Have you ever sat back and wondered “Dang, why am I so broke?”. This question usually comes when you have $13.15 left in your bank account and payday is two days away. You may make income that others dream about, but at the end of the day you still live paycheck to paycheck. This is when you realize that even though you make a good, modest income, people still could have financial problems.
People who drive around in expensive cars and live in exclusive neighborhoods could still be on the edge of losing it all. We call that “one paycheck away from being on the streets”. Meaning if they lost their current income, the poor money habits they developed will not sustain them for too long. No one is immune from being broke. We wanted to provide common reasons why people are “broke” and if you identify with any of these reasons listed, let’s make a change today.
Below are 10 reasons why you are broke:
1. You Spend Money Before You Earn It.
This is the main reason why people are in so much debt. When they spend money before they earn it, they think financing their purchase is the logical thing to do. The problem is, when people get paid, they may decide to not pay off the debt they just incurred because now there is something else they want to do with their cash when they actually receive it.
2. You Are Not Saving Enough.
If you remember the concept of paying yourself first NO MATTER WHAT, you will always have money. A great start is to put aside at least 10% of your income into a savings account every pay period. The feeling you get knowing you have money set aside and that you are gradually building your savings every payday, will cause you to want to save more. This will eventually get you out of the “paycheck to paycheck” feeling.
3. You Do Not Have A Financial Plan.
It’s a well-known fact that if you don’t have a plan, plan to fail. It works with your finances as well. If we do not have a plan for every dollar that comes into our house, we will more than likely spend those dollars on things we really do not need. Put together a budget today to track all fixed expenses (like mortgage/rent, auto loan payments, and insurance payments), all recurring monthly expenses (like electric, gas, and cable bills) , an amount you need to save, and if you have debt, set aside an amount you will designate to debt each month (and create a debt snowball) . Get a plan!
4. Your Current Lifestyle.
This lifestyle you have at the moment, sorry to say, but it’s wearing you out and wearing you all the way down. We all want to live the lifestyle that we “think” we should have right now, but there is a time for that and right now is not it. Anything worth having is worth working hard for, so we have to understand that it may take some sacrifice. You may find that creating a budget is all that’s needed in order to create a lifestyle that you desire.
5. Not Enough Income.
Simple. Your monthly expenses exceed your monthly income. At this point, even the thought of treating yourself is not an option. You haven’t treated yourself in weeks because you needed whatever you would have used to treat yourself for the light bill! What do you do at this point? You can get more qualifications for your career so you could get promoted, sell items around your home you don’t currently use, or pick up a side hustle. The possibilities are endless in the days in which we live. Check out our blog 53 Ways To Save Money And Cut Costs Starting Today
6. Too Much Debt.
When you have to pay for yesterday, the task of enjoying today or preparing for tomorrow may seem impossible. This causes you to feel “broke”. Carrying debt takes away money you could use for your “today” and takes away from investing in your “tomorrow”. Imagine if you had zero debt and all the money you earn going forward is just sitting there and growing? With debt, those opportunities keep getting delayed. Let’s make a change.
7. You Spend Money On Bad Habits.
Bad habits can be anything that has no real benefit to us and may even harm us down the road. If we are spending our money on things that do not benefit us, let’s stop spending our money on it.
8. You Hang Out With Other Broke People.
Birds of a feather flock together. If everyone around you is broke and making poor financial decisions, you are more likely to do the same and it may not even be intentional. Works the same when you hang with people who are financially successful and are setting positive examples. You will naturally rise to their level as well. We mean, who wants to be the friend in the group who doesn’t have a financial plan and still living paycheck to paycheck? Find friends who are doing better with their finances so you could learn a thing or two.
9. You Do Not Value Yourself Enough.
This may be a harsh reality, but after some careful consideration, we have found this to be true. People will debate with you back and forth, but no one likes to be broke even though they swear it’s a part of life and they are happy. Those of them who say this, are trying to justify their poor money habits. When you make excuses for yourself, you stay stuck. Value yourself enough to understand you deserve to not be stressed out over money and your deserve having options.
10. You Lack Motivation.
Start thinking less about all the reasons why you can’t make your financial dreams happen and just start doing. Start saving $5 a week, or start paying an extra $25 towards debt. Let’s do something extra no matter how little it may seem compared to the next person. Remember this is for you, not for them. They are too concerned about how they are going to take care of their family. Not too worried about how you will provide for yours. You got this. Let’s stop the cycle of being broke.
We hope after you read these reasons why you’re broke that you will make a change and re-direct your finances for the better! Let’s us know what you think!