By Derek, Life and My Finances
Do you ever wonder, “Why does it always seem like I don’t have any money?” Many people believe it’s because they don’t have enough money coming in, but this is hardly ever the case (and in fact, did not make my top 13). Nope, there are many other reasons why you’re always broke and all of them have to do with either your actions or your mentality. It’s as simple as that.
Man holding open empty wallet. (Photo by H. Armstrong Roberts/Retrofile/Getty Images)
#1. You’re always broke because you aren’t putting money away first
Many people choose to pay their bills, buy a few fun things, and then think about putting some money into savings at the end of the month. Well guess what? If you wait until the end of the month to save, then it is quite likely that there will be nothing left to put into savings! We humans have an uncanny ability to spend all of the money that we have. Fill out your direct deposit forms again and choose to put 10% or more into a separate account from the start. Chances are that you will not need this money at the end of the month and you have successfully begun saving.
#2. You’re always broke because you buy and sell stock frequently
There are quite a few cocky people in this world that believe they can beat the market by buying and selling single stocks in a short time-frame. In their minds, they are sophisticated investors that believe they know more about the market then the average investor and can therefore profit on everyone else’s stupidity. In reality, these “day traders” are the morons that only average about 6% earnings in the market, while the rest of us earn 10% by investing passively in a well-established index fund. Trading individual stocks for life is a great way to stay broke.
#3. You’re always broke because you keep buying too much house
There is always that allure of the perfect house that you’ve always wanted. Since your bank said you can afford it, you buy it. However, the monthly payments are almost more than you can handle. So, everyday you plod off to work just so you can afford that lousy house payment for the next 30 years. This house is keeping you broke.
#4. You’re always broke because you like an extravagant lifestyle
It certainly is fun to live an extravagant lifestyle – always going to parties, out to eat, and on vacations that make all of your friends jealous – but it definitely comes with a price. Living extravagantly will keep your cash flow low (especially if you are purchasing these experiences on credit) and will keep you broke for a very long time.
#5. You’re always broke because you borrow from your 401(k)
For some reason, there are some people out there that think it is sophisticated to borrow money from your 401(k) rather than the bank. Sure, you don’t have to pay interest on this money, but it can get you into a whole mess of trouble. If you get fired, want to switch jobs, or feel like you have to quit, then your loan from your 401(k) is immediately due back in your account. And, if you are borrowing $10,000 or more, you likely don’t have this cash sitting around. So, you’ll have to start paying withdrawal penalties. Please, just leave your money in your 401(k).
#6. You’re always broke because you’re not watching your pennies
I know buying a soda or coffee here and there seems like no big deal, but when you do it every day it can really add up – especially when you factor these expenses up over a lifetime. Watch your pennies and you’ll notice that you might not be as broke as you thought you were.
#7. You’re always broke because you’re not watching your dollars
If it’s possible to go broke on the small stuff, then it is certainly possible to go broke by purchasing larger items. When you need another car, you don’t necessarily need a brand new top of the line model. Be smart with your big purchases. Buy a car that is four years old or more. It will still be quite dependable and will get you from point A to point B.
Read the full article by Derek from Life and My Finances.
