Do you ever look around and wonder why people struggle financially?
Many work full-time/ part-time jobs and have businesses of theirs, yet they still complain they are broke at the end of the month.
Why is that? I hope I didn’t describe your current financial situation.
Having a good relationship with money doesn’t mean being wealthy or earning a high income either. It means making responsible choices with your finances. Whether you’re living paycheck to paycheck or on your way to becoming financially independent, there are certain habits you must know that can limit your ability to grow your wealth.
In this article, I would give you 5 reasons you’re broke. Make sure you read to the end!
REASONS YOU ARE BROKE
YOU DON’T BUDGET
One reason people remain broke is that they don’t live on a budget.
According to Investopedia, A budget is an estimation of revenue and expenses over a specified future period and is usually compiled and re-evaluated periodically.
If you don’t track your income and expenses, it would be difficult to know how much money you spend on various things.
Budgeting may seem stressful because of the thought of putting your income and expenses on a spreadsheet, but doing this could help those trying to control their finances.
Have you ever wondered why you don’t have any money left after making a few purchases the moment you got paid? Then you’ll know why this is important.
YOU DON’T HAVE CLEAR FINANCIAL GOALS
We need financial goals for any decision you will make with money. When you set financial goals, you’re making plans for the future which will enable you to achieve them. For example, you want to be debt-free within 2 years is a simple goal that would make you take those steps needed to accomplish the goal.
If you don’t want to stay broke, come up with a goal of where you want to be financially and an action plan. Whether you want to buy a new house, pay for a new car or save $20, these goals all have to be laid out.
- YOU SPEND MONEY
TO IMPRESS PEOPLE
“Most people buy things they don’t need with money they don’t have to impress people they don’t like”. Dave Ramsey
This is not a new thing to us. Many people buy things to show off to others because they think people would be impressed by their success and respect them if they look rich.
Nothing will make you go broke faster than trying to impress others. As funny as this may sound, this behavior is common. You might feel fulfilled after making that purchase to make you look good, but that feeling won’t last.
That purchase could set you back from achieving your financial goals, which are not usually worth it.
YOU DON’T PREPARE FOR EMERGENCIES.
What if your car needs repair? What if your heater is faulty?
Unexpected expenses are common. They are something we don’t have control over and when there is no emergency fund, this could be a problem.
If you don’t prepare for financial emergencies, then you’re setting yourself for trouble. When you’re not prepared for any emergencies, you’ll be forced to solve them, such as going into credit card debts, then you will not only struggle to pay off that debt but also struggle to save emergency funds.
YOU HAVE EXPENSIVE HABITS
Do you think rich people are the only ones that have expensive habits? They aren’t the only ones.
upper-middle-class, lower-middle-class, working-class, and poor people have expensive habits. Eating out regularly is one example of an expensive habit that cost more money than people realize. This isn’t just eating out a few times a month, it is eating out regularly. People think it’s nothing to spend $30. Spending $30 isn’t a big deal, but if you’re living on a paycheck, avoiding an expense like this regularly can make a difference.
There’s a saying “ A small leak could make a ship sink”. It’s not that big thing you do that could destroy your finances. It’s that little thing you don’t pay attention to that could make you broke.
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