Saving Money when You’re Already Broke

What if others are investing in stocks, while you still have trouble maintaining a small amount in a savings account, let alone other investments? And the holidays are coming up . . . Here are some financial tips that will help.

Saving money is a discipline, but you need to balance that with what you can reasonably accomplish.

âÂ?¢ Try keeping a “spending diary” for one week. Write down everything you buy, from pieces of furniture to a penny gumball. Where can you cut back? Add up only the necessary items – food, shelter, transportation (to/from work only) and clothing (the absolutely necessary kind only). How much money is left? The money left after necessary expenses is called discretionary income. What do you do with that money, and why?

� Aim for a balance between saving as much as you possibly can, while not saving so much that you feel completely deprived. For instance, if you buy a candy bar every day, you might want to cut that from your spending and save the money. But, if having that candy bar allows you to work longer (and therefore get paid overtime) or forego other spending, then you may want to keep buying it.

� Look at your spending diary again. Based on what you spend for basic items, formulate a budget. You may not have the discipline to put all of your discretionary income into savings, but can you put aside 10%? Or 30%?

âÂ?¢ Look closely at what you spend money on, with a goal towards cutting back as opposed to more austere measures. Don’t skip lunch, but if you normally buy a turkey sandwich from your local deli, can you eat a cheaper sandwich (like grilled cheese) once a week? Can you pack your lunch most days instead of purchasing it? Can you brew your coffee at home instead of paying $1.00 or more at the coffee shop near your office?

� What about your spare change? Try putting any change in a jar or other container. When the container is full, roll the coins and deposit them in your savings account.

� Do you play the lottery? Stop, and put the money into your spare change collection or directly into a savings account instead.

Have you allowed others – roommates, partners, the government – to receive more money from you than you can really afford? Be fair, but firm, and take back control of your money from others.

âÂ?¢ Do you have a roommate who religiously gets the carpets cleaned weekly, only to present you with half of the bill, even though once every six months is OK with you? Let your roommate know, clearly (and in writing if possible) that you won’t be footing the bill for their excessively clean carpet fetish, but you’ll be happy to chip in your share every six months. Then stick to it. Be very clear about what expenses (besides the rent) are shared, how they are divided and why. Insist that any other expenses are discussed with you beforehand.

� Do you have a partner who tends to go on spending binges, leaving you to scramble to pay bills? Talk to them and decide what to do to eliminate problematic spending. If they continue spending beyond your means and theirs, open a new bank account at a different bank and begin depositing your money into that account so you can meet your monthly expenses. Check the credit counseling resources below to help.

âÂ?¢ Are you getting all of the tax breaks you deserve? You probably can’t afford an accountant, but check with your IRS office for free tax assistance in your area. You could be eligible for deductions, such as the Earned Income Credit, which would reduce your taxes and/or provide you with a larger refund. (You can also check out information on the Earned Income Credit at the IRS web site, located at

If you know you ought to be saving money, but it tends to “disappear” if you have your hands on it, make it harder to access.

âÂ?¢ Open up a “Christmas” or end-of-year account with your bank. These accounts will usually deduct a set amount (some as little as $10.00) from your checking account each month and put it in a special savings account. The money is returned to you, with interest, at the end of the year. You can also usually decide what day of the month money is deducted, so you can make the deduction before you’re tempted to spend it.

� If you are employed, take advantage of any matching contributions your employer will make to your 401(k). Contribute as much as you can up to the maximum.

âÂ?¢ If you don’t have a savings account, open one, but open it at a different bank from where you have a checking account. Don’t get an ATM card for the savings account, but do ask for envelopes with the bank’s address and deposit slips. Make it easy to deposit money, but hard to get it out. See if the bank will make automatic deductions from your paycheck to deposit into your savings account.

Be careful about offers which claim to save you money. Do the math and be sure they actually do.

âÂ?¢ Most manufacturers’ coupons (like the kind in the Sunday paper) are name brands that are usually more expensive to begin with, so they aren’t likely to save you much money if you already use a store brand.

âÂ?¢ Many retailers advertise “sales”, but compare the prices of traditional in-store retailers, online retailers, and “discount” or “warehouse” retailers. Some items in “warehouse” or “discount” stores may not necessarily be inexpensive. Look for online venues that offer a dollar or percentage off your first purchase and see whether your actual price is more or less than buying the same item in your local department store. (Don’t forget to include shipping and handling charges, unless the online retailer specifies there is no shipping and handling fee.)

Consider doing some moonlighting for extra cash, and put any earnings directly into your savings account.

âÂ?¢ Look at your belongings. Go on a cleaning spree and clean out every closet, shelf, hutch and storage space you have. Still have those goofy collectibles from McDonald’s that you pestered your parents for twenty years ago? Check out auction sites, such as eBay ( and see if you can generate extra cash.

âÂ?¢ Pick up newspapers (free if you can get them – you’re saving money, of course) and look through your local Yellow Pages. Does your area have market research firms? They frequently will pay you (and even feed you a light meal) to hear you spout off about your favorite color of wrapping paper, which cheese is best and other esoteric topics. It probably won’t solve your financial problems overnight, but the fees they pay for your opinions ($25-$100 per session) will certainly help.

Don’t be afraid to seek out help with managing your money, especially if you have problems paying your bills or have run into credit-related problems. There are many good, non-profit agencies which specialize in helping people with money problems. Two of the best that I found online are:

National Foundation for Consumer Credit ( This is actually a clearinghouse of over 1,400 local agencies.

American Consumer Credit Counseling, Inc. ( Don’t let the “Inc.” mislead you – it is a 501c(3) organization dedicated to helping consumers with credit and related problems. Their list of “Danger Signs” gives you a good indication whether you need their help.

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