This is Why You’re Broke and Poor (and How to Fix it)
Did you know that a third of all Americans who are making over $70,000 a year are living paycheck to paycheck? The average American is almost $40,000 in debt – with the average credit card debt at about $7,000 a person. Or more. Over 40% of all Americans carry credit card debt from one month over to the next. And many wonder why they’re always broke and poor. The truth is, many of us need significant help with money management skills.
Broke and Poor: Where Money Management Comes In
Inefficient money management skills are also a learned mindset that can, and should, be unlearned. I am not making value judgments against you if you are reading this article. I had the very same problems until I took a serious look at how I spend and save money. We exhibit a lot of bad habits subconsciously.
We can only change bad habits once we realize and accept ownership of them. Are you always broke? In need of money? Or, can’t keep any money long-term once you are paid? If you always find yourself in need of money, there usually isn’t one reason for it. There are usually several reasons for it.
Spending More Money Than You Generate
Work on living below your means. Develop budgets to track and calculate how much you spend against your income every day, week and month. Eat out as little as possible. You may be spending up to 70% more dining out or ordering food against cooking at home.
There are many ways you can spend less money. Stop buying name brand products (you are just paying for the brand anyway). Do you drive everywhere instead of prioritizing where you can walk? Figure out where your money goes every month and make applicable course corrections. You might be surprised to learn what you are wasting money on and can ultimately do without.
Not Saving As Much As You Can
Try to save 20%, 10% or even 5% of the money you bring in every month. Every little bit helps. And, saving helps you adjust your mindset from spending to saving. Do you spend every dollar that you earn? Reverse that kind of thinking. Save every dollar that you can. Become ambitious enough to create a savings plan, open a savings account, and add to it whenever possible. This habit will not only help you now, but it can also make a huge difference in your lifestyle in retirement.
Not Thinking About the Future
Sacrificing and saving for the future isn’t fun. If you are impulsive and must have what you want exactly when you want, then you’ll likely find yourself broke and poor often. Adjust your mindset to begin thinking about recurring expenses in the future and the need to plan for them today. This includes expenses like your rent, a vacation, utility bills or even some other major purchase.
When you spend all of your money today, you won’t have enough in the future when you really need it. This was a hard lesson I had to learn on my own as well. Don’t beat yourself up – learning is a lifelong process. Poverty is real. Lack of opportunity is real in this country. But if you have an income, no matter how meager, change your habits now. If you have an income, opposed to someone without any income, being broke is truly a mindset.
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Allen Francis is a full-time writer, prolific comic book investor and author of The Casual’s Guide: Why You Should Get Into Comic Book Investing. Allen holds a BA degree from Marymount Manhattan College. Before becoming a writer Allen was an academic advisor, librarian, and college adjunct for many years. Allen is an advocate of best personal financial practices including saving and investing in your own small business.