This topic jumped at me yesterday and had my mind boggling trying to figure this out. I've been broke before and I've had lots of money as well. So figuring it out meant I had to look back on my experiences and what it was I did during those hard times. Turns out the only managing I did on both scenarios was to spend what I have on what I can afford at that time of my life.
But how exactly do you manage your money when you don't have any? Let me tell you about what happens when people don't have money and I'll be basing this on my own experiences. There were times in the past when I had absolutely nothing and all I could think about was how I'm going to get my next meal. Every penny that I would get would immediately be put into use for that next meal.
When you're broke you only have one purpose in mind which is to survive today and repeat again tomorrow. You don't worry about clothes, wifi, or the new iPhone, all you care about is food, water, and shelter. Basic needs for survival are your only luxury and you appreciate them even more.
It's only once you get to the point where you know where your next meal will be coming from tomorrow that you begin to "upgrade" your standard of living. You can now afford to buy the occasional McDonalds takeout or save up for that phone you've wanted.
It turns out you've always wanted to live comfortably and have the things that everybody has, like a nicer phone, nicer clothes and a car. You also have ambitions after all and these things represent success to you because you see that all the successful people have them. If you're able to buy some of these things then that must mean you're getting closer to reaching their level because after all, you've already advanced from where you were yesterday. When you couldn't afford any of these things.
Technically you are closer to reaching that level of success than you were yesterday. The bad news is that you're psychologically not ready to attain such success. In fact, you might have taken a step back in your progress by thinking that short-term purchases and luxuries will lead you to the success you want. You were better off when you couldn't afford these things and spent your money only on the basic needs.
Unless your goal of success has changed you should be spending your money on basic needs until that goal is reached. Spending money now on things you don't need only sets you back and prevents you from progressive anywhere faster and you'll find yourself stuck in what is known as the rat race.
The rat race is a way of life in which people are caught up in a fiercely competitive struggle for wealth or power in an endless, self-defeating, or pointless pursuit. People in the rat race are usually not aware of the fact and are driven every day by hopes that they'll one day achieve their goal. They work very hard and end up throwing all their hard work in purchasing unnecessary items which only bring short-term satisfaction.
When that satisfaction is replaced by the need to purchase something newer or more expensive in order to keep up with everyone else, then the trap is set. This brings about a cycle of repeating the same habit of hard work and spending it on unnecessary purchases. It's like being a hamster that's running inside a spinning wheel trying to get to the finish line.
The reality, in this case, is there is no finish line. You work, you get paid and you spend it all then you repeat this process again. For people who'd like to be rich one day, this is the opposite of what we should be doing. In order to achieve long-term success, you need to sacrifice the short-term satisfaction of purchasing stuff.
You need to become what people like to call 'cheap' and be conscious of what you spend your money on. Why buy a Starbucks coffee when you can make yourself a coffee at home? Do you really need to eat out or order extra cheese with that meal? Ask yourself these questions and you'll see the trap that's been set for society. I mean there's a reason why only 10% of society is considered to be financially rich. It's because 80% is preoccupied with the short-term benefits of spending instead of the long-term benefits of saving or investing.
So the answer to the big question: How do you manage your finances, when you don't have any? Is to not spend it. Don not spend it, because you don't have it.
If buying that new cellphone will mean you're setback a couple weeks financially then you probably don't need it. A good way I use to manage my finances is that I never spend more than 10% of my monthly income on anything other than the necessities. The rest I save or invest for the future. The more money you have saved up for the future, the less work you'll have to do in the future.
Whoever said that time is money wasn't lying, and you should buy yourself the future with the money you have. Don't get stuck in the rat race, working for money until the end of days. Rather work for money to save and invest so that it will work for you in the future.
You may not have money to invest but you can still invest in your future by learning and improving yourself. Free information is everywhere nowadays. You can read a book, take a free online course or watch videos from people you aspire to be like. The way I see it, the difference between success and failure is attitude.
I hope that this was of help to you and if it was please share it with someone else who might not be familiar with the ideas discussed in this post. You might quite literally save a soul out there.
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Speak the truth my friend. The one truth people don't want to hear. I spend some money on things I want but I've always told friends they'll never hear me complain about the prices because its a decision I made knowing what the price of an item is. I am still trying to cut on expenses and truly focus on only the basics but I have a long way to go.
As long as you're aware and it's something you decided on. One item at a time is all it takes to see the difference in the long run.
I know. I need to get better at cutting my spending.
The rich invest and the middle class rather spends their money.