Are you tired of constantly having to worry about money and being broke? Understanding why you constantly don’t have money is the best way for you to take action and change your habits. Here are seven reasons why you’re broke and how to fix them:

1) You Spend Beyond Your Means

Have you ever thought “if only I earned x dollars more, I wouldn’t be broke”? If you live beyond your means, you could be earning 50,000 dollars more each month and you’d still be broke – it’s simple math. Even spending the exact same amount you earn, therefore breaking even, is counterproductive. It is crucial for you to live a little bit below your means so that you have some spare money and by the end of the month, and as a consequence be more financially stable.

2) You Don’t Make Enough Money

Do you feel like you’re doing your best, trying to cut costs and not spending it on unnecessary things and still feel like you’re broke? The reason why this could be happening is that you don’t make enough money to cover your basic expenses. You could fix the issue by working extra hours or finding a side-hustle. 

3) You Don’t Have an Emergency Fund 

It’s essential to be prepared in case of job loss or unexpected expenses. If you don’t have an emergency fund, you’re more likely to ask for a loan after loan to cover an emergency, making you even more broke. An emergency fund consists of three to six months of your monthly costs saved in a low-risk, high liquidity, investment, such as a high-yield savings account. You can start small by saving at least 10% of your income each month and put towards your rainy day fund. 

4) You Don’t Have a Budget

Are you familiar with the situation of spending a few bucks on a cup of coffee, transportation, take out dinners every other day, thinking it won’t be that much and get shocked when you get a huge credit bill at the end of the month? Spending your money without thinking about it is probably why you’re always broke. If you want to change this, you’ll need to track and allocate every dollar you receive. There are many budgets you can follow, but the most known and straightforward one is the 50/30/20 budget.

5) You’re an Impulse Shopper

Do you frequently buy things you don’t need and regret later? You might be an impulse shopper. Impulse shoppers usually buy something to make them feel happy, or because they’re anxious. In that case, treating your mental health is absolutely necessary for your well-being and also for your personal finance. There are some techniques you can use to stop this bad habit, such as always buying with a shopping list, waiting for 24 hours to buy something, only going shopping when you’re feeling emotionally well.

6) Your Fixed Expenses Are Too High

Do you have recurring expenses such as rent, car payments, or subscriptions? Specialists say that your recurring bills cannot exceed 50% of your monthly budget. It’s time to put them down on paper, see if that’s your case and evaluate if you can cut some costs. You can also use apps such as Trim, that renegotiates your bills automatically and cancels old subscriptions for you.

7) You Don’t Have Clear Financial Goals

If you don’t have clear financial goals, you will probably never be good with your money because you won’t be motivated to do so. It is crucial to set short, medium, and long term goals for your cash. These can, for example, be upgrading your cell phone to a new one, a trip abroad, having your own home, you name it.