How to save money when you don't have any

How to save money when you don’t have any

By Scott Alan Turner

Jun 02

A question a lot of people ask is ‘how do I save money when I’m living paycheck to paycheck?’.

I’m in a rut. There’s barely enough to scrape by. I’m worried we might lose the house. We’re in debt up to our eyeballs. It seems hopeless.

Here are four steps to guide you to start saving money.

The choices we made

You cannot change your financial situation until you come to terms with what got you in the situation to begin with – choices.

Choices that may have seemed great at the time:

  • $150,000 for a law degree
  • $200,000 mortgage
  • $400 suit for a job interview
  • $900 on Christmas presents
  • $3,000 on a trip to Disneyland
  • $17,000 car loan (because you needed a reliable car!)

Most of the financial choices we make are difficult to undo.

You can’t return your diploma and student loans.

You can’t return a vacation you just took.

Accept yourself for where you are and the decisions you’ve made. We all have money regrets. I try not to dwell on my money mistakes but use them as an educational tool to help others. I’ve learned from them. I try not to make them again.

If there was one piece of advice I could give you as you think about your empty bank account, it’s quit thinking about your empty bank account!

Time to work on filling it up. Making it overflow. Wondering when the bank president is going to call you and ask you for a loan.

1. Each month make sure you are not spending more than you earn

How can you make sure you’re not spending more than you earn?

You will need to create a written spending plan that shows you where your money is going.

2. Get back to basics

By basics I mean the basics you need to survive:

  • Food
  • Clothing
  • Shelter
  • Utilities
  • Transportation

Everything other than what’s in that list is not a necessity – it’s a want.

Wants are fine, but not when you’re in debt or have a zero balance savings account.

When you work out your spending plan, make a note of each item that is a need vs. want. Be critical and honest with yourself.

If you want to save money and you’re living paycheck to paycheck there is a good chance there is some wiggle room in your spending plan. I can almost guarantee it.

Find where the wiggle room is and set that extra money aside for savings.

3. Prepare for emergencies

An emergency fund is a small amount of money set aside for when the unexpected happens.

People who don’t have an emergency fund rely on their credit cards to cover the mechanic’s bill when their car breaks down. Not having an emergency fund is a sure-fire way to stay in the paycheck-to-paycheck cycle.

If you’re in debt not having an emergency fund is going to keep you in debt when an emergency does happen.

You can’t get out of debt while you create more debt.

4. Get rich slowly

The important thing about saving money is to pick an amount you can consistently save on an ongoing basis. It’s any amount that works for you and your situation.

$5? Ok, great.

$20? That’s great too.

Whatever amount works for you.

You can save as little or as much as you want. Just save something.

Start creating the habit of setting aside a little each week or pay period. Over time, you’ll watch your savings grow from hundreds to thousands of dollars.

There is power in developing good savings habits.

What I love about change is anyone can do it anytime.

You’ve never run a day in your life, and you want to run a marathon?

You can do that.

You haven’t been below 180 pounds since high school graduation but want to reclaim your former self?

You can do that.

You want to do something you love with your life?

You can do that.

You’ve never had two nickels to rub together and want to break the paycheck-to-paycheck cycle?

You can do that.

If I were there with you, I would look you in the eyes and say ‘Hey, you got this.’ Managing your money and getting ahead is 80% behavior, 20% knowledge.

Start by taking one small, simple action today that’s going to move you towards your goals. If that’s just finding two nickels and putting them in a jar you’re $0.10 richer than you were yesterday. You’re on your way.