Being down financially is never a good point in anyone’s life. But being down doesn’t mean that you can’t get back on your feet. No matter how in debt you are or how bad your account or credit is looking, there is always a way to get back on track.
Hello, welcome to the blog that gives you all the financial and investing tips you need as a beginner. In my quest to bring you more ways to get out of financial slavery, I brought you in a previous post, ‘ What you need to be doing if you have no money in your account in 2020’. This time around, I will be discussing the best 6 steps to take when you are broke in 2020.
Everyone dreams of having that financial freedom where they don’t have to worry about anything. They can spend as they will, travel as they will, and have the most luxurious lifestyle. Now, this is a dream that is possible to live if only you are willing to make the necessary adjustments to the way you live and spend. To learn more, you can read my post about Ten ways how to manage money better.’ The goal of this post is to ensure that you come out conscious of every penny you earn and spend. Without any other preamble, let’s begin.
6 steps to take when you are broke
So you might all know by now that I began my journey in England with nothing. But I was able to grow into the self-made woman that I am now. At this stage in my life, I am closer to my dream of financial freedom and a life of luxury. So let’s hypothetically say that somewhere I make a mistake and everything goes down. And I find myself in that position where I am completely broke, what would I do? That is what I am about to tell you. Before then, I would like to state that even if you or I get broke today, we won’t have lost it all. Here is what I mean; your knowledge and experience are yours, and as much as the material wealth is gone, the intellectual wealth is still there. This means that you can get back on your feet by utilizing all that you know and have learned over your years of success.
Find the reason: If you’re broke today and you were not yesterday, there must be a reason why. I’ll go further and say if you regularly live from salary to salary and really can’t boast of anything else, then there is an underlying reason. Most times, the reason is that you are spending more or equal to what you’re earning. Whatever the reason is, whatever the story you have or the family needs you have to care for, the concept is, your spending is higher than your earning. Now that you understand this, it is time to change that pattern. As I said earlier, you could have a really good reason for overspending each month, and you could have really bad reasons. Whatever your reasons are, you have two options. First, cut down your expenses, you can get help from professionals, family, or friends, or you can personally learn money management skills. Or second, increase your earning by getting a better job or by having side jobs.
Work more: So let’s imagine that you are broke; obviously, the wise thing would be to get a job. That way, you can take care of the pressing needs you have. Now you have this job, possibly a nine to five kind of job that pays you 2 or 3 thousand pounds. That’s fine, that’s enough to care for an okay life. But for someone who wants to change their financial status in the long run. Or for someone who has a lot of financial needs and demands. You have to be willing to work more. And it’s okay to do that; it’s okay to work more today to save more and prepare for a luxury future. This also means that you have to sacrifice on friends gathering or maybe give up those days you have for lazing about. Just get at least one extra source of income.
Build a small business: Once you have your second job and have made enough money out of it and have fair enough savings, the next thing to do is this. Building a small business, here what I mean is not the physical business. No, that is time-consuming, which you don’t have the luxury for. What I mean is a small business online that really won’t cost you much of your time. Affiliate marketing is one option or selling your photographs and books on kindle, amazon, or wherever else. Having this third income source will be a quicker step to attaining financial freedom. Of course, it won’t happen overnight, but if you are looking at a year ahead, then you are certain to build that.
Pay yourself: You are most likely broke because you were not paying yourself. Every professional finance manager will always tell you to set aside money that is targeted at your future and financial freedom. When I say to pay yourself, you should be able to allocate at least 10% of your total monthly income to a high yielding savings account, a dollar-cost investment plan, or any other investment option you are using. This money will act as your reserve. If you had created and built this then you won’t be broke now, you will have some fall back or security.
Invest in yourself: Now that you have multiple income sources and have an investment plan for yourself, it’s time to rebuild yourself. Find a skill, find a new course, really go out there and search for free content, courses, and more. This extra knowledge should be channelled into building your finance. And if you have to spend a little here and there, I think it’s worth it just to improve yourself.
Investment: so, at this stage, you are trying to get more freedom of time and build your income source. So I would recommend going for an investment. I will most likely support going for stocks and bonds and real estate, and more. These are all secure vehicles for you to earn an income for now and in the future consistently. But you should bear in mind that most passive investment plans are long terms, meaning you don’t get to see the profits now. The other option is for those who are certain of their ability to be entrepreneurs, sure that you can go back to your business, which you had earlier started and expand it. At this point, you possibly have a lot saved to afford to get a worker. But really what you are doing is starting a business where you can earn faster and more.
Quit your job: Now, this stage should only come when your business or investment has begun making a profitable venture for you. Now, whatever business you are going in to, be it commerce, buying, and selling, service provider, or like a self-employed business. Whatever it is, you have to be certain that it has the potential for success. Once you can see that and you are already making a fair profit, you should quit most of your job. You can still keep one going if you think the venture is profitable. The purpose here is to ensure that you are committing to your business because you can see the potential for success. You do not want to quit your job if your business is yet to begin making a profit.
Create multiple investments: Once your investment, passive or active begins to yield fruits, it is time to diversify your investment. What I mean is, if you are operating an active investment, it is time to add a passive source, and if you are operating a passive investment, it is time to add an active one. This way, you are building your financial source through multiple options. As a tip, I always advise going for dividend-paying stocks. This is because they are an excellent passive investment source that does not demand anything from you but your money. In return for your money, these companies will pay you monthly.
So this is generally what I would be doing, and it could be different for you. But the end game is the same as being able to live in luxury without actually having to give your time for the money. And this point is really great for those in their early years of twenty or thirty because they can prepare their lives. I hope this post was useful in helping you if you are financially broke. Just stay committed and focused, and you are sure to be on your route to success. If you have comments, kindly drop them in the comment section, and I will respond as best as I can. If you liked the post, then show your love by liking and sharing. You should also subscribe to get the latest from my posts. Bye for now.
© Lifestyle Tips by Antoaneta
Recommended for further reading:
- The Intelligent Investor
- The Barefoot Investor: The Only Money Guide You’ll Ever Need
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week
- Stock Market Investing For Beginners: The Investment Guide
- A Beginner’s Guide to the Stock Market: Everything You Need to Start Making Money Today