In this post, you will find out the main reasons why you are broke and how to turn things around.
We live in one of the most prosperous times in human history with technological advancements and information overload.
However, majority of the population are living paycheck to paycheck and are broke.
If you find yourself in this situation, don’t beat yourself up, because you are part of a vast majority of the population in the same predicament.
Here Are The Main Reasons Why You Are Broke
- Lack of financial education.
- Lack of discipline.
- The pursuit of instant gratification.
- Having a consumer mindset.
- Adhering to old paradigms.
- Trying to impress people.
Lack Of Financial Education
It’s unfortunate that most people lack financial education.
Financial education is not taught in schools and most families don’t invest the time and effort to educate themselves on financial matters.
This is one of the main reasons why you are broke.
Financial education or financial literacy is the bedrock for achieving financial security and freedom.
In order to stop the madness and get on the right track, you must invest your time and enough in educating yourself on everything financial.
From budgeting to investing, you must make a decision starting today to get financially savvy.
Read books on personal finance, do google searches on personal finance, and go on YouTube to search for topics on finance.
This should be your first steps on getting out of your financial situation.
Lack Of Discipline
The next reason why you are broke is due to lack of discipline.
In order to achieve financial security/freedom, you must be disciplined with you finances.
Most of us lack self discipline and as such struggle with our finances and remain broke.
Having discipline means you create a monthly spending plan or budget and stick to it.
You must resist temptation of impulse purchases and marketing tactics from retailers.
By creating and sticking to a budget, you will develop a great habit and stay disciplined with your finances.
The Pursuit Of Instant Gratification
Yes, this is a big one.
We are bombarded today by advertising and marketing messages on the latest products and services.
In addition, social media platforms are now the main source of the distraction and marketing strategies.
Due to the availability of easy credit, it’s very easy to purchase things due to impulse without giving a second thought.
We see the latest shoe, hand bag, smart phone etc, I feel we must have this item now.
If you do not want to stay broke, you must learn to delay gratification.
Having A Consumer Mindset
Having a consumer mindset also ties into pursuing instant gratification.
Most of us are consumers and because of this mindset, we are leveraging credit cards and other debt instruments to fund our lifestyles.
This is another reason why you are broke.
I am not implying that you shouldn’t buy things, however, every purchase you make should be planned.
As soon as you let go of your consumer mindset, you will see purchases differently and make smart decisions with your money.
Adhering To Old Paradigms
Adhering to old paradigms is another reason why you are broke.
Because everyone is in debt doesn’t mean you too should be in debt.
If everyone is jumping off a cliff without a parachute, does that mean you should do the same?
You must change your mindset and think differently when it comes to your finances.
Do not follow the crowd but do things differently.
There is a reason why the wealthy act poor and the middle-class and the poor act rich.
The wealthy have mastered the art of finance and that is why they are wealthy.
They invest their money in income producing assets while the rest of us invest our money in depreciating assets such as cars, boats, etc.
Change your paradigm and you will change your life.
Trying To Impress People
The truth of the matter is that at the end of the day, nobody cares how big your house is, how expensive your car is, how expensive your clothes are, etc.
Most people try to impress their friends and family by over extending themselves with big purchases.
You may fool people with your so called rich lifestyle, but this comes at a price to your finances.
There are cases of individuals earning 6 or 7 figures income but yet live paycheck to paycheck.
It call comes down to living beyond your means and investing in income producing assets.
If you can afford things, then by no means go ahead and purchase them.
Remember that all purchases you make must be planned without having an adverse impact on your finances.