Budgeting Managing Your Debt How You Can Improve Your Financial Situation By Miriam Caldwell Miriam Caldwell Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. She teaches writing as an online instructor with Brigham Young University-Idaho, and is also a teacher for public school students in Cary, North Carolina. learn about our editorial policies Updated on November 2, 2022 Reviewed by Thomas J. Brock Reviewed by Thomas J. Brock Thomas J. Brock is a CFA and CPA with more than 20 years of experience in various areas including investing, insurance portfolio management, finance and accounting, personal investment and financial planning advice, and development of educational materials about life insurance and annuities. learn about our financial review board Fact checked by Lakshna Mehta Sponsored by What's this? & In This Article View All In This Article Start Budgeting Review Your Income Save Even $1 More Stop Using Credit Cards Pay Down Debt Frequently Asked Questions (FAQs) Photo: Sam Edwards / Getty Images If your financial situation looks like barely making ends meet and struggling to pay for just the necessities, it may feel like there's no way to improve it, and that can be exhausting. When you are in that situation, it may seem difficult to find a way out, especially when you are living paycheck to paycheck with nothing extra left to try to fix the situation. If you're ready to take control of your finances—even in the smallest way—here's what you can start doing today. Key Takeaways If you're feeling like your financial situation is not as good as you'd like it to be, you can start improving it by budgeting, saving, paying down debt, and more.Even if you start with one area, such as saving $1 more every week or month, you'll make strides in the right direction.If you can work a second job or manage a side hustle to make additional money, you may be able to improve your financial situation.Don't be afraid to ask for help. A friend, family member, colleague, or someone else you trust may be able to support you in your journey to a better financial situation. Start Budgeting You may think that you don't have enough money to budget when you are living paycheck to paycheck. But budgeting is the act of planning how and when you are going to spend every penny. In short, it means that you know where you are going to spend your money before you spend it. Budgeting allows you to plan for expenses in advance so you can start to put money aside before it comes time to pay for them. This may include bills for your home, car insurance, monthly bus tickets, groceries, medicine, child care, and more. Knowing how much you need to spend every month, compared with how much you make, can help you identify the necessities you need to pay for and areas where you may be able to cut back to save money. Note Any budget is useful when working to improve your financial situation. Consider making one that tracks money coming and money going out so you can see where you're able to make changes. Even if your budget shows you that you don't make enough to cover every expense, the bigger picture view of your financial situation could give you ideas for ways to improve it. Review Your Income Not everyone has the luxury of working a second job or overtime hours, or creating a side hustle. But if you do, it could help you make more money to save and pay down debt. This additional income could also help you pay bills or save for an emergency fund. A long-term career change could also allow you to make more money. Going back to school for additional training may be an option. If not, there may be other jobs in your area that pay more. Note Trade jobs or office jobs may be a good fit for your skills. Don't be afraid to apply even if you don't think you have every skill the company is looking for. You'll never know if you don't try. Save Even $1 More Start saving money now. There are two ways you need to focus on saving. First, put money into a savings account that you will not use except for emergencies. That is called an "emergency fund." even if you start putting just $5 into the account per week or month, it could add up over time. If you're not sure where or how to get that $5, use your budget to explore ways you can cut back on expenses. Over time, as your income increases and you have less debt to pay down, increase your contributions. You'll want to have an emergency fund that will cover between three and six months' worth of living expenses. That is your safety net and it is easier to make financial decisions when you know you have money in the bank to cover emergencies. Second, focus on finding ways to save money on the things you already do. Look for coupons and deals for your area. Do not pay full price for something and check at a few different stores before you buy something. Stop Using Credit Cards If you want to improve your financial situation, you'll want to budget and save, but also pay down debt. The first step is to stop using credit cards which can cause your debt to increase. The easiest way to do that is to stop carrying them with you. If they are at home, you cannot use them when you go shopping for groceries, gas, or other items. If you use your credit cards to earn rewards, consider the best ways to use them and make sure you pay them off as soon as you can to reduce the amount of interest you pay. Note Instead of using a credit card for an emergency expense, build your emergency fund and use that money when it's needed. Pay Down Debt The faster you pay down your debt, the faster you can allocate that money to your savings and necessities. Some debt is not bad debt—mortgages and student loans, for example. Don't feel pressured into paying those items off any faster than you have to. It's OK to pay the required amount every month and nothing more. However, some debt can cause bigger financial headaches. Credit cards tend to have higher interest rates. If you can pay down your credit card debt, and not keep a balance on a card, it'll help your credit score improve and you may have more money for savings or other things. As you pay off one debt, take that money and apply it to the next debt on your list. Once you are debt-free, you will have more money available to start building financial security. Frequently Asked Questions (FAQs) How do you know if you're considered poor? If you want to know how your financial situation stacks up against your peers, you can use poverty guidelines as a benchmark. The most commonly used poverty guidelines are set by the U.S. Department of Health and Human Services (DHS), except for Alaska and Hawaii, which each have separate federal poverty guidelines. How many poor people are there in the world? According to World Bank data, roughly 8.4% of the global population lives under the international poverty line of $2.15 per day. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Washington State Department of Financial Institutions. "Saving for Emergencies." U.S. Department of Health and Human Services. "Poverty Guidelines." The World Bank. "Poverty."