Here’s Why You’re Broke

It's an eye-opening fact: about 65% of working Americans live paycheck to paycheck, and this includes those earning over $100K a year!

This phenomenon isn't about income levels; it's about spending behaviors.

If you're not satisfied with your financial situation and can't figure out why, it's time to examine your money habits.

In this post, I'm going to highlight money habits that could be holding you back financially.

1. Lifestyle Inflation:

When your income increases, so does your spending – a phenomenon known as lifestyle inflation. That raise or business success might lead you to upgrade your lifestyle.

Soon, this upgraded lifestyle becomes the new norm and you find yourself back to living paycheck-to-paycheck despite earning more.

2. Overspending on Luxury Items:

The luxury industry, worth over $300 billion annually, thrives on the notion that “the grass is always greener on the other side.” Social media amplifies this, showcasing a world of luxury and prompting a desire to keep up.

While indulging occasionally is fine, regular spending on high-end items can quickly derail your finances.

3. Not Tracking Your Expenses:

One of the critical differences between those who manage their money well and those who don't is budgeting.

Regardless of your income level, knowing what you earn and spend is crucial.

Tracking your income and expenses for a period, like 60 days, can provide significant insights and help curb unnecessary spending.

4. Borrowing to the Max:

Just because you qualify for a substantial loan doesn't mean you should take it.

Oversized loans, whether for cars, homes, or education, can lead to financial stress and debt.

It's essential to budget and borrow within your means, not just according to what lenders offer.

5. Lack of a Financial Plan:

Without a clear financial plan, it's easy to lose direction. Know what you want, what it costs, and what sacrifices are needed to achieve your goals. A well-thought-out plan provides a roadmap for your financial journey.

Finally, the key to breaking free from the paycheck-to-paycheck cycle isn't just in managing your expenses but also investing in yourself.

Learning high-income skills and self-development can open doors to better opportunities and higher earnings.

Remember, your financial growth starts with you.

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