on your provider.