Many of us have been in this situation at one point or another (or frequently), and it can be scary—even terrifying. You may feel like you can’t go out with friends because you simply can’t afford it. You can’t spend money on anything at all, and you’re unsure if you can even make rent or buy groceries. So, what do you do?
First, take a deep breath and remind yourself that you’re going to get through this. If you’ve faced this before, chances are it worked out okay. Money isn’t everything, but it is necessary for living your life. Remember: there are solutions to this crisis.
FIRST, THIS IS PROBABLY WHY YOU ARE BROKE:
- You Don Have Financial Goals:
Not having financial goals to work toward is often the number one reason why people have an empty bank account. If you are not constantly working towards a single financial goal, then you most likely won’t be able to stick to a budget long-term.
- You Can’t Say No:
Something that we all need to learn at some point in our lives is that we can’t always get what we want. We have to figure out how to say no to things that aren’t going to help our futures and that can hurt our wallets.
Not being able to say no is a real reason why you are broke and you need to figure out how to say no when your friends want you to go out and grab drinks if you can’t afford it. You need to say no if someone convinces you to buy a new car and you can’t afford it. There are so many opportunities where you need to remember that no is an option and it will help your finances for years to come.
- You Aren’t Budgeting:
Budgeting is one of those things that everybody knows they should be doing but so many people avoid it and then can’t figure out the reason why they are broke. Budgeting is important because it helps you realize that your money should be working for you instead of you just working for your money. Making a budget can help you make a plan for your money that will help you start investing your money and have more in your bank account at the end of the month.
- You Don’t Have Emergency Money:
A lot of the time a person feels like they are doing awesome with their finances up until the point that an unexpected emergency occurs. At this point, people often realize that they are going to have to charge the emergency onto their credit card.
A great way to stop this and no longer feel broke when you are experiencing a financial emergency is to have an emergency fund ready. An emergency fund is a bank account where you will have (hopefully) 3-6 months of expenses saved up to cover any scary thing that may happen (e.g., broken down cars, a job loss, or a plane ticket to go to a funeral).
HOW TO AVOID BEING BROKE IN THE FUTURE:
Being broke can be a terrifying place, so once you are back on your feet, it is important to take steps to ensure you never end up there again. To prevent it from happening repeatedly, you should:
- Set up a savings account and contribute a percentage of your paycheck to it every month.
- Create an emergency fund to help you out of difficult situations.
- Budget, budget, budget.
- Keep track of everything you earn and everything you spend.
- Prioritize your spending, focusing on essentials. (Consider the 50/20/30 plan.)
- Ask for help from people who know how to manage money. (There are also plenty of great blogs, podcasts, books, and more that offer expert advice on personal finance.)
