Does it always seem like there’s too much month at the end of the money? ‘Why am I broke all the time?’ is probably a question you often find yourself asking.

According to a Highland Solutions survey, 64% of Millenials live paycheck to paycheck. 67% of the respondents say they regret not having an emergency fund before the pandemic.  

Being broke is a vicious cycle many people are looping around. In this article, I’ll give you 10 reasons why you’re broke and how to break the cycle. 

why am I broke all the time?

1. You’re thinking small.

Yes, you read that right: you’re thinking small.

You’re thinking about how you’ll pay next month’s rent instead of how you can own a home. Or about buying the latest iPhone(that you don’t really need) instead of building an emergency fund. 

Or, you’re thinking about treating yourself to a fancy dinner instead of paying down your debt. 

Worse still, you’re thinking of buying that brand new car – that will depreciate 15% the minute you step out of the dealership – instead of maximizing your employer’s 401k match or investing in an index fund. 

The minute you start thinking big, you’ll do anything it takes to achieve your greatest dreams.

2. You don’t have financial goals.

One of the reasons you are broke all the time is that you don’t have financial goals. When you don’t have a goal to work towards, it becomes easy to overspend and difficult to stick to a budget. 

Find yourself some ambitious goals to get you started. Concrete goals will keep you focused and motivated to stick to that budget. You’ll constantly be aware that you will not achieve your goal if you overspend or buy unnecessary things. 

Here are a few examples of goals you can set for yourself:

  1. Build a 6-month emergency fund.
  2. Pay off your debt in 2 years.
  3. Save towards a home down payment
  4. Create a retirement plan and start saving
  5. Invest $1000 into the stock market every month

If you’re not sure how to go about it, check out this article on how to set and achieve any financial goal in 4 easy steps

3. You don’t know how much you earn.

You are unaware of deductions and withholdings taken out of your paycheck before you receive it. 

There’s a difference between gross income and net income. Gross income is your total salary or your hourly wage. But thanks to taxes, pension, social insurance, etc., the amount of money you take home at the end of the month is less than the amount you negotiated with your employer. Your ‘take-home pay’, after the deductions, is your net income. 

It’s crucial to know your take-home pay. It helps you to be realistic about how much you actually have to spend. Take one of your payslips and have a look. You might even discover some deductions that can be reduced or eliminated.

4. You don’t know how much you spend.

The problem is not how much you earn; the problem is that you underestimate how much you spend. 

To be fair, overspending is very common. Nowadays, it’s extremely easy to swipe your credit card to pay for all manner of things. Actually, it’s become so easy that many people are spending mindlessly without pausing to consider how all these little expenditures add up to big bucks. 

It’s almost impossible to know where you’re overspending if you aren’t keeping track. If you stopped to check where you’re spending every dollar, you’d realize how much you’ve been wasting on things you don’t need. 

Tracking shows you the bigger picture and helps you identify areas to cut back–areas that don’t include the things you love. It also helps you stick to your budget.

Related read: How to Gain Control of Your Spending in 3 Simple Steps.

5. You don’t have a budget.

You don’t have a plan for your money. This is the most probable reason why you’re broke all the time. You hope that money will sort itself out. Life doesn’t work this way. If you want something, you’ve got to work for it.

To many, budgeting is difficult to stick to and outright boring. The good news is technology has made budgeting extremely easy.

Tracking apps like Mint and YNAB have made it convenient to keep track of your spending. They allow you to link your checking account and credit cards and notify you how much you’re spending on specific categories. 

You can even set the maximum amount you’d like to spend on each category and get notified when you overspend. 

Even though budgeting seems like a bother, you owe it to yourself to maintain one to avoid ruining your life. 

Creating a budget and sticking to it ensures that you’re spending reasonably to avoid getting deep into debt, not to mention how valuable it can be in helping you achieve your financial goals. 

Related read: 6 Budgeting Tips That Really Work.

6. You’re not disciplined.

Let’s say you know how much you earn, already have a budget but are still broke all the time.

The reason you’re broke could be that you’re not disciplined enough. 

You’re splurging your money and not sticking to your budget. You can’t say no to unnecessary spending pressure, whether from yourself, friends, or family. 

Granted, sticking to a budget is not easy. However, there’s no reason not to use a tracking app to set notifications for when you’re close to exhausting your budgeted money. 

7. You’re not taking responsibility

You are blaming others for all your money woes. 

This is a common reason why many people are always broke. They perpetually find someone to put the blame on. It’s either their parents’ fault, the college they attended, or their partner’s fault.

While they may have a role to play, you can’t blame them forever. You have to accept your responsibility and take control of your money. 

Here are the steps towards taking responsibility of your money: 

  1. You need to own your financial situation.
  2. Assess it to find where you might be going wrong
  3. Dominate it. Money shouldn’t dictate your life; it should work for you.

8. You’re comparing yourself to others

You’re trying to maintain the expensive lifestyle that your friends and other influencers portray on social media. 

Trying to keep up with the Joneses–or the Kardashians– is likely why you’re broke all the time.

Social media does an excellent job at highlighting the best parts of people’s lives but a terrible job showing at what cost. The friends you see on social media with exciting lives are certainly not rich or well off. Successful people’s lives are usually dull and mundane due to productive routines and habits that they set for themselves.

Don’t be pressured into a lifestyle that you can’t afford. Spend your time focusing on creating the life you want and actually working hard at it. 

To quote Dave Ramsey, ‘If you live like no one else, later, you can live like no one else.’ 

9. You’re only making minimum payments towards your debt

You’re not paying enough attention to your debt and are only making the minimum possible payments. 

The problem with debt is interest. For every dollar you owe, you are paying more in interest. While not all debt is bad, you want to keep your interest rates as low as possible.

To aggressively deal with debt, you need to reduce your expenses and/or increase your income. Create a repayment plan and use any extra money to pay off the debt with the highest interest rate first. 

10. You have bad habits

You have some terrible and expensive habits that are difficult to break.

For instance, you are lazy at making cheap homemade meals and are having take-out every other evening.

You smoke a full pack of cigarettes every two days or drink 5 bottles of wine every week. If this is you, ask no more why you’re broke. This is the reason why you’re broke all the time.

You drive your car everywhere. For this, here’s a quick tip: you can leave your car outside the city at a free parking place and take public transport into the city. This will save you a lot on parking fees and gas that you’d use up in the city’s traffic.

You put everything on your credit card. While credit cards are beneficial tools to build creditworthiness, credit card debt can be challenging to pay off. The best strategy is to pay it off in full every month. 

Final Thoughts

Does any of the above reasons resonate with you? The good news is you don’t have to stay broke forever. You can figure this out. Most people make excuses for their lack of money; don’t take that route. Take responsibility for your financial situation and start making changes to your lifestyle as soon as today, latest, tomorrow. 

If you’re unsure where to start, check out these articles:

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