When you’re living paycheck to paycheck, it can be difficult to get excited about budgeting. Indeed, budgeting seems like the least of your worries when you’re broke. However, this is the time when you really need a budget more than ever. Putting together a spending plan can help you re-evaluate your expenses, and help you establish priorities. And, more importantly, a budget can help you break the current cycle and move beyond being broke.

Take Care of the Most Important Items First

The very fist thing you need to do is go through your bills and figure out what is most important. Your first step is to avoid looming disaster. If you are going to be evicted, the first thing you need to do is to make sure you can make a housing payment. You might not be able to pay all your bills. Don’t ignore them. If you can’t pay your bills, contact the creditor or the company and explain matters. Find out if you can set up a payment plan to cover the costs, or if you can defer payments.

Prioritize your bills, and work out a way to make sure that the most important items are covered first, and figure out which things might need some time to work out. Realize, though, that anytime you skip a payment, or pay late, or pay only a portion of what you owe, you are putting your credit score at risk.

Look for Things to Cut from Your Spending

There are some estimates that the average household wastes between 10% and 15% of its income each month. If that is the case, then there is a good chance that you have money available — if you look for it. Go back through your bills and other spending. Are the places to cut back? Could you cut back on cable, on subscriptions, on eating lunch at work, on visits to the vending machine, on impulse purchases at the grocery store?

Create a Plan Based on Your Income

Now that you have figured out which items must be paid, and which spending is unnecessary, it’s time to put together a plan based on your income. Look at when you are paid, and how much you are paid. Look at the due dates for your bills, and how much they cost you. If you are paid twice a month, allocate money according to pay period, covering bills according to which pay period they fall into. If you run out of money before you get to the less important items, realize that you won’t be able to spend money on them.

Look for Ways to Earn More Money

Finally, when you’re broke, you need to consider ways to earn more money. Look for opportunities to start a side hustle, get a part-time job, or find other methods of getting some quick cash. Like all things money related, you need assess you situation, and honestly evaluate where you are at — and how you got there. Then you need to make tough spending choices to bring your expenses within your income.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.