This is why I’m broke: Common reasons why you have no money
- You have set no clear goals;
- You’re making little money;
- The wrong people give you advice;
- You’re too generous;
- You spend more than you earn;
- Credit cards are ruining your life;
- You took out too much mortgage;
- Money is a taboo topic for you;
- You were never taught about money growing up;
- You shy away from financial advice.
Speak with a financial advisor now to start working on your financial goals.
Chances are good that you, or someone you know, is broke. In fact, 78% of U.S. workers are living paycheck to paycheck. Having no money can make you feel powerless and disrespected. Being broke can also cause a great deal of stress, anxiety and depression.
Although money cannot buy happiness; at least it can keep the lights on.
This is why I’m broke. It’s often called “lack of good money management,” because you can still manage even on a low budget. What’s more, a lot of people are broke and yet they make good money.
Furthermore, I’m sure you have heard stories about lottery winners who struck it rich and then lost all of their money after a few years. These people probably never learned how to save 100k, let alone managing millions of dollars.
Instead of making sound investments, they buy expensive stuff and depreciating assets. And in no time, they loose all of their money. So being broke has a lot to do with how well you manage your money.
Bad money management, however, is not the only culprit. There are other factors that can keep you broke. Bad habits is one factor that comes to mind.
If you’re broke at this moment, don’t despair. Fortunately, there are proven ways to help you with your money. Being good with money and developing good habits are something you can learn.
In this article, I will address 10 common reasons why you’re broke and how to fix it.
This is Why I’m Broke: Common Financial Mistakes That Leave You With No Money:
1. You have no financial goals
Rich people did not just wake up one day and all of a sudden became rich (unless of course, they were born into riches). But the ones that had to work hard in the first place to become rich, had clear financial goals.
They knew where they wanted to be in 5, 10 years. They made short and long term goals and worked on them everyday.
If you’re tired of being broke, then you’ll have to set some clear and realistic goals. The goals can be paying off credit card debts, get a degree in finance, starting up a business.
If you cannot do it yourself, then it might makes sense to work with a financial advisor.
2. You’re not making enough money.
If you’re still wondering “why I’m broke,” it’s probably because you’re not making enough money.
So exactly how much money does one need to have in order to stop being broke? While there’s not an exact answer, common sense tells us that the more money one makes, the more likely he or she will have some money left each month after expenses.
This is not all true, however. Someone can make $110,000 a year, but spends all of it. At the end of the day, they are still broke no matter how much money they make. But if that same person manages her spending well, she can live well. Bottom line: when it comes to being broke, the more money you make, the better.
If you’re tired of being broke and depressed, then find ways to make more money. Perhaps, you can take a part-time job, or start a side hustle. But most importantly, and in addition to your active income, try to create multiple passive income streams.
3. You spend more money than you make
As the example above shows, if you spend more money than you earn, you’ll never have have any money left and you will always be broke.
One of the ways most people become rich is save their money, invest it, or start a business. But if every time you get a paycheck, you spend it all by buying unnecessary stuff, you will still be broke.
4. You took out too much mortgage
Owning a home can be a great accomplishment for many people.
But too often, people buy a house they cannot afford.
This will not only make you broke, but will also cause you stress at the thought of loosing your house if you can’t make the mortgage payments.
You should purchase a house that you can afford, to the point that your monthly mortgage payment will not leave you with no money at the end of the month.
If you have too much mortgage, your best option is to refinance it. If you refinance, you might get a better interest rate, therefore saving thousands of thousands on your mortgage payments.
Or you might refinance for a longer term, therefore reducing your monthly mortgage payments.
5. You shy away from financial advice
Most wealthy people recognize that they’re not an expert in certain area and need to hire an expert. Broke people barely work with a financial advisor even if they can afford to hire one.
I believe that if you can afford it, it is critical to work with a trusted financial advisor.
A financial advisor can help you with your finances, whether it be investing in the stock market, buying investment properties, creating an estate plan, etc. They’re there to offer advice on the risks of some investments as well as the rewards.
If you’re not sure where to find a financial advisor, check out a SmartAsset’s free matching tool.
The tool will match you up with up to three financial advisors in your area in just 5 minutes. All you have to do is answering a few questions such as when you want to retirement, what is your goal, etc…
6. You get advice from the wrong people.
Many people get financial advice from people that have no business of giving advice. And you wonder why you’re broke.
Indeed, if your parents and some family members are struggling to make ends meet, it is a very bad idea to get advice from them. If you do, you’re likely to make the same mistakes they made.
So if you cannot afford a financial advisor, your best option is to find a mentor or someone who is doing well financially.
7. Credit Cards are ruining your life.
Credit cards can be a good thing, but only in the hands of the right, responsible people. In bad hands, it can be a recipe for disasters. Credit cards can make it very easy for you to spend money you simply don’t have. And it adds up fairly quickly if you keep on buying things.
Buying things with your credit cards that you don’t really need is one of those bad habits that will always make you broke.
Worse, it will put you into debt.
Credit card debts are among those bad debts that can your financial life. To start tackling your debt, first get a free copy of your credit score.
8. You were never taught about money growing up
Growing up, you were probably taught how to drive, how to do well in school, and how to read and write.
But how many of you were taught about finances, budgeting, saving and investing money?
So many people, not only were they not taught these things in their childhood, but they never learnt them as an adult. It is no wonder they are broke.
While it may not be your fault if your parents or teachers did not teach you how to manage your money as a kid. But it is no excuse if you don’t learn about these things as an adult.
So learn now. Learn how to save and invest money.
9. Money is a taboo topic for you.
Perhaps growing up, you were taught that money is the root of all evil. Perhaps, you were taught that being wealthy was something reserved for the rich.
Maybe you come from a very poor background and were taught that you don’t deserve to be rich. These insecurities about money is probably why you are broke. If you have these perceptions about money, then you need to do something about it so they can no longer hold you back to achieve your financial freedom.
10. You are too generous.
Lastly but not least, one thing that will sure keep you broke is being too generous.
There is nothing wrong about giving money to a friend or a family member. In fact, in times of financial struggle, giving an extra hand is the right thing to do.
However, if you keep bailing them out, you will have no money left at the end of the day.
So if you’re wondering “why I’m broke,” then the answer is you’re probably too generous.
Bottom line: to stop being broke, you need to make more money, learn about money. You need to create multiple passive income streams. You also need to learn how to spend less money than you make. So if you’re tired of being broke, don’t just sit back. Take action. Work on your credit score. Invest in yourself, and so on!
A Financial Advisor is Here to Help
Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with fiduciary advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is legally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.