Reasons Why I’m Broke

Reasons Why I'm Broke

Many people use the words poor and broke interchangeably. However, there is actually a difference between the two terms. When you are poor, that means you do not make enough money to handle all of your expenses. If you are broke, then you have enough money to cover the necessary expenses, but still don’t make enough to pay down debt or save for your emergency cushion. Many people ask themselves, “Why am I so broke all the time?” There could be countless reasons why you are broke. However, in order to fix the problem, you need to be aware of it. That is why you should try to figure out what is causing you to go broke.

Reason #1: Laziness

Laziness can plague a person to a point of destruction. Some people are so lazy that they rather spend extra money in order to maintain their lazy nature. This is often seen with eating food. Instead of cooking dinner, a lazy person may order out. Now doing this once in a while is okay. In fact, it is even encouraged to have some form of variable expense in order to boost your mental health. However, without moderation, these lazy expenses can add up.

What Can You Do?

Be proactive! Laziness can be caused for a variety of reasons. You should first try to identify why you feel so lazy and unmotivated. If you can’t figure out a reason, then you still must push past. When you find the will to break lazy habits, you can save on costs immediately. Take your time when it comes to improving your productivity levels. Don’t expect to make a drastic change overnight.

Reason #2: Don’t Earn Enough Money

You need to regain control of your finances, especially if you aren’t making enough money to cover expenses. The first step you can take is to create a budget for yourself. You want to list out your income and your expenses. This will give you an idea of how much you can save every month or how much more money you need every month. Once you know this number it is time for action. You want to be responsible if you cut unnecessary spending and find that you can save an additional $200 a month.

With the additional cash that you saved from cutting expenses, you can decide to pay off debts, save towards your emergency fund, etc. However, cutting expenses may not be enough. You could still need more money even after reviewing the numbers and cutting costs where you can. That leaves you with the other option of making more money.

This is easier said than done, obviously. However, there are many ways that you can get more cash.

What Can You Do?

First, start with where you are currently working. Talk to your boss about getting a raise. You want to have reasons and proof as to why you deserve higher pay. If this doesn’t work, then you have two options. You can quit this job and find another that pays better, or you can try to find an additional source of income.

If you want to quit your current job then you should make sure to have another job lined up so there is no gap in your employment. If you are looking for more sources of income then you’re in luck. Whether you want to find work-from-home gigs or flexible opportunities, you have options. There are free apps and online tools available to help. You can specify the criteria you are looking for in employment in order to find something that works for your lifestyle.

Reason #3: Your Social Life is Draining Your Account

Everyone socializes differently. Some people go out all the time, while others prefer to stay home. Maybe you are frugal with your money, while your friends are not. Either way, unless done properly, your social life can drain your bank account.

It can be tempting to go out when all of your friends invite you. Sometimes people even opt for the help of a credit card to afford it. However, without proper financial management, socializing can hurt your financial standing and cause you to be broke.

What Can You Do?

The best thing you can do is better manage your finances. Start by cutting back on how often you go out or how much you spend when you do. Explain to your friends that if you hang out as often you may want to opt for a frugal alternative.

Reason #4: You only Buy Brand

Name brand items can be nicer than their more affordable counterpart. However, not every item follows this rule. If you are constantly buying name-brand, unaffordable products, then it may be time for a change.

What Can You Do?

One of the best things for you to do would be to only buy brands when necessary. For example, at the grocery store, you may prefer a brand-name item when shopping. You prefer the taste of a certain product, and the brand name is only a few dollars more. It won’t kill your budget to make that purchase. However, you still want to cut brands when possible.

Reason #5: You Try to Have Financial Wisdom but It Backfires

Some people take grocery shopping extremely seriously. Couponing has increased in popularity, especially in a weakened economy. However, mismanagement of your coupons can cost you more in the long run.

Oftentimes it happens if you research the prices of products and find three different good deals at three different stores. For example, if you drive to different stores because you see that chicken is $1 cheaper at one store, the sauce is $.32 cheaper at another, and garlic is $.06 at the third.

In theory, it would make sense to go to the spots with more affordable pricing. However, that isn’t always the case. Even after visiting three different locations to save $1.38, you could have spent more than that on the cost of gas.

Another example is being frugal with little parts of your life. It doesn’t make financial sense if you buy one-ply toilet paper because it’s cheaper but spend $200 a week on going to the bar.

What Can You Do?

Think grand scheme. You want to think about your money holistically instead of in small increments. While it is great to save on little items, only do so when it makes sense!

Reason #6: You Can Save Holistically but Fall Short with Small Purchases

This is reason #5 but reversed. You may find that you approach savings as a whole just fine. You have affordable housing, an affordable car, a great phone plan, etc. However, you may stop for coffee every morning, or get some snacks when you get gas or buy extra items at the grocery store that you don’t need.

Regardless, you could be your money’s own worst enemy.

What Can You Do?

The first step is to be cognizant of your spending patterns. If you see that you are constantly making little purchases, try to become aware. You can address the issue after you can identify that bad spending patterns.

Self-restraint is key here. When you feel like you want to add items at the end of your purchase at the grocery store, you need to remind yourself to follow your list.

If you want to stop and buy coffee every morning, it may make sense to buy a coffee maker for your home. Even though it may be a higher purchase initially, it will eliminate the need to continue to stop every morning.

Cutting variable expenses completely isn’t recommended either. You want to allow yourself to spend the money that you worked hard to get. That is why you should set yourself an allowance every week. Based on your budget, set some money aside. You can then use this money on whatever you want. It is the responsible way to spend!

Reason #7: You have a Lack of Organization

Organization is key for proper financial management. You could be broke if these skills aren’t up to par. For example, you get a late payment notification for a bill. You could’ve sworn you paid that! However, due to a lack of organization, you ended up missing the payment. Since you thought you paid the bill, you spent your bill money on unnecessary items. Missed payments not only affect your credit but could be a contributing factor to how broke you are.

What Can You Do?

Get your life together and organized! Get a planner. You can easily write down all of the bills you need to be responsible for. You can also use this planner as a tool to organize all other aspects of your life.

Now that you have a planner, set up automatic bill payments and write down when they will be taken out of your account. You can then check to see the posted transaction. It can be a daunting task to organize your life, but you will be grateful that you did.

Reason #8: You can’t Rip the Bandaid Off

Ignorance is bliss, right? Well not necessarily. It may mean emotional bliss if you are too nervous to take an honest look at your finances. However, it could equally mean a lack of financial bliss. You will never know until you look. Being critical of yourself and your spending habits may not be easy. However, it is completely manageable!

What Can You Do?

Dealing with finances can be scary. However, it’s a part of life. You need to understand why you feel so apprehensive when it comes to your finances. If you can’t figure out why you still need to figure how you can overcome that obstacle. Rip the bandaid off and gain financial insight!

Reason #9: You Spend the Money Before You Get It

Some people have the financial mindset of someone who is in a higher tax bracket. This means that money they don’t have is spent before it is earned. There is a lot wrong with spending your expected earnings, especially before you get that money.

You not only run the risk of spending money that you don’t end up earning, but that risk could lead to many avenues of financial ruin. Do not run up your credit card spending funds that you do not have!

What Can You Do?

While it may seem like common sense…don’t spend money you don’t have! Treat your money seriously. If you do not have the funds in your account, don’t try to spend the money, especially with a credit card. You don’t have the funds to pay it back!

Reason #10: Too Much Driving

There is a difference between necessary driving and unnecessary driving. Sometimes a distance may be walkable, or you may just feel like going on a drive to clear your head. While it may not seem like driving a lot could hurt your finances, the cost can add up. Besides there being a gas shortage in some parts of the country, it can be expensive to constantly paying for gas.

What Can You Do?

If you find yourself driving more than you need to, figure out ways to avoid it. Instead of taking a long drive to clear your head, take a walk or do some yoga at home. Maybe buy a bike. You could also try keeping track of all the drives for the week so that you can plan when you will be driving!

Reason #11: Sales are Your Weakness

There is a lot of human psychology behind sales. For example, odd number pricing. When an item is marked at $99.99 instead of $100, it seems cheaper, when in reality it’s only a penny less than the asking price. This is a marketing technique used to target shoppers to encourage them to spend money. The same psychology applies to all different types of sales.

A good sale is hard to resist. So much so that you may come across one that is a great deal on a product you don’t need, that you will still buy! It is important to remember that a good deal on a product you weren’t going to buy, is not actually a good deal. Spending money where you normally wouldn’t have just because it is less money than you could have spent makes no sense.

What Can You Do?

The only thing you can do is be critical of your purchases. If you come across a good sale, you need to ask yourself, “Do I really need this?” Figure out when you will use it, why you would need it, and see if you have your allowance money available for the purchase. When you take these aspects into consideration, you may find that it is easier to ignore sales, even if they are a good deal.

Reason #12: It’s Either Black or White, There is No Grey Area

Sometimes people could be on a great path towards financial prosperity but then hit a wall. They may mess up within their budget and this could trigger an all-or-nothing response. Just because you made a mistake on your budget, doesn’t mean you need to blow your savings and give up on all the hard work you accomplished!

What Can You Do?

Humans make mistakes. It happens. You need to be forgiving to yourself. It doesn’t need to be the end of the world if you accidentally buy a coffee one morning when you run out of allowance money. Make sure to not feel defeated. If you find yourself feeling defeated after a mistake where you want to spend a lot of money, put card controls on your account! You can even freeze your account if you don’t think you have the willpower to not spend a lot of money.

Reason #13: You Lack an Emergency Fund

One of the keys to personal finance is having an adequate emergency fund.  The goal of your fund is to cover three to six months’ worth of expenses. This provides you a cushion in cases of the unexpected. When you don’t have an emergency cushion you could be in for financial ruin in cases of devastating events.

What Can You Do?

Saving can be hard. That is why with a proper budget, you will be able to see how much money you could save a month. These monthly savings will go towards your emergency fund. You will be able to get a timeline that, if everything goes according to plan, could get you the savings fund you need to handle some of the worst situations that you could encounter.

Once you reach your goal of six months’ worth of expenses, keep going! You can never save too much and the more money in your savings account then the better off you are.

Overall

There are numerous reasons that someone could be broke. These are just some of the common ways that people find themselves falling victim to a lack of funds. Everyone is unique in their situation. That is why you need to be self-critical in order to find ways to handle how broke you are.

What Do You Do When You are Completely Broke?

If you are completely broke and still struggling to figure out ways to manage your money then seek the help of a professional. There are specialists available that can help you properly manage your finances! Sometimes a problem may be too big and complex for you to handle on your own and that’s okay.

References:

  • Entis, Laura. “How to Spend Money to Squeeze More Joy out of Life.” Vox, Vox, 13 Nov. 2019, www.vox.com/the-highlight/2019/11/13/20951937/money-experiences-buy-happiness-happy-how-to-spend.
  • “Gas Shortage Hits DC, Eases in Southeast – CNN Video.” CNN, Cable News Network, 15 May 2021, www.cnn.com/videos/tv/2021/05/14/exp-tsr-todd-gas-shortage-hits-dc-eases-in-southeast.cnn.
  • VanSomeren, Lindsay. “How Big Should Your Emergency Fund Be?” The Balance, 27 Sept. 2020, www.thebalance.com/is-your-emergency-fund-too-big-4142617.
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