Why do people go broke and how can you avoid it

 

 “I am broke” You must have heard this dreaded line which often sends shivers down the spine of the people. We all want to be wealthy, financially stable and live life on our own terms as soon as possible. Many people will never actually achieve their dreams of achieving financial success due to their poor management of finances. Anyone can achieve their goals if they have the right mindset and take appropriate steps. But often without even recognizing it, people act in ways that hinder their ability to succeed financially. They ruin their financial prospects, ensuring that they will always stay broke due to rash decision-making. It's crucial to realize that accumulating wealth doesn't depend on luck.Let’sfind out in detail why people go broke:-

 

They Don’t Have Clearly Defined Financial Goals

Every decision you make with your finances starts with setting financial goals. In other words, by setting financial goals, you're providing direction for your future financial decisions. They provide you with a feeling of direction and financial stability. Your financial future will also lack accountability without them. For instance, if you plan to save Rs 1 lakh this year, then you must evaluate every purchase you make in order to achieve your goal of saving Rs 1 lakh. Therefore a question like that could be the difference between impulsive spending and simple living. In fact, I would say that answering a question like that could mean the difference between being broke and wealthy.

They don’t track their spending

Majority of the people don’t keep a track of spending which puts a strain on their finance. Therefore money could slip out of your grasp easily if you don’t manage your money wisely. Therefore before you know it you are broke and you don’t have any idea how could that happen. I like to compare budgeting to parenting. What should parents do when their little kids frequently escape from their control? They keep a track of them. The same holds true for your money too. Money has a tendency to wander if you don't keep a tight eye on your spending habits. You need to keep track of your expenditures, whether it's at the grocery store, shops, or restaurants. Otherwise, you'll be left wondering what happened to all of your money.

 

They carry credit card debt

It should go without mentioning that credit card debt is a bad thing. In addition to complicating your spending patterns, it also comes with a gut punch in the form of outrageous interest rates. In fact, the interest rates are so high that you might never be able to pay them off unless you make an extraordinary effort. The biggest barrier to financial success is credit card debt, which is also one of the main causes of why people are broke. 

 

They don’t invest consistently

I think it's crucial for you to realize that saving money won't make you rich. You must put your money to work if you want to become wealthy, and that means investing consistently over a long period of time. Do you even know the difference between those who are poor and those who are wealthy? Rich people earn interest, while those who are poor pay it. Therefore, if you don't want to be broke, you should avoid taking on debt and make investments. In this manner, interest will be earned instead of being paid.

 

Conclusion- Remember, achieving financial stability is a journey, and it's okay to make mistakes along the way. What's important is that you learn from those mistakes and keep moving forward. With the right mindset and the right tools at your disposal, you can achieve the financial freedom and security you deserve. Thank you for reading this blog, and we hope that you've found the information and insights you need to avoid going broke. If you have any questions or comments, please don't hesitate to reach out to us. We're here to help!