Are you tired of feeling broke?

I’ve been there.

Just four years ago, my husband and I were buried in $117,000 of student loan debt.  Now, we’re 100% debt-free!

Having no debt payments means our money can go toward things we actually want… like a house, saving for retirement, traveling, and doing fun stuff.

So if you’re tired of being broke, what should you do to get your financial life together? 

*Disclosure:  This post contains affiliate links. Read our full disclosure policy here.

Here are 20 smart steps you can take right now!

Create a Budget

The first step to getting your finances in order is to tell your money where to go instead of wondering where it went.  A budget does exactly that.  There’s a common misconception that budgets are restricting, but the opposite is actually true.

A budget gives you permission to spend and it puts you back in the driver’s seat so you’re no longer at the mercy of your money.

Need some help setting up your budget?  We have a few articles that can help you get started:

We also offer a budget bundle, which includes six printable budgeting worksheets.  Each sheet comes with instructions to guide you through setting up your budget!

Are you tired of feeling broke?

Our budget bundle can help you get on track!

Read The Total Money Makeover

If you’ve been reading this blog for a while, you know that I’m a big Dave Ramsey fan.  Reading his book The Total Money Makeover shifted my perspective and changed my life.

In the book, Dave goes through his “seven baby steps” for financial freedom, which are:

  1. Saving a $1,000 emergency fund
  2. Paying off all non-mortgage debt
  3. Saving 3-6 months’ of expenses
  4. Investing 15% of income
  5. College funding for kids
  6. Pay off mortgage
  7. Build wealth and give!

Dave has helped many Americans to get out of debt and achieve financial freedom.  I love listening to his radio show The Dave Ramsey Show because listeners call in to do their “debt-free screams” and their stories are so inspiring!

Set Financial Goals

If you’re reading to change your financial life, you need to set some goals.  Goals should always be SMART (specific, measurable, actionable, realistic, and time-based).

“I want to save money” or “I want to pay off debt” wouldn’t be the best goals to set because they’re too vague.  Better examples of goals would be:

  • I want to pay off $20,000 of debt by the end of this year.
  • I want to save $1,000 (for an emergency fund) over the next three months.

I would recommend setting yearly and monthly financial goals.  If you really struggle with spending, you may want to set daily goals as well about how much you’re allowed to spend each day.

Monitor Your Credit

The credit system in our country sucks (because it encourages debt), but like it or not, credit scores do matter.  Keep an eye on your credit with a free monitoring tool like Nerd Wallet’s.  Their tool uses a “soft pull”, so checking your score won’t damage it.

Having a good credit score allows you to snag the best interest rate possible when you take out a mortgage or another type of loan.  Of course, it’s best to avoid debt as much as possible, but you may not have enough money to pay cash for a  home.

Here are a couple of related posts on this topic:

Track Your Net Worth

Tracking your net worth is important, but it can be a bit depressing when you’re deep in debt.  Remember that your net worth is merely a tool.  It is not a reflection of who you are as a person and it should not be tied to your self-worth.

Related: 5 Things That Matter More Than Your Net Worth

To calculate net worth, simply subtract your liabilities from your assets.

Net Worth = Assets – Liabilities

Assets include things like the equity in your home, the value of your car, the amount of money you have in the bank and your retirement accounts, and jewelry you own.  Liabilities are debt – these include the amount you owe on your mortgage, car loan, or any other types of debt you have.

For example, my husband and I currently have a net worth around $23,500.

We have no debt (liabilities) and we have the following assets:

  • $5,000 – hubby’s car
  • $500 – my car
  • $12,000 – bank accounts (including savings)
  • $5,000 – retirement savings
  • $1,000 – jewelry (wedding rings)

If we still had debt, we would simply subtract the total debt amount from the $23,500.

Prepare for Emergencies

While you’re still paying off debt, you should have a small $1,000 emergency fund so you can use your income to pay off your debt ASAP.  Once you’re debt-free, save 3-6 months’ of expenses in an emergency fund.

This money is there to pay your bills (so you don’t resort to debt) if you lose your job or face some kind of major financial emergency, such as a serious illness.

The majority of Americans don’t have enough money saved to cover a $400 emergency… even though the average car payment in the U.S. is over $400 every month.

Strangely, we’re okay with putting money toward debt each month, but most of us don’t set aside anything for savings and then we act surprised when emergencies happen.

Emergencies are not a surprise!  The only guarantee we have when it comes to emergencies is that they WILL happen.

Plan for Large Purchases

If you’d like to buy something big (like a TV, new bed, etc.), set aside a certain amount each month for it instead of just swiping a credit card and paying for it later.  There’s no need to waste money on interest.

We’ve become accustomed to instant gratification, but we do not HAVE to buy a new thing the second we decide we want it.  As Dave Ramsey says “Children do what feels good.  Adults devise a plan and stick to it.”

Pay Yourself First

“Paying yourself first” means saving money before you spend it.  The best way to do this is to automate it.  For example, let’s say you have three savings accounts (one for emergencies, one for a new car, and a third for a vacation).

You can set aside a certain amount each month to be automatically taken out of your paycheck and deposited into each of your three savings accounts.  This way, the money will always go into savings and you aren’t tempted to spend it because you don’t even see it.

Use the 50/30/20 Rule

The idea behind the 50/30/20 rule for budgeting is that 50% of your net income should go toward “needs”, 30% should go toward “wants”, and the remaining 20% should go into savings.

“Needs” would include things like groceries, prescription medications, rent, and insurance. Some examples of “wants” are Netflix, cable, and manicures.

Remember that the 50/30/20 is just a general rule of thumb.  You may not hit those exact percentages, but ideally you should be close… unless you’re working on a huge savings goal.

For example, if you’d like to retire in your 30’s, you might be aggressively saving 70% of your income right now, and that’s great!

Create a Debt Attack Plan

Ready to get out of debt?  I highly recommend using an amortization calculator (you can find free ones online) to calculate exactly how long it’ll take you to pay off your debt if you pay [xyz] amount each month.

Dave Ramsey advises his followers to use the debt snowball plan because paying off small debts first gives you the “quick wins” you need to stay motivated as you pay off debt.  Other personal finance experts prefer the debt avalanche method (paying off the highest interest debts first).

Related: The Debt Snowball vs. The Debt Avalanche

No matter which method you choose, you’re paying off your debt and that will put you in a much better place financially.

Save for Retirement 

It’s never too early to start saving for retirement!  Start ASAP.  If you want to wait until you’re debt-free (which I did), that’s okay but don’t keep putting it off.

So where should you start?

I highly recommend reading Chris Hogan’s book Retire Inspired to learn more about investing.  Next, you can start saving.  Many people only use their company’s 401(k) plan and I would caution you against that.

There’s nothing wrong with using your company’s plan (and I encourage you to do so if they offer a match), but you don’t need to stop there or assume that they’re your best option.

An alternative is to go with a financial planning agency.  A financial planner, unlike the company you work for, can actually help you to choose the best investments.

Putting all of your eggs in one basket is never a good idea.  Research a variety of different retirement saving options, and remember that it’s perfectly okay to choose more than one.

Have Budget Meetings

If you’re married (or in a serious relationship), it’s a good idea to have periodic budget meetings.  Check in with your partner and make sure you’re on the same page.

These meetings can be weekly, monthly, or semi-monthly.  What’s most important is that they happen!  Do whatever works best for you.

Cut Expenses

If you’re struggling financially, you need to start cutting costs wherever you can.  The “little things” like your Starbucks addiction or eating lunch out every day might not seem like much, but it adds up over time.

Once you’ve cut back on small expenses, take a good look at your budget.  Are you still in bad shape?  If so, you can find ways to cut back on major expenses and/or find ways to earn more.

Earn More

At a certain point, it’s impossible to save more.  Maybe you’ve hit that point or perhaps you just aren’t a frugal person.  Either way, the solution is to earn more.

This could mean asking for a raise, finding a better job, working overtime, getting a second (or third) job, side hustling, or starting a blog.

Live Below Your Means

No matter how much money you make, you’re always going to feel broke if you’re constantly living above your means.  Instead, try to live on less than you earn.

Increasing your income won’t help if you keep increasing your spending every time your income goes up.  This is called lifestyle inflation.

Stop Keeping Up With the Joneses

You don’t need to keep up with the Joneses anymore.  For all you know, they could be broke!  They might be drowning in debt just to keep up the facade that they’re so “successful”.

You don’t want to be broke…that’s why you’re reading this article :)  If you continue to keep up with others, you’ll end up as broke as they are.

But if you live like they aren’t willing to live, someday you’ll be able to do things they’ll never be able to do.

As Dave Ramsey says “Live like no one else now so later you can live like no one else.”

Never Pay Full Price

How often do we pay full price for things without even really thinking about it?  This is kind of crazy when you think about how easy it is to save money today.  With just a few clicks of a mouse, I can find all sorts of deals on just about anything I want.

There are websites like Wikibuy that allow you to comparison shop across multiple websites at once.  With Ebates, I can earn up to 40% cash back on purchases at hundreds of different stores.

There’s no need to pay full price for things when I don’t have to!

Use Apps to Earn Cash or Gift Cards

The average American adult checks his or her phone 80 times per day.  Yikes!  If we’re going to spend so much time glued to our smart phones, we might as well make a little money off of it!

Related: 5 Apps That’ll Help You Save Money

There are tons of free money making apps out there.  My personal favorite is Ibotta, which allows users to earn cash back every time they grocery shop.  I’ve earned over $200 with Ibotta so far!

Want to get a free $10 today?  If you sign up with Ibotta with my link, you’ll get a $10 welcome bonus once you start redeeming cash back offers.  Download Ibotta today!

Master Your Mindset

If you have deeply held negative beliefs about money (“there will never be enough”, “I’ll always be broke”), it can be difficult to change them…but it’s certainly not impossible!

Most of us have a scarcity mindset when it comes to money.  We feel like money is scarce and we never have enough.  Changing to an abundance mindset can help us to achieve our financial goals.

Continue Learning About Money

There are many ways to learn about personal finance.  I love reading books, following money blogs, and listening to personal finance podcasts.

I’ve learned so much over the past few years and I’ve come so far from where I used to be.

You CAN too!  Whether your goal is to get out of debt, save money, or learn to budget, you can do it…even if you’ve always struggled with money in the past.

Follow the tips outlined above to stop being broke today!