7 Habits of Perpetually Broke People

The way you handle your money on a daily basis is a big factor in how successful you are in building wealth. If you are careful and budget, you can build real wealth. On the other hand, if you practice bad money habits, you may end up broke and unable to reach your financial goals. Here are seven habits of perpetually broke people. 

01
Never Follows a Budget

Frustrated woman paying bills
Tom Merton / Getty Images

The perpetually broke never seem to master that art of budgeting. A budget is your strongest tool in getting control of your finances. It helps you determine how much to spend on different categories. It gives you the power to start saving or to pay down debt.

Many people don't enjoy budgeting or think that things will eventually work themselves out. But the truth is, everyone (no matter how much money they earn) should follow a budget. Unless you set and follow limits, you can always spend more than what you earn. 

02
Spends Too Much on Discretionary Purchases

Smiling shop owner helping customer with purchase
Thomas Barwick / Getty Images

Everyone should have a little bit of fun money, but if the majority of your money is spent on discretionary purchases, you may find yourself becoming perpetually spread thin financially, or even unable to pay your bills

This can include spending too much on video games, shoes or eating out. Small steps to cut back on this unnecessary spending can make a big difference. Just make a goal to stop eating out or set a limit on how much you can spend each month on clothing and you may be able to change your situation.

03
Doesn’t Plan for Emergencies

Man standing near a broke down car.
Jordan Siemens / Getty Images

If you are not prepared for the inevitable financial emergencies in your life, then they have the potential to cause serious financial setbacks. 

That's why you need an emergency fund. An emergency fund is a savings account with 3-6 months of living expenses saved, in order to cover you in the case of an unexpected job loss, car repair, or medical issue. 

Having an emergency fund helps prevent you from going further into debt by relying on your credit cards to cover an unexpected emergency. 

04
Lacks a Clear Financial Plan

Couple talking to financial advisor in living room
Hero Images / Getty Images

People who are always broke never seem to have a clear financial plan. It is similar to going hiking without a clear map or route to follow. You may end up seeing some pretty things, but you are just as likely to get lost and never reach your destination. 

Although you may not end up following your financial plan perfectly, it can still help you prioritize your goals. It's like a map for your financial life and it can help you determine the direction you need to be going for the next step of your plan.  A financial adviser can help you fine-tune the plan and determine the best investments to help you reach your long-term goals. 

05
Does Not Set Financial Goals

Close up of savings jars with money
JGI/Jamie Grill / Getty Images

Budgeting and saving money can feel pointless if you do not have clear goals that you are working toward.

Financial goals and financial planning go hand-in-hand. People who always seem to be broke do either do not set goals or lack the follow through to make them happen.

If you want to change your situation, you need to set reasonable goals with a clear timeline. The goals may be basic steps like getting out of debt or saving up for a down payment on a home. 

06
Spends Money as Soon as They Get It

Woman carrying shopping bags in shopping mall
Dan Dalton / Getty Images

Are you someone who rushes to the store the minute you get paid? Does money burn a hole in your pocket? Many broke people spend the majority of the money as soon as they get it.

This may be because they are truly living from paycheck to paycheck and have run out of groceries and need to head to the store, or could be due to poor spending habits. 

However, if you can train yourself to save money each paycheck and balance your additional spending, you will be in a much better position financially. The key to doing this is your budget and controlling your spending. 

07
Carries Balances on Credit Cards

Young male artist with credit card and laptop shopping online
Hero Images / Getty Images

Broke people tend to pay interest rather than earn it. They may be near the limit on their credit cards and tend to carry a balance each month.

If you are carrying a balance each month and paying interest, you will not begin to build wealth. It is essential that you stop using your credit cards and work on getting out of debt.

Updated by Rachel Morgan Cautero