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!
1) 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.
2) 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. Do you really need another pair of shoes or do you just want one………….?
3) Doesn’t Plan For Emergencies
If you are not prepared for the financial emergencies in your life, then every little thing can cause serious setbacks. An emergency fund is a great way to handle this. 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 credit (debt!) and increasing the amount that you end up paying in interest. A “rule of thumb” is three months’ living expenses as a minimum.
4) Lacks A Clear Financial Plan
People who are always broke never seem to have one of these. 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 prioritise your savings and determine which goals you need to work on next. Your financial plan is like a map for your life and can help you determine the direction you need to be going for the next step of your plan. An Independent 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, by illuminating targets you need to attain along the way.
5) Does Not Set Financial Targets
Budgeting and saving money can be pointless if you do not have clear goals that you are ultimately working towards. Financial goals and financial planning go hand in hand. People who always seem to be broke do either do not set targets/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 targets with a clear timeline. The targets 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.
6) Spends Money As Soon As They Get It
Are you someone who rushes to the mall the minute you get paid? Does money burn a hole in your pocket? Many broke people spend the majority of their money as soon as they get it. This may be because they are truly living from paycheque to paycheque and have run out of food and need to head to the shops. If you can save money each paycheque 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 – simples!
7) 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 do, what you pay in interest will outweigh the interest you are earning on your savings/investments normally. To those that do this, I say “thank you” because it means MY credit card charges me nothing – because the credit card companies get more than enough from you, to give me a free service!
Do you want not want to be poor in the future? Please contact me for help.
00971 50 8769035