Why Am I Broke? 5 Reasons Why Your Pockets are Empty !
“Why am I broke?” – A frustrating question that you probably have asked yourself time to time.
There is no other way to say it. Being broke sucks.
Many people want to become financially independent, but can never get ahead of the game. The unfortunate reality is a lot of people will never achieve financial freedom due to their undisciplined spending habits.
People cripple their chances of becoming free without even realizing it. With that being said, the system that you currently live in is purposely set up to keep you spending money and keep you broke, so I understand if you’re struggling.
It is easy to get caught up with the latest trends, pop culture, and newest electronics. Then you end up broke trying to keep up with the joneses.
However, anyone that is willing to change their mindset and create new habits can dig themselves out of their financial pit. Along with this, it is crucial to understand that financial freedom doesn’t happen on accident.
It is about consistency, discipline, and most importantly hard work.
In order to gain financial freedom you have to understand what is preventing you from succeeding in the first place.
Budgeting: You Don’t Have a Plan
Every professional sports team that has won a championship had a plan for victory.
They prepared for the other team, they studied their habits, and they figured out their strengths and weaknesses. This is how they figure out how to win.
These same methods need to be applied to your financial life. If you don’t have a plan to win, you are going to lose the money game. Simple as that. And losing SUCKS!
If you are aimlessly spending money and not tracking where it goes, it’s inevitable that you are going to end up broke.
Have you ever received a paycheck and then by the end of the next week you’re like, “Damn, where did all my money go?”
This is why creating a budget is so important. A lot of people think that having a budget means that you can’t have any fun. This isn’t true at all.
A budget simply allows you to track your expenses and therefore allows you to cultivate a plan for the rest of your income. Creating one will help you save money, pay off bad debt, and eventually invest your money.
When you don’t create a budget, you usually spend more than you earn. How are you supposed to get ahead of the game if you are spending money you don’t have?
-Get a Piece of Paper.
-Write Down your Income
-Write Down Your Expenses
-Do The Math
Don’t look at it as budgeting. Look at it as your Wealth Building Plan.
I don’t mean this in a negative way at all, but the fact of the matter is that a lot of people are not educated on our financial system. In fact, a lot of people don’t even know what the Federal Reserve is.
If you went to a public school, you most likely were never taught about budgeting, taxes, or purchasing a house.
Chances are, you don’t understand how the banks work, you don’t understand the credit system, and you don’t understand interest rates. It’s okay, a lot of people are in the same boat.
Financially illiterate people often make money mistakes due to the fact that they were never taught money principles. When you don’t know much about personal finance, it is easy to be tricked into making poor financial decisions. (pun intended)
If you want to escape the evils of the financial world, you need to educate yourself, and I don’t mean by going to college.
There are plenty of free resources online that you can use to gain knowledge on the financial game. Some great websites are Investopedia and Forbes.
Along with those, I recommend you read Rich Dad Poor Dad by Robert Kiyosaki, and The Patriot Report by Bryan Sharpe.
Rich Dad Poor Dad will help you change your mindset on money and teach you how rich people think.
The Patriot Report focuses on the history of the relationship between banks and Americans.
There are literally millions of videos on Youtube that you can also watch for free to increase that financial knowledge, so, maybe ditch Netflix for a while and tune into some financial literacy.
Those little purchases add up and those financed luxuries will eventually hurt your pockets.
As I said earlier, spending money that you don’t have is the fastest route to becoming broke. Especially when you’re spending money on things you do not need.
Stop telling yourself that you can pay it off with your next check.
Let’s be real. You can’t.
If you have found yourself in this bad debt situation, you need to get back to budgeting and creating a plan to get out of credit card debt.
Try to pay off your high interest credit cards first, then proceed onto the next highest. You definitely do not want to fall into the interest trap.
With that being said, credit cards aren’t bad in totality. If you use them strategically, you can actually build a credit score that will help you in your financial future.
You should be using no more than 30% of your credit limit. This would be considered an excellent Credit Utilization Ratio.
You Party Too Much
A lot of people spend Monday through Friday working 40+ hours at a job they hate.
Then in order to relieve some stress from their shitty job, they party all weekend.
They spend hundreds on bar covers, overpriced drinks, and bottle service. Along with this, online shopping has never been easier, so people end up buying things online while they are intoxicated.
By the time Monday rolls back around they are hungover with $11.27 in their checking account and feel defeated.
FOMO can and will keep you broke. Debt and alcohol abuse often go hand in hand.
Partying is extremely addictive, especially for young men, and it is easy to get caught up in that lifestyle. Some people get so bad and end up going out 4-5 times a week.
I just think its crazy to work all week just to blow it all on alcohol, but I understand why it happens to so many people.
I don’t know the exact answer to this problem but I do have some possible solutions. Instead of wasteful spending on the weekends, try to make money on the weekends instead.
Pick up a side hustle that is fun and that can maybe make you a few hundred dollars. Some of my favorite side hustles are refereeing sports and reselling items, also known as flipping.
If you can make an extra $100 every weekend, at the end of the year you’ll have an extra $5,200 dollars. That can potentially help with some credit card debt, or assist you on your investing journey.
You Don’t Invest
Investing is one of the most important tools to creating wealth. With that being said, investing comes off as very intimidating to a lot of Americans.
A lot of people think investing is a gamble or only for wealthy people, but that couldn’t be further from the truth. Just like anything else in life, if you have a plan and study the game, you can succeed.
It may seem complicated at first, but that is because it is new to you. Riding a bike was once complicated, but eventually it becomes second nature.
This same thought process can be applied with investing. It is one of those things you can never really grasp until you throw yourself in the fire.
Investing is simply making your money work for you in order to create more money. There are many different ways to invest, including real estate, the stock market, and purchasing cryptocurrencies.
If you are planning on retiring comfortably one day, then you need to start investing ASAP. There are also many tax benefits that come with investing your money as well.
Pay Yourself First
You need to break the chains of living paycheck to paycheck. Thats an exhausting life that nobody wants to live.
If you are broke, it is time to take a look in the mirror and make a serious change. The first step is changing your mindset about money.
If you never believe that you can escape the struggle then you never will.
Educate yourself, figure out whats holding you back, and start taking the actions necessary to build wealth.