7 Habits of Perpetually Broke People
There are habits that the perpetually broke people share. 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 continue in your bad money habits, you may end up broke and unable to reach your financial goals. Here are seven habits of perpetually broke people. If you can break them, you could find yourself with more financial freedom!
Never Follows a Budget
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 who do not like to budget think that things will work themselves out and that eventually things will be okay. The truth is that unless you set and follow limits, you can always spend more than what you earn. You need to take control of your finances and the key is your budget.
Spends Too Much on Disposables
Another problem that many people have is spending too much on things that are not necessary. Everyone should have a little bit of fun money, but if the majority of your money is spent on things that do not accumulate in value, you will not change your situation. This can be everything from spending too much on video games, shoes or eating out every day. If you can stop wasting money and set strict limits on what you can spend each month, you can find extra money to reach your financial goals. Small steps to stop the spending can make a difference. Just make a goal to stop eating out or set a limit on other spending and you will be able to change your situation.
Doesn’t Plan for Emergencies
If you are not prepared for the little financial emergencies in your life, then every little thing can cause serious setbacks. An emergency fund is a great way to handle emergencies. Set aside money to cover things like car repairs and medical bills. Once you are out of debt, you can save up enough to cover all of your expenses in the event that you lose your job or have another situation where you are unable to work. This also helps prevent you from adding more money to your credits and increasing the amount that you end up paying in interest.
Lacks a Clear Financial Plan
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 prioritizes your savings and determine which goals you need to work on next. Your financial plan is like a map for your 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 the goals that you have set for yourself.
Does Not Set Financial Goals
Budgeting and saving money can be 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. The goals may not be achievable because the timeline is not realistic. 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. They should fit in with your financial plan.
Spends Money as Soon as They Get It
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 this. 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. If you can 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.
Carries Balances on Credit Cards
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. Until you what you pay in interest will outweigh the interest you are earning on your savings.