How many times do you hear people say “I just got paid yesterday, then why I’m broke?”
Well, you can stop being broke (too soon), and all it takes is a few simple financial measures to get better.
Yes, you can train yourself to spend money only when it is needed and this financial makeover is not impossible. If you have a good look around your home, you would realize just how much crap and unwanted stuff you have managed to accumulate.
Yes, we’re surrounded by an enormous bunch of clothes we never wear, shoes that never get a chance to escape the closet and there are DVDs, crockery, appliances, and what not. The sad fact is that half of Australians don’t want to talk about money, let alone personal finance management.
One of the articles published by Mortgage Professionals Australia reveals that money/ personal finance was the most difficult thing to discuss by Australians. In fact, Aussies were more comfortable talking about their sex life, religion and politics.
Clearly, it’s not a good idea to start revealing your bank account details and other sensitive information like PIN or passwords to every other person. But it is important that you educate yourself about money management and avoid being broke.
Why I’m broke is the number one question people ask when during a bad financial phase. But the question is why do people end up with practically no money?
Why I’m Broke: 7 Bad Financial Habits that are Keeping You Broke
1. You Can’t Get Out of the Debt Trap
If you are broke, you are more likely to remain stuck in a debt trap because you’re desperate and stressed out.
Whether it’s maxing out on your cards or a personal loan, lack of money would force you into making rash decisions and these will haunt you for a long time.
2. You Ignore Bad Debts
Failing to pay your bills or delaying credit card payments will only make problems worse.
A lot of people are burdened by debt stress and they don’t realize there are a number of positive options rather giving in to the feelings of helplessness.
3. You Don’t Learn About Personal Finance
According to Mortgage Choice’s Money survey 2014 ,68.1% of Australians who do not currently have a financial plan in place admitted that they have no intentions of seeking financial advice.
These statistics clearly show that the majority of Australian population doesn’t understand the importance of seeking financial advice.
It is also important to understand that seeking financial advice doesn’t mean you work closely with a financial planner.
Simply put, you should create a financial plan that will not only allow you to achieve your financial goals but help you live the life you always wanted to live.
You don’t have to be a millionaire to create a spending plan. More importantly, you should start controlling your spending early on in your life.
Remember, not paying enough attention to how you spend money is something you’re most likely to regret later in life.
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4. You Care More about Today’s Happiness before Future Financial Needs
According to Harvard University research people are tempted to spend more when they are in a bad mood or feel sad.
That’s right! You’ll get answers to ‘Why I’m Broke’ if you have a closer look at your spending habits.
Are you guilty of spending money to feel better just because you had a bad day? Yes, we are talking about unnecessary coffees, movies and spoiled groceries after a rough day at work.
There is always that moment when your boss is being unreasonable, you forget to eat breakfast so you seek out instant gratification by spending big bucks from your bank account.
The shiny new gadget smiles at you at the store and you buy it without hesitation. Similarly, you try cheering yourself up by going out to eat, buying expensive clothing or making major purchases.
Of course, occasional spending on fast food, coffee, gadgets and even movies is fine, but you shouldn’t go overboard.
5. Saving Money is Not Your Priority
Saving money is especially tough for younger people because they’re not thinking about retirement soon.
Well, this may sound like a strange idea but, saving even a dollar a day can save you from the ‘why I’m broke’ fiasco.
6. You Don’t Find a Better and Cheaper Way of Doing Something
If you need to move to a smaller home for a while to cut down expenses, do it.
If you need to start taking the bus because you cannot afford a car or pay for insurance, do it.
If you have to make cuts in impulse grocery shopping, do it without shame.
Also, there is no reason to be shelling out fifty dollars every week for coffee and a muffin every single time you have a craving.
What you need to remember is that there’s nothing more embarrassing than having to survive on credit.
And simply asking yourself ‘why I’m broke’ without doing any substantial to improve your financial situation also doesn’t make sense.
7. You Don’t Know Where Your Money is Going
Do you have enough money to deal with your needs and only some of your wants along with those emergencies?
Well, if you don’t know where your money is going currently, this habit will only keep you down financially.
If you don’t have much money right now thanks to your bad financial habits. Sit down and figure out how you can get your bills paid on time.
You can even talk to your family about the best ways you can handle all the debts you might be looking at.
5 Rules for Not Being Broke in Your Life
Sweeping your problems under a rug or closing your eyes is not going to benefit anyone. If you don’t want to end up being broke:
1. Make sure you stick to a budget
Having a well planned budget can save you from a financial hardship.
No matter how much you earn, having a budget is a necessity because it can help you figure out what your money problems are and where your money is going.
2. Understand your financial goals
Your primary financial goal is to control your spending and focus more on spending on what matters most (to you).
3. Do your savings first, the rest will follow
If you don’t put away a little bit of your money in savings account before you start doing your budgeting, that 100 or 200 extra dollars won’t magically make it to the end of the month.
Work out with your bank so that the amount you want to save goes directly into your account and you never have to deal with the emotional question ‘Why I’m Broke?’
4. Make expenditure cuts wherever possible
If you have to make cuts in luxuries and wants, do so without shame.
5. Plan ahead for emergency and other unexpected expenses
Life is unpredictable and having an emergency fund can help you avoid hurting yourself financially.
The bottom line is that when you know there’s enough money to deal with all your needs and some of your wants, you can sleep well at night.
To train yourself to spend less and save thousands of dollars.