Thanks for being here on this page. You have landed on this page, It means you are either broke or want to know the reasons why people are broke.
We all face these problems at a stage of life. In our student life, we always broke all the time. When we start doing the job then also we get broke by paying bills and loans.
A very interesting question always comes to my mind. Why we are broke?
Even though we are investing money in studying, after degree we do the job for whole life but still broke. We never are financially free in our life, until the end. The same story happens in everyone’s life. And why only a few people are super-rich?
All answers I got after reading the book “Rich Dad and Poor Dad” and “Business School” written by Robert T. Kiyosaki.
He tells that our education system or school never teaches us “How to be rich?”, or “How to earn money?” Everyone is in the race of getting good grades and find a safe secure job, but Job can only give you financial security, not financial freedom.
Why the rich get richer?
Robert T. Kiyosaki answered that we network according to our choice such as a Rich network with other rich people, poor network with other poor people and middle class hanging out around other middle class. He also says that, if you want to become rich then make a network with other rich people who can help you to achieve success.
“If you want to be rich, you need to be a business owner and an investor”:- Robert T. Kiyosaki.
The above concern was for Rich and the poor. The broke people mostly come in the middle-class category. Now let’s see why we are broke. We are mainly broke because of our bad habits.
I am listing here some reason which is enough to make us broke. If you want to know then this is the right place for you.
17 Bad habits which make People Broke and Penniless
We all are totally accountable for being broke and it is our responsibility to follow some good habits to get rid of it.
1. Set no Goals
The goal is the most important aspect of life. Without setting a goal, you can’t choose the right path to move forward in life. Goals always give clarity in mind and a clear mind can make the best decision of life.
But how setting a goal can help to not being broke?
Let me explain:- We all get a limited amount of money in a month. We have everything predefined that how and where we should spend this money such as Room rent, electricity bill, loan, debt. After paying all these bills, we save some money for monthly expenditure. These activities happen for a goal, to manage our life properly in that much-limited amount of money.
But if there is no goal, you will spend all your money on irrelevant activities like Shopping, gaming, traveling, partying, Buy expensive things and much more. And within two days you become broke after getting money. These activities everyone does in their student life.
So if you don’t want to be broke then just set a goal for spending money. How and where you should spend, this thing should be always clear in your mind.
2. Always Make Excuses
We always make excuses for our problems. If something will not happen according to our thought and wish then we start making excuses and blame on some external things.
What is the excuse?
An excuse is nothing but a reason to defend yourself from taking responsibility for your own mistakes and postpone to take action. It always prevent us to live our life on full potential. Simply put blame on an external thing for our internal disabilities.
But how this excuse make us broke?
The simple answer is, we always make an excuse if there is no money in our pocket. We say that This is my fate, I am from a poor background, My father doesn’t give me money, I earn less and much more. But the truth is we spend all our money on irrelevant activities. When our pocket is empty then our excuses come to defend us.
This happens because of our mistake of bad management, or not setting a goal to spend, or no savings.
For example:- There is a statistic of 2015, Americans spent $14.6 billion on the book, which is a good thing to invest in yourself to get knowledge but on the other hand, they spent $70 billion in the same year on lottery ticket which is a totally irrelevant investment.
3. Don’t Prioritize Saving that’s why you are Moneyless
Do not save money is an important aspect for people who are broke. You know one thing, How much money do you make it doesn’t matter, but how much you keep that’s the important thing. We don’t bother to save a small amount of money every month because we think that what will I do in this much savings.
But why I am not able to save money?
There are so many reasons but most important is your bad habits for spending money on activities which you can’t afford. This is the biggest problem that holds us back and makes use broke. Because of this, we never going to achieve our financial goals.
My favorite financial Blogger Michelle and her Blog Making Sense of Cents clearly explain about it.
4. Try to Impress Others
This is the most stupid thing which we do in our daily life. We always try to impress others so that we used to buy expensive clothes, watches, shoes, Bike, Car, Mobile and much more. We waste our money on all materialistic things and get broke at the end.
A very funny incident I want to share with you. In my college days, My all roommates were from a good economic background. They get enough money to spend in a month. But all get broke in the first week of the month. The main reason behind this was they just believe in showing off and always try to impress girls. They had no money to eat food but they always roam on an expensive bike and purchase a gift for their girlfriend.
So please, Don’t try to identify yourself with these materialistic things and waste your money. If you have good knowledge, good behavior and you are a good human being then no need to impress others.
5. Poor Spending Habits
Our habits are the most important thing which makes us wealthy or broke, it depends on us.
How is our spending habits poor?
Because we never set our limit on spending money. Our expenditure is more than the monthly earnings. And to fulfill this sometimes we borrow money, use credit cards, take loans and more. These habits of spending money always create debt. And it leads to making us broke. Because our all earning finish in paying borrowed money.
So please don’t borrow money or use credit for expenditure, because you are just spending that money which you never earn, that’s why it makes you broke
6. Don’t Invest in Themselves
Investing is the most important process for a businessman. If you want to become rich you should learn to invest. World top richest persons are good investors like Robert.T Kiyosaki, Warren Buffet and more.
But here I am talking about investing in yourself? And how it makes you broke.?
Life is the process of learning. Every day we learn new things. But we never invest in those things which make us capable to earn more money, such as books, new skills, language and more.
After getting a degree and job we stop learning new things to enhance our skill to make some extra money as a freelancer. At least we should invest in a good book which teaches us good things about life and gives us motivation.
7. Unorganized Finances
Our finances are always unorganized because we lack financial education. We created a debt trap around us by borrowing money or loan or debt. And when we get a salary, all spent on paying only interest every month. Sometimes we use debt to pay off debt which creates a debt trap.
Sometimes we want to get rid of interest and debt, then we pay our all money at once to finish. And we think, other bills we pay next month which also create debt. And we become broke all the time. So please organize your finances in a proper way.
8. Spend more than They Earn
This is the common factor for people who go broke. Our earning is limited but our expenses are unlimited. Our capacity is to make $1000 per month but we spend $1500 per month.
We don’t have the discipline to spend money. The human tendency is to overspend.
But how we spend more, I never observe it?
We earn a limited amount of money but spend more always through our credit cards or borrowed money or loan. You think to pay it from our salary but that is the extra money which you don’t earn but spend. We spend this extra money to support our lifestyle, and that’s why we go broke.
So please avoid to spend money from a credit card or please don’t borrow money if you can’t earn extra.
9. They Own stuff, they can’t afford
This is also the most important factor that people go broke in life. We always try to buy some expensive things in our life or dream about it such as Expensive Bike, Car, Watch, Branded Clothes, iPhone, electronic gadgets, and much more.
Our earning is limited but you always try to adjust yourself after buying these things. We never think before buying, because you can’t resist yourself for buying your dream. To enhance our lifestyle, we buy all the things which make our life simple, but it creates debt and we go broke all the time.
10. Don’t even know how to Invest
This is the most important aspect for those people who make a bad financial decision before investing in the business. You should have a good knowledge of investment otherwise it can create a huge debt trap for you.
So you need to seek a counsel who has already made it and become very successful. Always try to learn from other’s mistakes. Mistakes are a good teacher and show a clear path.
So if you want to make a successful investment then please go outside attained a seminar, find a mentor, make a network with successful people, ask their opinion on your investment, take suggestions and then implement your idea. Always try to read some good books.
11. They have Vices( bad habits)
This is the most embarrassing habits which make people broke. So many people have some vices such as drinking, smoking, gambling and more. They waste a significant amount of their earnings on their bad habits.
Because of this, they suffer from an ill-health condition which also cost money all the time. How stupid process is that First, you waste money in these vices and then you waste money to take care of your health. It means you are losing your money with both hands and they get broke for a lifetime.
I have only one request for this type of person, please leave your bad habits and save your money so you can live your life with dignity.
#12. Abuse Credit Cards
We most of the time abuse credit cards because we have to pay interest every month. We think that they are taking enough interest. But at the time of spending money, we use to pay it by credit card not cash. When they start collecting 36% interest per year then we start abusing them.
A credit card gives us the freedom to pay later so we purchase our groceries, clothes, gas, entertainment and more. But at the time of paying interest, we never had the cash to pay. Because our expenses are unlimited and every day we spent our cash on something. This is the reason why people are broke.
So please make your habit to pay a cash amount for daily expenses and keep a credit card for the only emergency.
13. Didn’t set a budget
If you are not setting your budget and you make a bad budget plan then, of course, you will go broke.
A budget can help you to manage your family expenses according to their needs. If you have a good budget plan then you can easily observe that where you are wasting money and curb them easily. You can fix you all financial issue.
Many people don’t want to set a budget because they can’t spend according to their wishes.
So please face your fear and set a budget to manage your spending and not to go broke. Most people are broke because they don’t set a budget.
14. Always Make Impulse Purchase
This indicates our bad habit of purchasing. When we go for marketing then buy extra things always. Some people have a bad habit to buy clothes every month. Some people have a bad habit to spend money on entertainment every week. Girls have a habit to spend money on makeup. It means their purchasing cycle never ends and they always buy extra thing according to their needs.
This impulse purchasing always lead towards getting broke. Just stop and think, do you really need that much clothes or outside food.
So please if you have this type of habit then please leave this habit to achieve your financial goals.
15. Support too many friends and Relatives
Helping others is a good thing. But you have to control yourself and teach to say no. Because if you are suffering to manage your debts and expenses then it is impossible to support others.
It doesn’t matter how much you earn money but if you support too many friends and relatives then you can never know how much is your income. And if someone will not pay your money when you are in need then, of course, you feel broke and no use of supporting too much to others.
I am not telling to not help others. Only I am saying that you can support but in a limited way and be sure that they can return your money when you need it.
16. Don’t set up an Emergency Fund
This is the most important thing for life. Because life is full of surprises and when it will take a turn we don’t know. But we can control every situation if we have a monetary backup, which means emergency fund. And I recommend everyone to save some money every month.
There are so many types of an emergency such as Health emergency, Losing a job, Car servicing or repair, House repair, any gadgets repair and much more. If we have an emergency fund we can tackle easily but if not then it is so hard. If you don’t have an emergency fund then in a critical situation you will have to borrow money which creates debt and you will be broke at the end.
17. Lack of financial education
Financial education is very important for everyone’s life. I think that in every school and college it should be compulsory to teach. So that we can learn how to save money, how to invest money, how to afford our needs and many more things.
Without financial education, it is very difficult to manage our finances.
A simple solution for this to make network with people who are successful in business, finances, investment and much more. Choose a mentor, read some good books about business, discuss your financial situation. This thing can help you to achieve success.
These 17 reasons are enough to make people broke. If we are not rich and not earning so much money then controlling our bad habits and making and budget plan can give us a decent lifestyle.
A person need is only a house, clothes, food and water. But the human being is greedy by nature. They can never be satisfied. They always try to get more and more and start to make their identity by some materialistic things like mobile, care, bike, television, restaurant dinner and so on. To fulfill these wants they spend all their money and get broke.
The main reason to get broke is that we are not earning enough. Working 24 hours can’t give you extra money. You have to save your time and try to find some passive income ideas. We waste our time is watching Tv and on social media.
Save your time and try to find some passive income idea then you will become rich and debt-free.
You can be financially free and enjoy your life at fullest only with an additional income source.
Warren Buffet says, ”If you don’t find a way to make money while you sleep, you are going to work until you die”.
So, friends, that’s all from my side, if you have other reasons which can tell us why so many people go broke then please let us know in the comment box.
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