Many people understand the intense stress of financial strain. Sometimes, changing a few money habits can make all the difference for those who are struggling to get ahead financially .
Here are six money mistakes people tend to make when they’re broke, along with some practical advice on how to improve overall financial health.
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1. Eating out
People on tight budgets may choose to eat out at inexpensive restaurants. Eating at fast-food joints is an easy way to stretch your restaurant budget . However, eating out often can become costly.
Other alternatives, such as checking out local church food drives or food pantries, will allow you to stock up on kitchen staples so that you can make inexpensive meals at home.
Own a car? Here's 7 warning signs you're paying too much for car insurance. 2. Not signing up for assistance programs
There are plenty of government assistance programs for low-income earners. However, people might not take advantage of what is offered.
Many people choose not to undergo the tedious application process to qualify for food assistance and access to low-income housing — or they may not even know the programs exist.
It’s important to research the types of assistance programs available and find one that fits your needs.
3. Buying lottery tickets
When people are experiencing trouble, they tend to turn to alternative methods in hopes of improving their luck.
Buying lottery tickets is one of the biggest mistakes that people who are broke make. The chances of winning big in the lotto are incredibly slim, and the money spent on lottery tickets may be better distributed elsewhere.
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4. Ignoring the bills
It might seem like it’s easier to shove those unpaid bills back into the mailbox.
Many broke people live in denial to avoid confronting debt. The bills continue to pile up, and you’ll be in an even worse mess.
Ignoring the problem won’t make it go away. Making proactive choices, such as setting up payment plans or asking for deferments, can help you take steps toward eliminating debt.
5. Overusing credit
Though it doesn’t come directly out of your debit account or savings, credit technically belongs to the bank, which is why some people may believe overspending on credit won’t directly affect their financial future.
However, that’s not the case. You will eventually need to pay credit back, and over time, the money owed will accrue interest. It’s better to simply not spend beyond your means.
6. Neglecting maintenance
When you’re concerned about paying for immediate needs, such as rent or utility bills, other priorities might be overlooked.
Routine maintenance is essential to ensuring that your possessions last a long time. When it comes to car care, it’s also important to perform preventative maintenance, even if you feel your budget doesn’t allow for it.
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Though it may seem difficult when you find yourself in a tough financial situation, don’t fear.
Instead, look for ways to make better financial choices. It may feel impossible at first, but over time, you can take steps to figure out how to make the changes you need.
1. Create a budget
Budgeting is an extremely important facet of money management, and most people don’t even know where to start when it comes to creating a spending plan.
Budgeting apps can help people visualize their budgeting goals. Other alternatives include meeting with a financial advisor or asking friends or family to walk them through creating a budget.
2. Cut back costs
If you find yourself overspending, ask yourself: Where can I cut back? The answer to this question may lie in understanding which products you don’t need to spend money on.
It’s easy to develop habits, but it's hard to break them. In troubled times, sacrifices have to be made, like opting for cheaper, off-brand products instead.
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3. Find cheaper accommodations
Rent is often the biggest monthly expense. These days, inflated rent prices are forcing renters out of big cities — but this may actually be a good thing.
Cheaper accommodations can temporarily fix a tight budget. This could mean finding roommates or moving in with family. However, by spending less on rent, you’re saving money in the long run.
4. Make a rainy day fund
A rainy day fund is an account or even a physical storage space for money, like a jar, where you keep money for emergencies.
Having that rainy day fund will not only give you peace of mind but can also provide you with just a little bit of cushion money in case of a hospital visit or a broken-down car.
5. Practice self-care
It's no secret that debt and living lower income can greatly affect your mental health. That’s why it is important to ensure that you are taking care of yourself.
Free activities, such as taking a walk or visiting the park with family and friends, can help clear your mind and maintain a positive outlook.
Connect with nature. Spend time with family. The best part is you can do these activities without taking out your wallet.
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Bottom line
One essential step to a positive relationship with money is accepting that it's okay to make financial mistakes — the most important part is being ready to fix those mistakes in the future.
Are there ways to improve your money management habits? Reflecting on these can help you take one step closer to improving your financial health .
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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