We always come across some friends in our lives who always seem to be broke. Although they have an income that is enough to live a hassle-free life, they often find themselves miserably broke. They do not have a single penny in their name, nor do they have any clue why they are in such a situation. The actual problem is not with their income, it’s with some of their habits. Broke people practice some toxic habits that hold them back from somehow making ends meet let alone being financially successful and building wealth. If you dream to be financially successful and build real wealth in your life, you must avoid practicing these habits.
In this article, I have listed 7 such bad habits of poor and broke people that make and perpetually keep people broke.
Habit #1: Spending too Much Money on Things That Depreciate
Some things are worth spending money on as they will appreciate over time, like your home, gold, stock market funds, etc. While some things will depreciate in value from the moment you purchase them, like your car, your latest smartphone, clothing, etc. Broke people always tend to spend money on items that depreciate instead of those that appreciate. For those who don’t know about depreciation, depreciation means diminishing in value over time.
Broke people would rather buy a new car that depreciates as soon as they drive off the lot instead of putting that money on a down payment toward a house. They are happy looking good dressed from head to toe even if they don’t have a single penny in their pocket. Or, they find it more pleasant to show off their latest iPhone in front of their friends which depreciates as soon as they purchase it rather than investing that money in the Apple stock market that can help them build real wealth.
Habit #2: Showing off and Always Trying to Keep up with Your Neighbors
Broke and poor people care too much about what others think about them. They sometimes make dumb purchases that they neither really need nor they can afford. If you ask them why they bought it. They would reply that one of their neighbors or friends bought that last week. They end up spending even more money on other accessories to keep up with the Joneses.
They buy a nicer car, more expensive clothing, shoes, handbags, etc. just because they want to impress others whom they probably don’t like or they don’t care about. But when it comes to paying bills, buying groceries, and other financial emergencies, they run out of money and seek help from their friends and family or pay interest for months. Broke people often are broke because they would rather have others think they are wealthier than they actually are.
Habit #3: Relying Too Much on Credit Cards
Broke and poor people can’t wait for delayed gratification. If they want something, they want it now although they don’t have enough money for that. They would never wait and save money for something they want. They spend everything they make and don’t save a single penny for tomorrow. What’s worse they spend more than they make which forces them into debt to maintain their standard of living.
Credit card is broke people’s best friend.
They resort to the use of a credit card to meet their monthly living expenses. They tend to pay interest rather than earn it. They just put it on the credit card until it maxed. But the reality is the interest rates are so high that unless they make an effort to pay them off, they could remain in credit card debt forever. Credit card debt is the worst enemy for financial success and it’s one of the biggest reasons why so many people go broke.
Habit #4: Spending Money as Soon as You Get It
Poor people live from paycheck to paycheck. They constantly scramble to make ends meet and are never left with enough money to cover the necessary overheads or run out of things that they need each month due to their poor spending habit.
As they don’t save money, they have to incur significant financial crises until they receive their next paycheck. As soon as they receive their next paycheck, they spend the majority of their money. They rush to the stores the moment they get paid to purchase necessary groceries and accessories.
Habit #5: Buying Lottery Tickets Often
Broke and poor people have a lottery mentality probably because they believe that the only way to get rich is by buying lottery tickets. They hopefully think that if they win the lottery, they’ll buy their dream house, quit their job, and spend the rest of their life in happiness and peace. Even though they know that their chance of winning is slim to nothing, they happily spend their money in the hope of that fantasy.
After a point in time, it becomes an addiction and they’re not reluctant to get into debt for buying lottery tickets. Even worse, some people lose everything they have by falling into the infatuated trap of gambling and spending the rest of their lives in utter poverty.
Habit #6: Blaming Others for Your Own Financial Situation
You may have come across those people who always have excuses and have someone to blame for their misfortune. They are one of those unsuccessful people. Broke people are no exception. They blame others for their financial situation.
They always complain about the economy, their boss, their family, their neighbors, their city, their job, and almost everything and everyone except themselves. Rich people never blame others for their fault. They take responsibility for their own fault and constantly hustle to change their fate.
Habit #7: Not Having Plan for the Future — Today is Everything for You
Broke people don’t prefer to plan for tomorrow because it seems too far away for them. They never do a budget. They forget about budgeting and saving for the future and spend recklessly until their last penny is gone. They believe —Why budget for the future when I can have fun today? They only focus on present needs thinking that the future needs will be somehow met in some way.
But the reality is they actually have no way to bear upcoming expenses and eventually go broke or even worse find themselves in debt. This time they again happily believe that they’ll figure out how to pay the debt some other time and spend like the king!
Key Takeaways
To wrap it all up, here are the core lessons you should always keep in mind if you don’t want to be a broke person:
1. Don’t make a purchase just because one of your neighbors has it. Ask yourself if you really need it or if you can really afford it before you purchase it. Don’t just stupidly imitate others. Be yourself and let not others control your life.
2. Always try to have some investments.
3. Always make financial decisions with future needs in mind.
4. Don’t be in credit card debt. Stop using credit cards and responsibly work on getting out of debt.
5. Never gamble with your money.
6. Always budget for the future and practice the habit of saving so that you don’t need to miserably wait for the next paycheck.
7. Always take responsibility for your own fault and work hard to get rid of financial stress.