I’m Broke – Why? And How Can I Do Better?

I'm Broke. How Can I Do Better?
Picture of Rosemary Pearson

Rosemary Pearson

Rosemary Pearson is a freelance financial editor and writer with 12 years of experience. Her communications career includes writing roles at Coutts Bank and the fintech brand Scalable Capital. Rosemary is also studying for a degree in psychology.

Quickfire Roundup:

Do you ever wake up thinking, ‘I’m broke’, but don’t know what to do about it?

We have plenty of useful ideas to help you reach financial stability.

First, you’ll need to understand why you got into that situation in the first place, and then you’ll need to change your behaviour to make sure it never happens again.

The road to financial freedom is paved with ambition and discipline.

Do you check your bank balance with bated breath? Is the sight of it scary enough to make you jump behind the sofa?

Waking up to the thought, ‘I’m broke,’ is a terrible start to the day. So, if you’re feeling the pinch and don’t know what to do about it, we have a few ideas for you.

With some simple changes, you’ll no longer wince as you log into your online banking or peer at your savings account.

You may even start to relish the moment your balance appears a bit higher than expected. All it takes is a bit of hard work and a few life changes.

Table of Contents

I’m broke what should I do?

If you’re feeling broke, that probably means you’ve simply got more money going out than you’ve got coming in. The balance is off. 

You may be wondering how you got into this position in the first place and how you can get out of it.

Undoubtedly, your struggles can partly be attributed to the cost-of-living pressures we’ve seen over the past couple of years, as rising inflation has affected everyone’s bank balance.

UK Finance recently found that more and more UK households may need to draw on their savings to cover higher monthly bills. We’ve all noticed the huge rise in energy prices – my monthly bill has risen from £60 to £240!

These increases are hard to adjust to; the economic environment is challenging for everyone at the moment. But on an individual level, you can’t do much about the current economic environment.

What you can do is change the way you think about your own personal finances.

Saving for something important?


Let the latest technology help get you there with the best money savings apps.

The ostrich effect

the ostrich effect

The ‘ostrich effect’ is actually a behavioural finance term used to describe the tendency to avoid negative financial information.

Instead of facing up to their financial struggles, ostriches bury their heads in the proverbial sand.

But of course, ignoring our problems simply exacerbates them (wouldn’t it be nice if it were otherwise).

For anyone with their head in the sand, it’s time to pull it out and face up to your financial position. What you need is a deep and honest dive into your monthly incomings and outgoings.

Be honest with yourself

It starts by being honest with yourself about your financial situation. 

Have you built up credit card debt through bad habits and overspending? Are you living paycheck to paycheck without an emergency fund?

These are all signs that you need to sit down and have a hard look at your actions that have got you to this point.

The best advice I can give is harsh – nobody is coming to save you other than you!

Start budgeting

According to a recent YouGov poll, only 3% of Brits are using budgeting apps, and 14% use other methods of budgeting (such as excel spreadsheets).

Although most of us (81%) do our banking via an app, we don’t seem to be using apps for budgeting in the same way.

So, if you’re new to budgeting, your incomings are fairly straightforward for most to calculate – it’s your salary plus any extra income you earn from side hustles.

Freelancers or the self-employed just need to tally their invoices.

Outgoings are a little more complex. If you’ve never done this before, start by adding up your monthly bills before looking back over your spending from the past few months and dividing it into categories such as ‘socialising’, ‘travel’ or ‘clothes’. Some patterns may start to emerge…

…Any surprises? It truly is amazing to see how much the regular lunchtime sandwich adds up.

Or perhaps there are some splurges in there you’d forgotten about – a pair of never-worn strappy sandals you’d snapped up in the end-of-season sale, just as autumn was setting in. 

Or the latest headphones your friend raved about, which are still in their smart new box.

I am confident there will be something on your list that you didn’t have to buy; a luxury you could have lived without. 

We’re looking out for these to answer the original question, ‘I’m broke. Why?’

If you really need a helping hand pick up a copy of our Smart Money Budget Sheet which can help with household budgeting, debt calculations, net worth and a whole lot more.

Or if you prefer tech then check out our best budgeting apps.

How can I do better?

To get yourself in a strong financial position, something is going to have to change. The incoming/outgoing balance needs adjustment.

You’ve got three ways of doing this.

Firstly, you could seriously curb your spending. Secondly, you could up your side hustle game to earn plenty of extra cash. Or thirdly, you could a bit of both.

i'm broke, i need to spend less

Financial check up

If you’re sitting there saying I’m broke well first up is a giving your finances CPR. 

You need to sit down and put a plan in place for your current income, improving it and where you’re going to cut back on. 

Yes, it’s hard. No it’s not fun but this is essential to help get yourself up and out of the I’m broke all the time mentality.

Trust me, there’s more to life than just staying in the rat race.

Spend less

Seriously curbing your spending is probably going to be hard but not impossible. 

To do it, you’ll need to start by shifting your money mindset, which includes stopping and thinking before you spend and trying to stay positive when things feel tough.

There’s no doubt that cutting back on spending will make a positive difference to your month-end bank balance.

Earn more

If you need to earn more and your regular salary shows no signs of increasing, it’s time for you to think about side hustles or starting your own business to bring in a bit of extra cash. 

When it comes to side hustles there are plenty of options, from flexing your writing skills to opening an investment account, or even honing your crafting talents as the demand for handmade goods continues to soar. We wrote an article about just this which you can read here

If you’re feeling entrepreneurial and have an idea you’d like to pursue, perhaps getting a small business off the ground is the right option. 

This will take ambition, vision, and lots of hard work but the rewards should eventually come in equal measure. 

You’ll be well placed if you’re willing to learn and can take heed of your mistakes. We go through all the pros and cons of this and all the skills you need to be an entrepreneur.

A bit of both

By curbing your spending and thinking about side hustles, you should feel less broke in no time. A gentle combination of the two will get out of the red and stop you from wincing as you log in to your online banking.

There may be challenging times and it will take hard work and discipline, but if you stay focused and stay positive, your financial tide will start to turn.

I'm Broke What Do I Do?

Lastly, if you’re really stuck then there’s always some quick money earners like clearing out your loft and doing a car boot. 

Or listing a bunch of clothes on Vinted. I also sold a bunch of things on Facebook market place recently and earned over £100. 

You’ve got to stop feeling sorry for yourself, drop the victim mentality and do something about it.

FAQs

What do I do when I’m extremely broke?

This can feel very overwhelming. But it’s important to remember there are lots of people out there that can help. Try to stay calm and face the issue head on.

You may find it helpful to talk to a friend or family member about your situation, or even a professional therapist (there are plenty of low-cost/free options out there).

Suffering in silence helps no one. Then with some support, you can start to spend less and earn more, somehow.

And if you can’t, you could start to look into borrowing money, as long as the interest rate is manageable.

How do I accept I’m broke?

Being broke can feel very isolating. Everyone else seems to have loads of money and able to go out all the time, while you’re stuck at home eating leftovers for dinner.

But there’s no doubt that everyone has felt broke at some point in their lives; no one completely escapes financial challenge.

So, accepting you’re broke starts with realising you’re not alone. And there’s tons of great free stuff you can do with your broke friends, even in the pouring rain.

Life doesn’t have to be isolated just because your pockets are empty.

Then, you need to face the issue head on and decide for how you’re going to improve your financial position so that this doesn’t happen to you again.

Feeling broke is only temporary – it will get better. Just believe in yourself.

What do I do if I’m broke and need money?

This goes back to our earlier point about side hustles! If you really do need some cash quickly, a small business idea might be the answer for you.

Just offering yourself up for babysitting or dog walking will quickly get some money in your pocket, but we have loads of other ideas like blogging, crafting, or doing online surveys.

There’s plenty of cash to be found, if you know where to look.

Conclusion

If you woke up this morning thinking, ‘I’m broke’ and a gentle panic began to set in, I hope this article has given you a few ideas about how you can make a change.

You’ll need to start by thinking about why you got into that position in the first place to make sure you don’t end up there again, and then you’ll need to change your behaviour by spending less, starting a side hustle, or doing both.

There may be tough days on your way to financial stability, but the end result will make it totally worth it.

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Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.

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