10 Reasons Why You Are Broke And What You Should Do – You are not “broke” because you do not have a lot of money or because you cannot buy the things you want and need.
Here’s Why You’re Broke:
Being broke is not a dollar amount. But it is a mindset that you, somehow, let define you. Bad habits will not help you if you get more money, so it’s not the money that has to change. It is you and your belief surrounding money that must change. If you want to stop feeling broke, you cannot fix your money issues by crying about what you do not have. You fix them by appreciating what you have and focusing more on what you want.
1. You don’t have the right money mindset:
You might have heard this before, but having the right mindset regarding your life and finances is essential for success. If you are always telling yourself, I am broke; your perspective will prevent you from succeeding. The way you think about things translates into how you act.
Having the right mindset includes believing that you can be successful, making up your mind to put in the work, and learning how to self-motivate and self-inspire.
2. You Don’t Believe in a Budget:
Budgeting is the process of allocating specific amount of money that you are going to spend on different things in a month. This is one of the top reasons why you are broke. You don’t believe in a budget, you aren’t aware about your spending patterns and you probably don’t know where your money goes by the end of month. You live paycheck to paycheck.
3. Focus on increasing income:
Finally, perhaps the biggest change you could make if you’re feeling broke is to focus on increasing your income. If you could ask for and receive a raise, switch to a better paying job, or get a promotion by learning some new skills, you’d have a lot more money to spend — and that always makes it easier not to feel broke. Plus, a higher income will give the ability to both pay off current debt and save for your future goals.
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Give these techniques a try and see if they can help you feel better about your financial life — and leave you with more money to do the important things.
4. You borrow for everything:
Not planning ahead, spending more than you earn… just put it on the credit card, right? Whatever it is, you tell yourself you can pay it off with your next paycheck. Meanwhile, the bills get higher, and it gets harder to catch up.
If you’ve found yourself in this situation, it’s important that you create a plan to get out of debt. However, in order for your plan to be successful, you’re going to have to commit to stop spending on credit and acquiring new debt.
5. You Have Bad Habits:
Addiction to bad habits is another bad habit. Smoking, alcohol, drugs, obsession with social platforms are all bad habits to be avoided. You waste time and money if you are addicted to bad habits which eventually leads you to be broke. You feel disgusted and unhappy about your life.
Stop having bad habits.
6. Your Socializing Is Expensive:
How often do you go out a week? Once or twice with friends, once or twice with a date, once or twice with co-workers? How much is all that costing? Go ahead, check Mint. I’ll wait. It’s a lot, isn’t it?
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This is especially true if you live in a big urban area. Food and drinks are expensive in cities. One of the things I’m always amazed by when I leave NYC is how cheap it is to eat and drink out in smaller places.
7. You’re A Brand Slave:
There are a few reasons people always buy a name brand or a particular brand of something. It’s familiar, what your parents use; it’s what your friends buy.
Sometimes the brand name is superior to something else but not always, so you shouldn’t make it your automatic default.
8. Invest in Yourself to Build Wealth:
If you are guilty of any of the behaviors above, it’s time to make some serious changes so you can start working on building real wealth. And that starts by working on YOU.
Invest in your personal growth and development. Read books, take courses, educate yourself, and improve your skillset. When you invest in your self-development and follow through with it, you stay in the frame of mind to succeed and do well.
9. How can you save and invest?
First, even if you don’t have a lot of money to invest, it’s important to split your savings into two distinct buckets — liquid and illiquid.
If you have zero savings right now, the most important thing is to figure out how much money your bills are every month and start stashing away in a saving account or financial app three to six months of your expenses. So, if your monthly bills come to $2,000, then you need at least $6,000 in an account that you can access anytime if you need it. Even if that seems like a lot, set it as a goal and work hard to get there. Figure out where you can trim expenses even a little bit to stash more into savings.
10. You have no emergency savings:
From replacing a flat tire to covering a visit to urgent care, life is full of unexpected costs. But without an emergency fund, you could be forced to drain your bank account to pay for unavoidable expenses. If you’re hit with an emergency, you might even need to borrow money to pay for it — which often includes the added cost of interest and loan fees.
The fix: Have an emergency fund saved up to cover these costs without stressing out or borrowing money. Even a small buffer can help you bounce back faster from these small setbacks and keep you from being broke.
Wrap Up:
Once we fix the mind, we can fix the bank account. If you continue to identify with being broke, you will always have money issues. We only desire more money because we lack it, so by having this desire, not only does it show that we do not believe in ourselves, but it also shows that we are not grateful for what we have.
