5 Mistakes of Perpetually Broke People

The definition of being broke is “having no money.”
But I say broke is an inability to manage money because that’s what leads to having no money. People are making many stupid mistakes when it comes to money.
Nearly 78% of Americans are living paycheck to paycheck. And 47% of them will go in debt if a $400 emergency comes up. If that’s not a mistake, then I don’t know what is.
People think that they can solve their problems only if they made more money. But making money is only one part of the equation. You will lose whatever you make if you don’t have the knowledge to keep it. Many lottery winners who make a fortune end up being worse than before.
Why do they end up broke? Because they didn’t know what to do with their money, and we aren’t educated when it comes to handling money.
Here are 5 mistakes broke people make with their money.

1. They fixate on one solution

Poor people are stuck looking for a fancy solution. They believe it’s their new business idea that will make them money. Or a promotion in their job. Or investing your money in a scheme that promises “risk-free high returns” — that’s exactly what 1.5M people did who lost their savings in Bitconnect scam.
But even if an investment or business idea is legit, it won’t make you rich — because there is no one solution to money. Money is a puzzle that requires multiple pieces to be put together. Most people are trying to solve the whole puzzle with one piece alone.
Many obstacles keep people poor; being stuck in a job that is opposite of your strengths, being ignorant and never learning from the rich, not providing enough value with your work, and so on.
You must see that there is more than one obstacle to be solved.

2. They don’t act their income

We are a generation of consumers. Most people say money doesn’t buy happiness. But still, they treat buying stuff as a quick fix to well-being. Even the American families in the lowest-income bracket, spend 40% of their income on luxury items.
Most people go on credit-card debts to buy things they don’t need. Their priority has become Starbucks and fancy dates over savings. To not be broke, you must spend according to your income. When I used to work as a Janitor, I sacrificed a lot. I used to eat cheap Ramen and Tuna Fish to invest the saved money in my business. That early sacrifice I made when I was 18, helped me build my business to six-figures.
I am not saying to eat cheap food; you may earn enough then the past me to afford nutritious food. But I believe if you are young, the earlier you deprive yourself of stupid expenses, the quicker you can climb to financial freedom.
Start saving. Redirect your income towards — improving your skills, emergency-funds, retirement-plans (Roth IRA), and active investments like stocks or real estate.

3. They don’t increase their income

Most advice on becoming wealthy is about saving and investing, like my previous point. Again, the problem arises when people fixate all their effort on it. They treat it like the only piece of the puzzle.
I advise saving even if you make minimum wage, but you must have plans to increase your income. Most people don’t have a clue about increasing their income. They have left it all on hope, but it doesn’t have to be that way.
The key to increasing one’s income is to create more value. Whether it’s a job or business, you get paid in proportion to the value you provide. A Heart-surgeon is paid way more than a general doctor because of the difference in value. His unique skills create more value than a standard doctor’s.
If you can acquire such unique skills in your profession, the money will be easy. Most of my clients come to me because they can’t get enough sales in their business. After knowing that, I got good at marketing and lead generation.

4. They don’t spend on improving

People love to spend on overpriced on Netflix or a new iPhone but refuse to spend money on acquiring skills. They feel hesitant when it comes to buying books, courses, and coaches around their profession. But this is the worst place you can try to save.
Because without an increase in your skill, there is no increase in your income. These are the things that will help you increase your skills in the market place. Right now, the only difference between you and a high-paid person is your skills.
Credible mentors and coaches can provide a map to success. Instead of figuring out the long-way, you can save yourself a lot of failures. This is not self-promotion. You don’t have to pay me a dime. But find someone in your industry.
From the beginning, I have spent thousands on coaches. Only because of that, I am able to run a six-figure business at the age of 25. I have successfully skipped the long-route.

5. They have broke friends

We change our behavior to follow the behavior of our social groups. It is called peer-pressure. Broke people are over-influenced by other broke people.
They have friends that spend on expensive restaurants and cars which they imitate because nobody wants to be called “cheap.”
But this fear of being criticized and alienated costs people their financial freedom. I know it’s difficult to save when your friends always want you to spend money. But realize these friends won’t pay for your future needs.
Your debts and future plans are yours to take care of.
It’s going to be tough. When I kept a strict budget on how much I will spend with friends, I got a lot of resistance. But know this, the moment broke people start to make fun of your decisions, you are on your way to wealth.

Takeaway

For most people, money is and will be the most significant stressor in their life. They will never have enough of it. Because whatever they make, they waste.
“A fool and his money are soon parted” ~ Old Proverb
Don’t be most people. Be wiser. Treat every dollar in your pocket like a seed. It can turn into a great tree only if you give it the proper nourishment and time. You have to give-away some of it to survive in this world. But remember to keep some to yourself.
Always keep a part of your income to yourself. Save it. Grow it. Use it to improve. This will be the money that grows into a financially secure future.