Most people who are broke don’t understand why. They say they stick to their budget (usually) and are really careful about what they buy (for the most part), but find themselves broke each week and just can’t figure out what they are doing wrong. Well, most people are doing quite a few things wrong and don’t even realize it. Here is the shocking truth about why you are broke.
Do you see something, have to have it and buy it on the spot? You, are an impulse buyer. You don’t ask yourself if you really need something, you just know you want it and you buy it. This is a huge reason why a lot of people are broke all the time. From now on, when you see something you want, follow the 48 hour rule. Go home, compare prices online and think about it. Is it really something that you need or want? Will you regret the purchase in the days that you are broke and waiting to get paid or will it be worth it to you? If after 48 hours you really feel that you have to buy this item, go ahead, but buy it at the best possible price you can find. I am definitely guilty of making impulse purchases. I have made a conscious effort to restrain myself from making unnecessary purchases. All of the the little items really start to add up! Trust me, it is difficult, but try to stop yourself and take a few days to see if it is necessary, and if it, find a coupon!
If you are making minimum payments on your bills each month you are probably getting nowhere. It can take several years to pay off a credit card bill if you only make the minimum payment. Stop using the credit card and focus on putting as much money as you possibly can toward your current balances. The goal is to get those debts paid off, leaving more money in your monthly budget. Yes, this is definitely easier said then done, but being able to make extra payments can REALLY lower your debt much faster and save you money on interest. You can even save money on your mortgage doing this! Check out our free debt payoff printable to help you stay organized and pay off your debt faster.
Even if you don’t realize it, you probably have some bad money spending habits. keep track of every penny you spend for the next week or two. Then sit down and look over your spending. You will see little habits that are causing you to spend more money than you should. One of those habits might be not paying your bills on time. When you’re not organized and you forget to pay a bill here and there you may not see it as a problem, but that bad habit can cost a ton of money in late fees and penalty charges. Find a system to organize your monthly bills or use a bill tracker so that you don’t forget and you can break this bad habit.Find out the shocking truth about why you are broke! #MoneyManagement Click To Tweet
Having multiple credit cards can quickly become a problem. Credit cards allow you to spend beyond your means. Before you know it you are spending more money than you have, and are getting deeper and deeper into debt. Pay off any credit card debt that you may have, cut up multiple cards and keep just 1 or 2 that you only use in case of an emergency. This will prevent you from spending more money than you have. Again, paying off your credit cards will take time, but if you set a goal and work towards it you may be surprised with how fast you can get your debt paid off.
Another thing that leads people to being broke is not working for the things they want. When you want something extra, instead of waiting till the next paycheck to buy it which could lead you to living paycheck to paycheck, work for it. Set aside a certain amount of money each week and wait until you have saved enough money to buy it. You may not want to wait but your patience will be rewarded and you won’t be broke until you get paid again.
Most people don’t invest. It may be because you do not know how to invest or maybe you just do not have any extra money. Instead of spending money on frivolous things, invest in something that will make you money. Look into stocks and bonds, CD’s or even collecting valuable things. If spending money makes you money than it’s money well spent. Too many people are basically throwing money away each time they make a purchase and they don’t even notice that it’s contributing to them being broke. You may only be able to put a small amount away each month, but it is better than nothing!
A lot of people try to keep up with the Joneses. Well, the Joneses are probably broke too! Don’t worry about what car your friend is driving or how many different programs they pay to put their kids into. Worry only about your own family and learning how to live within or even below your means. Look at the benefits, you may not be driving the newest model car, but you also don’t have the $300 monthly payment that goes along with it.
One thing that broke people consistently have in common is they don’t have a savings account. Having a savings account is essential. Start out small if you have to. Each time you get paid, put a set amount of money into your savings account. Do it each and every paycheck and eventually you will have a decent amount saved. What you are saving for may vary at times, but don’t change the way you save. Do it consistently and you will have that savings to fall back on or use on something special like a family vacation or even a down payment on a house.
What’s the shocking reason that you are broke? It may be a combination of two or more reasons. If you acknowledge where you are making mistakes and work to correct them, you can start to work towards begin financially stable.
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