5 Habits That Are Keeping You Broke

5 Habits That Are Keeping You Broke

Building wealth is not impossible. In fact, many people have done it, not just a rare few. If you have good financial habits, you can do it, too. However, practicing bad money habits leads to the opposite: you will remain broke and never reach your financial goals. Check yourself and stay clear of these five habits perpetually broke people keep.

1. Disregarding budgeting

Everyone should follow a budget, no matter how much money you earn. Setting limits and following them is the fastest way to build wealth. It helps you determine how much to spend on different categories, how much to save, and how much you need to pay down debt. Failing to budget is a one-way ticket to being broke all the time.

2. Too much discretionary spending

There is nothing wrong with having fun with your money, but if the majority of it is spent on discretionary purchases, then you may be spreading yourself thin. Cut back on unnecessary spending and see the big improvement in your wallet. Try to lessen eating out or set a limit on shopping every month. These small steps will already make an impact.

3. Not preparing for emergencies

Unexpected emergencies can cause serious financial setbacks. That is why you need to set up an emergency fund. Save up to six months of your living expenses and cover yourself in case of the unexpected. Do not be like the perpetually broke who turn to debt every time an emergency comes up.

4. Not having a clear financial plan

You will never get anywhere without a clear plan. You will only lose your money and never reach your goals. Write a financial plan and prioritize your goals. Use it as a guide to direct your actions and keep you focused. Look at investments that will help you build real wealth for the long-term.

5.  Not having financial goals

Financial planning and financial goals go together. Without them, budgeting and saving money can feel pointless. This is why people who are always broke fail to change their situation. They have nothing to aim for. So set reasonable goals with a clear timeline. Act and make your dreams come true!

Ian Schindler