How To Stop Being Broke? 23 Things You Need To Do

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how to stop being broke

Hey, my awesome blog reader! Are you tired and depressed of being broke? In today’s post, I will go through the exact steps I did to stop being broke. If you want to also learn how to stop being broke all the time, take this post as a guide.

I’m not sure about you guys but for a big part of my adult life, I’ve always felt broke.

Even when I was earning a high income from my last corporate job, I’ve always felt broke all the time. And it kills me not knowing how to stop the feeling.

But, I now realized that it’s more of a feeling and not exactly something true.

Here was my situation:

I’ve always been afraid that I won’t have enough investment for retirement. So I always think that I need to invest more and more in my future. Little did I realize, my cash flow month to month was very little since I had been putting too much on my investment account – on auto mode.

Since I’ve set up automatic payment every month to contribute to my investment account, and the amount kept getting bigger (because I kept getting more paranoid), my cash at hand was very limited.

And that ultimately got me into a credit card debt because there wasn’t enough cash in hand.

It wasn’t until I sat down and really spent time auditing my finances that I know I’m only investment-rich but cash-poor.

Once I realized that I lowered and limit my investment contribution to have more cash in hand for my monthly expenditures. As well as to build up my emergency fund again.

My whole life mantra now is to do everything in moderation. This includes your finances. If you’re too heavy on one part (like me), then you will lose and at a disadvantage on the other.

That’s why I’ll always advocate assessing your finances at least once a year to make sure that your money is doing okay and you’re not committing to something that will only hurt you in the present or future.

Well that’s a little background about my financial journey to why I’ve come up with this step-by-step guide. I really hope that you will enjoy this post!

Also, I’ve sort the list based on the importance so you can treat this as a checklist 😊

1. Changing Your Mindset

I put this at the top because I do believe in the importance of getting your mindset straight whenever you’re trying to do something that’s good for you.

If you’re thinking that you will always be in this state in your finances, well my friend, you’re wrong.

You DO have the power to change your financial state.
You DO have the power to do something about it.

It’s fortunately not a critical or chronic disease that’s very hard to cure. This is curable and only take a few actions for you to do to get out of this state.

I’ve been in this state and it’s not fun. Sometimes you will lose sleep just thinking about where to get your money to pay the outstanding bills tomorrow.

I’m saying this again and you can put this mantra on your bedroom or your work desk – you WILL be able to get out of this rut and break the being-broke chain.

2. Figuring Out The Reason You’re Broke

Self-reflection is amazing when you’re trying to “cure” your bad habits.

At times, as human beings, we can be blindsided by the normal daily habits that we’ve forgotten or we chose to forget that they are not healthy.

If you’re a shopaholic, shopping comes naturally to you. Whenever there’s a big sale, you’re the first one to know and will put 20 items in your shopping cart. This might be normal to you, but for others, it’s definitely far from normal.

When nobody is telling us that our habits are bad, we have to take control in our hands and do some self-reflection. Not to judge ourselves, but to be aware of the problem and find ways to improve them.

There are a few ways you can do to figure out why you’re broke and one of the most important ones is tracking your spending. I’m going to go over this more below. But please know this is a VERY powerful exercise.

3. Stop Trying to Impress Others

These days whenever I want to buy something, I will question myself:

“If social media doesn’t exist and I couldn’t take a picture of this item to show it to someone, will I still want to buy it?”

If my answer is yes, I’ll put it on my shopping cart, and sleep on it. If I still want to spend money on that item the next day, I will buy it.

Some of the best purchases I’ve made in 2020 were a big-ass whiteboard to organize my work and an ergonomic chair for my workspace. This is not to impress anybody but to invest in me.

Please know that you don’t need to impress anyone other than yourself. Not even your family and your best friends.

Remember this quote: We buy things we don’t need with the money we don’t have to impress people we don’t like.

Don’t be that person.

4. Tracking Your Expenses

As I’ve mentioned before, tracking your expenses might be the answer to knowing why you’re broke. This activity is extremely powerful to do.

And this NEEDS to come before budgeting your money.

I honestly don’t get people who budget their money as a way to get their finances together before knowing where they usually spend money.

Anyway, if you don’t know where to start, you can read my post on how I track my expenses using Google Sheet here or get some budgeting templates here.

Basically, you can create a spreadsheet or anywhere you like but I just prefer a spreadsheet because it’s flexible and easy to customize. And then put in the categories that you usually spend your money.

You usually want to have these main categories:
  • Fixed expenses (rent, mortgage, debt, insurance)
  • Variable expenses (groceries, gas)
  • Investments (401k, IRAs, unit trust)
  • Savings (emergency fund, wedding)
  • Guilt-free spending (dining out, shopping)

You can check out my Google Sheet budgeting template post here where I go through the categories in more detail.

Once you figure out your categories, you can go into even more detail, if you like to key in every single thing you buy, every day. You can do this as long as you like but I recommend doing it for at least a month.

Because that’s our usual pay cycle and you can have better overview of where you spend your money.

If you’ve never done this, it can get a bit overwhelming but it’s okay! You don’t need to do this forever. This is just an exercise for you really figure out why you’re broke.

I usually put an alarm at 10.30 pm every night to remind me to key in the things I’ve purchased that day. I’ve been doing this for years now and I can tell you it’s not that hard.

5. Budgeting Your Expenses

Once you know where you usually spend your money, it’s time to learn how to budget BASED on your spending.

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Don’t try to cut everything out from where you usually spend your money. If you’re a shopaholic, it’s not sustainable if you were to just do a no-spend challenge. You will tend to just go back to your bad habits after reaching your goal.

Instead, just try lowering down your expenses bit by bit.

If you usually spend $1,000 shopping every month, try giving a budget of $700 instead. And if you’re able to only spend $700 on that month, try lowering the budget again to $500 the next month.

This is more sustainable for you and in the long run, you will definitely have better financial habit.

Budgeting your money is also a way to make sure that you’re spending money within your means. If you’ve noticed that you’re spending more than what you’re earning, you might need to be even more stern with how you spend money.

That brings me to next point.

6. Becoming Frugal

Frugal doesn’t mean being cheap. It just means that you’re being intentional with how you spend your money.

I’ve been frugal for years now and I still buy expensive items. But I only buy those expensive items because I know they are long-lasting or have warranties.

I use an $800 handbag but that was the last handbag I’ve bought. And I bought it in 2018. And I use it daily to work, to travel and to do grocery.

But I don’t always buy expensive items. Instead of buying Pixel buds (I use Google Pixel as my mobile), I bought a $20 wireless earphone. Because I know that I’ll only be using it for meditation and yoga purposes. I don’t listen to music with them.

So remember, you can still spend money on something that you love but you got to have better intentions when buying them.

You can read more on the lifestyle changes I’ve made to become frugal here.

But my 3 main tips in frugal living are these below:
a) Only bring cash

This will stop you from overspending and it will also give you an appropriate time to sleep on things that are expensive.

I know it’s going to be harder nowadays because we will usually do online shopping. If you find it hard to control your shopping habits, try cancelling your credit cards. Instead, pay using your debit card or online banking.

This automatically makes you more aware of the amount of money you will take out to buy something.

b) Become a smarter consumer

Don’t get swayed by promotions. Some companies say that they are doing 70% off sale when they actually just inflate the price much higher to give you that discount.

I’ve worked as a store promoter before and I know this happens all the time.

So before you buy anything, try comparing the items price from multiple stores or online stores. Then choose the cheapest one.

Another way or my way is to bulk buy most of my everyday products. I usually buy on Black Friday for my skincare products, toiletries, and even laundry detergents!

You don’t need to wait till Black Friday. You can also do couponing to bulk buy some products.

c) Buy second-hand items

There’s nothing wrong from buying a second-hand item.

Not only you’re saving the world, from more consumption but you’re also saving your money. I love buying second-hand items for things that I might not use very frequently.

Some of the items I’ve bought second-hand are winter coats, financial calculator, phone, desk, scarves and some expensive branded clothes!

Before you buy anything, try looking at a flea market, craiglist, or even Facebook marketplace and see whether there’s anything that you can buy second-hand.

7. Reducing Your Expenditure

You can do this while you’re budgeting your money but this is just an exercise that you should do every other month.

At the end of the month when you’re analyzing whether you spend within your budget or not, you can figure out in what categories you can further reduce your expenditure.

The main two expenses that I will look at first are:
a) Housing or accommodations

If you’re currently renting, try finding a cheaper place. This is one of the lifestyle changes I did. I went from renting a $2,000 apartment to $700 small room. I managed to save $1,300 just by doing that.

Yes, you don’t like to share space with other people. Yes, you have pets.

If you really have a will to reduce your expenses, you will find a way and take this seriously.

b) Transportation

The second biggest expenditure you usually spend on will be on your transportation.

This might not be the case if you’re working from home (like many of us in 2021) but if you still need to commute to work or anywhere else for that matter, you might want to think of a way to reduce this cost.

Instead of driving to work, can you carpool with someone who works near your office or even your colleague? Perhaps carpool with someone to the train station and you will take a train to your office?

OR if you’ve never tried the subway before, well you might want to start thinking of giving it a try.

If you ask me, I’ll find jobs that I can do from home or find a cheap room near my office where I can walk or just bike to.

Other ways for your reduce your expenditure:
  • Grocery shopping (read this post on some tips to save money when grocery shopping)
  • Do a no-spend challenge for a month
  • Meal plan for your entire week
  • Do a home workout instead of going to the gym
  • Eat healthily! This will pay off in the long run
  • Make your own coffee. Save money and kinda therapeutic to do in the morning
  • Delete your shopping apps
  • Negotiate your bills like credit card charges, or overdraft fee

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8. Improve Your Credit Score

You might not think of this when trying to get better from being broke.

But this is an important step too because it will affect your other future spending. If you’re not trying to get your credit score in shape today, you will just end up with a higher interest rate that’s going to eat up more of your income later on.

You won’t see the effects of improving your credit score today. But your future self will pat you on the back.

9. Setting Up An Emergency Fund

You might be thinking how do you even set up an emergency fund when you’re already broke right now.

Yes, I get you.

That’s why this post is more of a checklist. You need to do all the above points first. Once you have more room from your income by cutting down unnecessary expenses, you will need to set up an emergency fund, if you don’t have one already.

The thing is, a lot of us become broke because we have an unexpected payment that we need to make. That we haven’t necessarily allocated money for.

And when we don’t have an emergency fund set aside, we tend to resort to credit cards or taking up loans. Credit card debt or loan payment that we have to make monthly will just eat up more and more of our income.

It’s a vicious cycle, really.

But you need to nip it in the bud. One way to do it is by having a steady emergency fund set aside.

A tip on setting your emergency fund is to get a different bank account specifically for this. So that you won’t touch it unless it’s an emergency.

If you’ve been a reader of my blog, you know I’d always recommend CIT bank just because they give out one of the most competitive rates out there. You can check out their money market rates here.

And yes, I do encourage you to put your money on money market accounts rather than normal savings account for your savings, including your emergency fund.

10. Taking Out An Insurance Coverage

Not many people like to talk about this but I will talk about this here on my blog.

I always, always encourage and tell people to get insurance coverage, especially life insurance. If you’ve read my personal finance guide, you’d know that I even ask people to do this first before setting up an emergency fund.

If you’ve been in a place where you had to pay an exorbitant amount of money for your medical bills, you’d know how painful it is to make that payment. Those medical bills can be one of the reasons that you’re broke.

You can get rid of that awful situation in your life by getting an insurance policy. It’s worth it.

If you haven’t gotten a life insurance, get one. And if you already have one, you might want to think about getting a medical insurance.

But, before you get a medical insurance, you might want to check whether your company offers any. If they do, see what coverage can you get.

And if they don’t (boo!), get yourself one.

11. Getting Rid Of Your Bad Debt ASAP

Yes, bad debt.

I usually categorize credit card debt, personal loan debt, payday loan debt, even hire purchase loan debt to be bad debt.

Try your best to get rid of them as soon as possible by using the debt snowball method. You can check out my post on how to get rid of your debt fast here.

You want to do this so that you will have more room within your means. If 40% of your income is used to pay your debt, you want to take this seriously.

12. Avoid Instalment Payment

This seems convenient to us all. Even I used to buy more expensive things like a camera with installments.

Not until I’m short on cash. How I wish to just pay everything lump sum and not to think about all those instalment payments anymore.

If you want to buy something that’s more expensive, try saving your money for it. Trust me, you will get a lot more relief when you do this because you won’t have to think about the payment anymore.

Yes, it will take longer for you to be able to buy it but use that time to really think about whether you actually need the product.

It’s not easy but TRUST ME on this!

Now, I no longer do installment payments. If it’s too expensive for me to purchase at the time, it’s either I’ll go back and save OR I’ll find an alternative to that product or services that’s more affordable.

13. Doing Free or Cheap But Still Fun Activities

When you’re on financial detox, it can be very depressing at times because you’ll deprive yourself of going out or to have brunch with your friends.

But there are a lot of free or cheap activities that you can still do with your family and friends.

Instead of hosting a party for everyone, perhaps host a potluck. It means that you won’t need to be the only person serving everyone. You and your family or friends can come together to get a party going.

Or, instead of going out to movies with your partner, you can turn your living room to be like a cinema and watch romantic movies together at home.

My favorite way of spending time with my friends is by playing board games. It’s free and still fun!

Honestly, guys, if you get creative, there are still a lot of different things you can do with your loved ones that are free or cheap!

14. Selling Your Unused Items

Now that you know how to get your money in order and not to spend so much, it’s time for you to learn how to make a few extra bucks. This is either to fund your emergency fund or even get rid of your debt faster.

This is the first thing I will do if I need extra money fast. I will look around my room and house, think about all the things that I could sell to make money.

I sell my clothes often. I make it a thing to sell some whenever I buy some. I only have a 2-door closet with 3 drawers. If all my clothes can’t find there neatly, it’s just a sign for me to sell a few items that I haven’t been wearing.

It’s not only for your clothes. I’ve sold my gadgets a few times too.

In fact, when I was in credit card debt, I actually sold my brand-new camera to pay off the debt. I still don’t regret selling my camera. I knew I can just buy another again next time.

But I need, at that time to no longer be in debt. It just drove me crazy!

So go into your room, your living room and see what items can you sell and make some money off. You’ll find a few things, trust me 😊

If you don’t, you need to buy the Marie Kondo book. Spark Joy: An Illustrated Master Class on the Art of Organizing and Tidying Up (The Life Changing Magic of Tidying Up)

15. Renting Our Your Belongings

This doesn’t only need to be your belongings. If you have a spare room, you cant rent it out too. I’ve done this twice and I will always do this again to help reduce my accommodation expense.

If you have a professional camera, you can also rent it out. I’ve seen a lot of people actually rent out their gears per day and make some money.

You can also rent out your evening gowns. There are companies that actually become a third party for you to rent out your dresses and for others to rent. Here’s one that I found.

This is the time for you to be creative. I don’t know what else you have in your house that you could potentially rent out, but be creative! Perhaps your mountain bike? Your skateboard?

I’m sure you’ll find something. Don’t give up!

16. Flipping Items

If you follow Gary Vaynerchuck, you know that he likes to flip items. And you can definitely do this too. You can watch one of his videos below on flipping things:

One of my inspirations in flipping items came from Sophia Amoruso, the founder of Nasty Gal. She started off buying clothes in thrift stores and flip them on eBay. You can read more on her journey here: GIRLBOSS

The business grew so big that she started her own company. That’s just how big you can make by flipping items.

Again, find some creative ideas on how to do this. Maybe you have a hidden talent for restoring furniture. 😊

17. Finding Creative Ways To Make Quick Extra Bucks

These are just some ideas that I had when I was thinking of making extra bucks that I thought I’ll share with you here.

a) Offering to wash your neighbor’s cars on weekends.

You don’t need to ask every weekend. You can just make a one-time deal whereby you will wash their cars twice a month on Sundays and you can charge them $20-$30 per month.

People are lazy. If they can just be at home and someone else is washing their cars, they are more likely to take up the offer.

If you can do this for 5 of your neighbours, you’ll get $150 extra per month!

It’s not a lot but hey it’s a no-brainer and you’ll get to move your body and exercise too.

b) Selling a weekday meal plan

Now that a lot of countries are on lockdown, many of us have to work from home. Even though we’re closer to our kitchen, that doesn’t mean we all have enough time to prepare lunch. Especially if we have kids.

So, if you’re good at cooking, why not ask your neighbors if any of them is up for ordering lunch meals from Monday till Friday? And the food will be delivered to their doors.

Instead of only taking a one-time order, ask them to get the week plan (5 lunches) which will be easier for them and for you.

c) Babysitting

Again, with the lockdown, you can offer parents to babysit their children while they focus doing work at home!

18. Freelancing On Your Spare Time

If you have spare time outside of your day job, you can take up a freelancing job to give a boost in your income.

If you’re a graphic designer, you can do some freelance jobs after work. Or if you’re a digital marketer, you can help other small businesses run their ads.

I’m sure you have some talent to offer as a freelancer. If you don’t know what to offer, you can become a language partner for someone who wants to study English.

I used to pay someone on italki to converse in French. You can definitely do something like this!

Remember, nothing is impossible. Just think of some creative ways!

If you’ve never freelance before, you can read my post on how to start freelancing even with no experience here or read how I’ve managed to secure a client on Upwork in less than a week.

19. Taking Up A Part Time Job

This is similar to freelancing but if you’re really not sure on freelancing, you can take a part time job on top of your day job.

A lot of us do this so there’s no shame. I do feel that it’ll only build your character when you know and learn how to hustle.

You can even opt to become an Uber of Lyft driver – though be careful during this corona time!

20. Selling Crafts or Printables

This is something that I’ve been meaning to take more seriously this year.

If you’re great at making crafts, you can definitely sell your products to other people. Either by creating your own website, or even sell them through Etsy.

I actually thought of perfecting my recipe for a hand lotion and selling them. Since I recently suffer from dermatitis on my hand, I’ve been very careful in putting on hand lotions. And since I made it with only natural ingredients, I thought of selling the product to others.

If you’ve been in this kind of situation with making crafts, you can definitely make it a way to make more money by selling your products.

I’ve also been meaning to take creating printables more seriously this time around. I’ve learned how to create printables and I just need to allocate some time to design more and offer them to others.

This is the course that I took to learn how to create printables. If you’re thinking of learning how to create one, I really recommend checking the website out. I love the teacher, Suzi – I’ve learned so much from her! And I believe you will do so too if you get her online courses.

21. Getting A Pay Raise

Another thing you can do is to ask for a pay raise.

Yes, ask for a pay raise, within reasons. Make sure that you’re performing at work and you’ve shown to your bosses that you ought to get a pay raise. This takes a little bit of skill.

One powerful resource I can share with you is to watch Ramit Sethi’s YouTube video. Here’s one of his videos that’s worth watching.

Another way is to get another job that offers higher pay. This is exactly what I did to get an 80% pay raise. If you want to learn just how I did it, you can read more here.

I shared the exact steps I took to secure a high paying job.

22. Building Passive Income Streams

Now that you’ve found a creative way to make some money and hopefully get a pay raise, it’s time for you to think about your future income.

That’s to building passive income streams to make sure you’ll never be broke, ever again.

There are 3 main ways I will share with you today:
a) Passive income through multiple investments

You can invest in stocks or in REIT to get passive income. I’m not going to touch your retirement savings as those will be for a longer time horizon (401k, unit trust) and not really suitable for passive income now.

If you invest in stocks through online platform, you can always sell it whenever you think you are making enough profits. You can then take your profits as a passive income, because you literally didn’t do anything else other than investing that money.

You can also invest in REIT aka real estate investment trust. You can read more on my post here on how to invest in real estate with little money.

REIT will give you dividends and it’s a great way to get passive income coming in.

b) Online passive income ideas

You can read more on my post here for passive income.

But a few things that I personally would like to try more is to sell stock photos. You can sell good stock photos even if you’re not a professional photographer!

YouTube channel is also one of a good way to create passive income based on your video views as well as affiliate income that you might get when someone clicks on your link. You only need to record it and edit the video once. The income will still come in no matter how old the video is, as long as people are still watching it.

You can also create online courses. If you don’t have a website, you can take advantage of Udemy or even Skillshare to host and promote your course.

c) Passive Income From Websites

You will know that this is my favourite way to earn passive income.

The websites that you create today can generate income for you for years to come. If you don’t know how I managed to get passive income from 3 of my websites, you can check out my free training here. You will learn how to create a website, create content, and monetize.

It’s a free training and it’s also free to create your very own website. And no, no credit card details required. It’s risk-free and it’s also the EXACT way I took to slowly build my websites.

23. Assess Your Financial Habits Again

Don’t only stop there.

Your personal finance needs to be monitored and reassessed at least every year. You always want to improve it so try to find more ways to make it more effective and efficient.

Don’t do this as a goal.

Yes, don’t make “Stop being broke” a goal. Instead, make it a habit. Make “having better financial habit” a mantra and keep doing these steps as part of your life.

When you make this habit as part of life and not a goal, this will become more sustainable, it’s more unlikely for you to become broke again and your personal finance will explode for the better!

I learned this trick from the book “Atomic Habits”. If you haven’t read it, I really recommend you to do so. You can check out the book here: Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones

It’s not about the goal. It’s about those small things that you constantly do that can change your life. So make those small things a good one 😊

24. Improve Your Personal Finance Knowledge

And it doesn’t stop there guys. Try to always be thirsty of knowledge when it comes to your finances. You’ll learn a bunch and you’ll learn from others’ real life experiences!

If you want a list of personal finance books to read, here are 2 of my lists that you can check out.

My all-time favorite personal finance books
10 personal finance books to read as a young adult

And if you haven’t read my personal finance guide, you can do so here. It will give you an overview of what you need to look at and take care of when it comes to your money. It’s the playbook on how to stop being poor.

How To Stop Being Broke

Pheww! I just realized I’ve written more than 5,000 words now. I’m just sitting here on my work desk and words just flowing out because I do want to help you in any way I can.

And I love sharing ideas when it comes to finances, so I do hope you will get something out of this post.

Remember: Make this a part of your life not a goal.

If you do find this helpful, please feel free to share it out. I’d love it if more people will learn how to break the being-broke chain!


If you find the post helpful, please share it around!

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