No one sets out to be broke. Whether it’s bad investments, poor money-making skills, or bad saving habits, there are many reasons why people end up in financial struggles. Being broke isn’t just about not having enough money; it’s living paycheck to paycheck, without savings, and drowning in debt.
If you’re tired of being broke, it’s time to take control of your finances! Whether it’s improving your spending habits, learning how to save, or finding ways to make more money, you can break the cycle. Here are steps to help you stop being broke:
1. Stop Spending More Than You Earn
Living beyond your means is one of the quickest ways to stay broke. If you’re spending more than you make to keep up with others or show off a certain lifestyle, it’s time to rethink your approach. The key is to live within your means. Put your credit or debit cards away and avoid the temptation to spend on things you don’t need.
Start focusing on living below your means so you can save and have something left at the end of the month. Shift your focus away from consumerism, stop reading fashion magazines or watching shows that feed your desire for unnecessary purchases.
2. Develop Valuable Skills
If you’re broke, it’s often because you either don’t earn enough or spend too much. To stop being broke, you need to develop money-making, money-keeping, and money-growing skills. You can’t grow or keep money you don’t have, so the first step is to boost your earning potential.
Think about the skills people are willing to pay for. Do you love writing? Improve your writing skills. Are you good with logic? Try coding. Do you have a passion for art? Learn graphic design, photography, or video production. Whatever skill you develop, the key is to make sure people want it, and they will pay you for it.
If you already have a skill but are still struggling, it may be because your skill needs improvement or your marketing skills need work. Use digital platforms to promote your talents. Whether it’s advertising online, leveraging social media, or starting a blog or online content on platforms like Medium, it’s essential to market your skill, not just have it.
3. Be Cautious When Lending Money
Lending money to someone close to you can be tricky. While it’s okay to lend a helping hand, only do so when you can afford to lose the money. If you’re struggling financially, lending money you can’t afford to lose can leave you in a worse situation.
To avoid losing money or damaging relationships, only lend what you can afford to give away in the worst case.
4. Follow the 50/20/30 Budget Rule
The 50/20/30 budget rule is a great way to manage your finances. This rule divides your net income into three categories:
- 50% goes towards “needs” (rent, groceries, insurance, etc.)
- 30% is for “wants” (entertainment, dining out, subscriptions)
- 20% should go into savings.
This rule is a guide, so you may not follow it exactly, but it’s a good way to manage your spending and prioritize savings. The key is to pay yourself first by setting aside at least 20% of your income before you spend on anything else.
5. Stop Giving in to Instant Gratification
Instant gratification is one of the main reasons people get into financial trouble. Spending money on things you don’t need, simply because you want them now, can drain your finances.
To avoid this, create a budget and tell your money where to go. If an item isn’t in the budget, resist the urge to buy it. Plan for large purchases and save towards them, rather than buying on impulse.
6. Avoid Debt as Much as Possible
It’s easy to fall into debt by using credit cards or taking loans. However, high debt can quickly eat into your income, leaving you with less money to manage. Only take out loans when absolutely necessary, and avoid accumulating debt unless there’s no other option.
7. Invest Carefully
While investing is a great way to grow your wealth, it’s essential to do it wisely. Avoid get-rich-quick schemes that promise high returns with minimal risk—these are often scams. Instead, focus on calculated risks.
Smart investors invest in what they know and understand. Educate yourself before investing, and if you’re unsure, seek advice from professionals. Remember, if something sounds too good to be true, it probably is.
8. Evaluate Your Social Circle
It’s true that you are the product of the five people you spend the most time with. If your friends constantly spend money recklessly, their habits will likely rub off on you.
Take time to evaluate your friendships and separate yourself from those who are toxic to your finances. Surround yourself with people who are more frugal and financially responsible.
Conclusion
Becoming financially stable and stopping the cycle of being broke takes time and effort. The key is to develop valuable skills, live within your means, and make smart decisions about your spending and saving. With these steps, you can break free from the cycle of financial struggle and work your way toward financial freedom.