How to Pay Yourself First, Even When You’re Flat-Out Broke

By Jackie Lam
September 27, 2017

When you’ve hit the sweet spot moneywise, it’s not that difficult to squirrel away money on the regular. But what if you’re flat-out broke? While saving money may feel like an insurmountable task, it is still possible to save for a rainy day.

Here’s how you can pay yourself first or save money first when you don’t have much financial wiggle room at the end of the month:

Make Trade-Offs

If money is tight, make those trade-offs so you can save. For instance, keep the gym membership but forgo the pressed juices. Or, cut your HBO subscription — at least until the next season of Game of Thrones kicks in. If you’re making conscious trade-offs, then you’ll want to make sure the money you’re saving goes toward a rainy day fund. Otherwise, it may just get spent nilly-willy on say, a tank of gas.

I’m also all about the “swap it, don’t stop it” approach. You don’t have to give up the things you enjoy entirely to save a buck. Instead, find less-expensive alternatives. For instance, enjoy your favorite restaurant’s happy hour menu instead of eating during prime dinner time. Or plan a local, no-frills getaway instead of a pricy, overseas vacation. You’ll not only save some beans, but you’ll have fewer bouts of FOMO.

Save a Tiny Amount

You know what they say: every little bit counts. When I got my first-day job out of college, I was barely scraping by. And when I signed my first-year lease and moved into a tiny single in Los Angeles, I was afraid of breaking my lease and made an effort to save as much as possible – sometimes just a mere ten bucks each paycheck.

Being committed to saving, even when I had very little to save, helped me get into the habit of paying myself first. I set up automatic transfers to coincide with payday. I didn’t miss that money, and in time it became an effortless thing to do.

Take on a Side Hustle

Side hustles can help you rake in a few hundred dollars a month. And while that money may end up going toward basic living expenses, make an effort to sock a wee bit away each month into your savings. Even a few bucks here and there will get you started.

Curb the Credit

I really can’t emphasize this enough. It can be a struggle to dig yourself out of debt and credit card debt has been a national problem. In fact, the average household credit card debt in the U.S. is $8,777, according to WalletHub.

To break things down, let’s say you rack up $1,000 in credit card debt and the APR is the current average of 15.59 percent. If you make a minimum monthly payment of $40, you’ll be paying $218 in interest alone. Yup, That’s over 20 percent of the amount of debt. You can only imagine how much more you’d be paying on interest alone if you racked up more debt, or had a higher APR.

Instead, use the cash you have on hand and use a debit card if possible. This will help you keep tabs on your spending and prevent you from continuing to rack up debt.

Use an App to Help You Save

There are a handful of apps out there that can help you save. Whether you use an app to budget, automate your savings or round up transactions, a dollar here and there can add up quickly. In the past year and a half, I’ve saved a few sweet thousand bucks or so using financial apps.

If you’re a member of Chime, you can enroll in our Automatic Savings Program to save money with every card transaction. Every time a transaction goes through, Chime rounds up that amount to the nearest dollar and transfers your money from your Spending account to your Savings account. That’s just one of the handful of ways the Chime app can help you save.

While it’s not easy to save when you’re flat-out broke, it is possible. Making it a priority, and starting small will help you build an essential rainy day fund. In turn, you’ll be less stressed about your financial situation.

Jackie Lam is an L.A.-based financial writer whose clients include Fortune 500 companies and FinTech startups. Her work has appeared in Forbes, Business Insider, and GOOD.

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