How to Manage Money When You’re Broke

The American Dream is that anyone can be successful and prosper, but far too many Americans fall below the poverty line. What if you are struggling to put food on the table? To keep your house? To pay your phone bill?  Most budgeting tips are designed for those with enough money to make ends meet, so we are going to focus on how to manage money when you don't have enough!

How to Manage Money When You're Broke

When you are broke, it's easy to feel hopeless. As soon as you get paid, it's all right back out for food, bills, gas, and the basics.  If you are really struggling, you may not even have enough to cover everything. Becoming financially stable isn't a fun process. Anyone that tells you they have the perfect way for you to get out of debt without sacrificing is full of it!

They've either never struggled or are trying to sell you some get-rich-quick scheme. It requires working hard, prioritizing, and making sacrifices now so that later you can have a life you can really enjoy – without being one bad month away from losing everything. And you need to forgive yourself when you slip up or something outside your control happens.

I've been there!   During our first few years together, my ex-husband & I both worked minimum wage or barely over jobs. We made it work and saved some money.  Then I got pregnant with our first & spent half my pregnancy on bed rest.  We quickly ate through our small savings account. For over a year, it felt like I was juggling every penny that came in, trying to keep the rent paid, utilities on, and food in the house. Use the tips below on how to manage money to save you from making some of the mistakes I did!

How you got into this situation isn't important. Don't blame yourself or worry about what you could have done differently.  Did you lose a job?  Just graduated college with a mountain of student loans?  Ended up upside down on your home loan and are struggling to make your mortgage payments?  Get into a car accident, fall off a ladder, or suffer from a chronic illness?  Or were you trying to live above your means? No matter what got you here, just know that what you do from here on out is what counts. When we know better, we do better!

How to Manage Money When You're Broke

Put first things first: Food comes first.  You have to stay healthy in order to work (or find a job) to get out of your money crisis. After food, make sure you stay current on your home loan or rent and basic utilities.  You need gas in the car to get to work and liability insurance for it unless you live in an area with affordable public transportation. If you can, try to carpool whenever possible.

Cut Expenses: If you don't have at least $1,000 in the bank for emergencies, get rid of any extras. Cable tv, Netflix, Gamely, or any other monthly subscription needs to go.

It's just for now and you will be able to have those fun things later without the additional stress.  Sometimes, it's easy to overlook small payments so go through your last 30-60 days of bank transactions and cancel anything that isn't necessary. You do not need to sign up for one of the apps that does this for you – just print out and go through your statements. Make sure to check ALL your payment methods, including Apple/Google Pay, Paypal, and any credit cards.

If you still have a home phone, do you actually use and need it? Cell phone – consider switching packages or providers. Do you need internet at home? If so, can you change your package or provider? Shopping around for these things plus your homeowners/renters insurance and auto insurance can save you a LOT every year.

Meal Plan: Plan out what you are going to eat every week. Make sure to include snacks so you aren't tempted to splurge while at the store.  Pinterest is a great source for budget-friendly meals.  If you have a larger family, I put together 7 dinners for less than $100!

There are tons of systems out there to make meal planning easier. eMeals is an app that lets you select meals, generate a shopping list, and then import it into either Walmart or Instacart. PlantoEat is a website that allows for more flexibility. It has a drag & drop option and is one I use when I want to be more creative & generate a full shopping list including all meals plus snacks.

Sell Stuff: Look around your house. Do you have any extra furniture you don't know?  Any small kitchen appliances? Artwork?  What about an extra car?  If you have an auto loan, could you sell your car and use public transportation or buy a less expensive car?

Validate Your Debt: Once we were caught up with the basics and were able to really start paying off our debt, I ran our credit reports.  On mine, I found more medical than I expected with the same amount.  After contacting the hospital, I realized all three companies were trying to collect on the same bill!

Not all debt collection agencies are ethical. The hospital owned the debt still, but one of the collection companies “sold it”! After researching, I learned about Debt Validation & sent all three debt collectors a debt validation letter.  

None were able to prove they owned it and had to remove it from my credit report.  I still owed the hospital, but they let me set up a payment arrangement which didn't hurt my credit as bad since it showed I was paying as agreed.

Prioritize Your Debt: Do you have student loans, medical bills, or credit cards?  Get your free credit report from (this is 100% free once a year) and make a list of all debts.  What is most important to pay right now?

Ask about a Settlement Offer: This works very well for older debt.  If you have an old credit card that was closed, contact them & ask if they would be willing to settle it as “paid in full” for 50 or 75% of what you owe.  My ex-husband once received a settlement offer for 40% on his old credit card. I had gotten so overwhelmed that I was just putting all of the bills in a little tote to go through later.  

When I finally went through everything, the settlement offer had expired.  No matter how far in debt you are or how little money you have, OPEN everything.  File everything in a filing cabinet or expanding file, making sure to put settlement offers in a separate file.  When you have any money not already spoken for, go through the file and see what you can pay off.  If it has already expired, call them & see what they are willing to offer if you pay today.

Avoid Debt Consolidation Loans: You have probably seen the commercials and ads: “Can't Pay Off Debt? Lower Payments, Interest & Fees”. Most of these programs turn unsecured debt like your credit card or medical bills into secured debt, using your house or car as collateral. If you aren't able to pay it, you have just put your home or way to work in jeopardy! Debt counseling also sounds good, but most companies cause an enrollment fee plus part of your monthly payment goes to them instead of your debt!

Get a Second Job: Consider getting a part-time job to help you through this rough time.  Whether it's flipping burgers, delivering pizzas, or whatever you can find.  Remember, this is just for NOW.  You won't need to work this hard forever, I promise! If you are a SAHM and daycare costs more than you can make, consider doing in-home daycare for a few children, even on a part-time basis.

Set up a payment arrangement: Many companies offer payment arrangements.  Some utility companies will do budget billing, where you owe a set amount every month based on previous usage, and they will split your past-due balance up over the course of a year. Make sure you'll be able to afford the extra every month. The last time I used it, I rolled a very large winter gas bill out over the course of the year. I made my normal payment and then each additional bill was about $40 extra.

Ask for help: There is no shame in admitting you need a hand up!  Look into low-income programs such as WIC (if you are pregnant or have a little one), LIHEAP (assistance for heat during the winter months), or other local programs that may help with your rent & utilities while you get back on your feet.

Set up an emergency fund: Murphy's Law always seems to kick in once you start making progress. The car decides to act up, someone falls & needs a trip to urgent care for stitches, or the furnace goes out. Before you start paying off your debt, SAVE for those emergencies that would push you back.  As soon as you are current on your necessities, start putting every extra penny in a savings account. Once you hit $1,000 you are ready to move to the next step – paying off debt.  Whatever you do, do NOT touch that savings account unless there is an emergency and no, wanting that new pair of shoes on sale doesn't count as an emergency!

What is your biggest financial struggle – controlling a shopping habit, not having enough income, being burdened by debt, or something else? Leave a comment below!

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How to Manage Money When You're Broke

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  1. Great tips. We jumpstarted getting out of debt by selling stuff around the house that we weren’t using. It really got us started in the process of cutting our debt and living for the future. Great article. Thanks for posting.

    1. Thanks! I love #4 of your Money Saving Tips! I often forget about that, even though I put everything but my modem & router on a separate power strip so I could shut off the TV, Xbox, tivo, and other miscellaneous things we never power off.

  2. Great ideas, but they’re tough to do when the spouse isn’t on board. I’m the one who manages the money in our family, and no matter how much I tell him “we can’t pay this bill this month” he still insists that because he works so hard, there ought to be money in the account. How do you deal with that??

    1. Tina,

      I’m not sure it’s the best thing to do, but I finally got fed up when my ex-husband used to act like that. I printed off every bill that was due, blank budgeting pages (including an allocated income sheet since he gets paid weekly), and the previous month’s bank statements. I set it all on the table after the kids went to bed one night & told him to have fun. At first, he got angry because “that was my job”. I pointed out that he obviously had a problem with how I was doing “my job” since he was either complaining or spending money I said we didn’t have, so maybe he could show me a better way to do it. He decided that was a good idea, then got frustrated. Finally decided that I was doing a great job & quit complaining.

      We set up his and her bank accounts. We both had access to each but only spent from our own. His check was deposited into “mine” and I paid all the bills, did the grocery shopping, etc from it. He had a spending allowance (which also included his living expenses when traveling for work). Many of my friends have also switched to his and her accounts & found it really helps cut down on money-related arguments. I think a lot of it depends on your individual personalities and your financial situation.