No one sets out to be broke.Badinvestment, poor money making skill, poor saving habits; these are some reasonsyou’ll often revert to broke status. Being broke is not having a reliablesource of income. Being broke is living paycheck to paycheck with no savingsintact. Being broke is being in debt up to your eyeballs.
If you’re sick and tired of being broke, it’s time to take control of your finances! Whether you need to work on your spending habits, learn how to save, or find ways to earn more money, you can find a way to stop being broke.
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So today, we’ll share with you 10 things you should do to stop being broke in the New Year. This post is brought to you by After School Africa.
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Table of Contents
1.Learn to live below your means
Spending above what you earn will onlyleave a trail of debt behind you. If you’re spending beyond your meansbecause you need to keep up with your friends or show others that you canafford a certain lifestyle, you’re not doing yourself any good. Stop worryingabout what others can afford and think about how you can live within yourmeans. Put your credit or debit card away. They make iteasy to spend money you don’t need to spend.
Changeyour attitude on consumer goods. Stop reading fashion, home style, and consumertechnology magazines and watching flashy TV shows. They only feed your vaindesires. Learn to live below your means. That way you’ll have something left atthe end of each month.
2.Develop a skill
You are often broke either because youdon’t earn enough or because you spend more than you earn. There are threemoney skills you need to develop; money making, money keeping and money growingskills. You can’t keep or grow money you don’t have. So the most importantthing to do to stop being broke is to develop your money making skills. And whatother way than to have skills people are willing to pay for.
People don’t usually have money problem.What they often have is skill problem. If you have skills people are lookingfor, they will pay money to get it. So if you want to stop being broke, start developinga new skill. If you love to write, develop your writing skill. If you lovelogical reasoning, you can try your hand in coding. If you love art, learndesign, video production, graphic, photography. There are many skills you candevelop. Just go and get more self education.
3.If you already have a skill,get better at it
If you already have a marketable skill and are still broke, it’s either your skill is not good enough for people to pay for it or that your marketing skill needs some work. Take advantage of digital media to reach more prospects. If you are selling a product or service, try online advertising. Learn social media and content marketing. If you’re a writer, start a blog or utilise platforms like Medium, Dev.to. Don’t be skilful alone, adopt the skill of promoting what you do.
4.Only lend money you can affordto lose
Leave a comment below if you have had a badexperience lending money to someone close to you. You end up losing your moneyor even hurting a friendship. I’m sure a lot of you can relate to this.
It’s okay to lend a helping hand to someone in need. But that should be when you can afford to. If you are still struggling to find your feet financially, lending money you cannot afford to lose leaves you at the mercy of the borrower. To be on safer side, only lend money you can afford to let go of in the worse case.
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5.Use the 50/30/20 rule
Former American presidential candidate, Elizabeth Warren popularized the so-called ’50/20/30 budget rule’ in her book,All Your Worth: The Ultimate Lifetime Money Plan. The idea behind this rule for budgeting is that 50% of your net income should go toward “needs”, 30% should go toward “wants”, and the remaining 20% should go into savings. “Needs” would include things like groceries, prescription medications, rent, and insurance. Some examples of “wants” are Netflix, cable, and manicures. You may not necessarily hit the exact numbers but work towards splitting your earnings around that percentage. To make this more effective, see dividing up your income as paying yourself first. Set aside at least 20 percent before any other spending. Once you’ve exhausted the rest of your liquid income for the month, let every unimportant thing go or wait till next month.
6.Stop buying on impulse
Instantgratification is getting you into trouble time and time again. There are many ways to spend money but fewer ways to make them. Animportant step to getting your finances in order is to tell your money where togo instead of wondering where it went.
A budget puts you back in the driver’s seatso you’re no longer at the mercy of impulse spending. If your potential purchase isn’t in the budget, slow down and backaway.Remember that making minor sacrifices now will pay off in thelong run.Know what your end goal is, and then goafter it!
If you always have a plan for what you will buy, you willhave a much easier time managing your finances. If you have a hard timecontrolling your purchases when you go to the mall, try to avoid going to themall at all. Your urge to buy unnecessary items will likely wear off afterseveral days or sometime a few hours. Instead plan for every big spending. Savetowards it. And make the decision thoughtfully.
7.Avoid debts as much as possible
It’s easy to buy things on credit or askfor a loan but they always come back to haunt you when your earnings arrive.Sometimes accumulated debts could halve your income even before you take a dimeout. So avoid debts as much as possible and only take loans when there is noother way around a financial situation.
8.Stay Away from Get-Rich-QuickSchemes
Many people have lost a lot of money inget-rich-quick schemes that come as high yield investment programs. They makeyou believe you have to take risk to put your money to work for you. But in theend, it ends up making a few people rich and the rest broke.
Investing is a great way togrow yourmoney. But, we aren’t all experts in investing. In fact it’s easier for mostpeople to make money than to invest it profitably. But if done right, investingcan lead to unexpected wealth.
There is calculated risk and there is dumbrisk. The best investors only invest in what they know and understand. That istaking calculated risk. They don’t invest with emotions. They rely on marketanalysis and projections among other information. You too can start groomingyour investing skill in a field of interest. Remember, this rule always apply;if it is too good to be true, then it’s most likely too good to be true. Youare better off saving your money than losing it in a get rich quick scheme.
9.Let go off friends thatencourage negative habits
It’s been said that“you are the product of the five people youspend most of your time with”. Make a list of your friends and put theminto two categories: toxic and non-toxic. You’ll learn that some of the peopleyou hang out with are not worth spending your time with anymore. Maybe everytime you hang out with them, you come home feeling emotionally drained or you’reforced to drink against your wish. Perhaps all your friends do is spend moneyon frivolous things, and now you find yourself doing the same things. Freeyourself from those friends. If you are always around people who spend moneycarelessly, their habits are likely to rub off on you. Try spending time withmore frugal people.
In conclusion, the habit you develop withmoney when you earn a little will translate into when you start earning more.If you spend on impulse with a little, you will not change automatically whenyou start earning more. If you don’t plan your spending with a little, the samehabit will accompany you with earning more. Start now to develop you financialintelligence. Develop and brush up your skills to increase your ability toearn. Your future self will be proud of you. What money habits will you bedeveloping in the new year? Tell us about it in the comment’s section. If youare yet to subscribe to After School Africa, now is a good time to do that. Untilnext time YOUR SUCCESS MATTERS!
As an experienced financial advisor and educator, I possess a deep understanding of personal finance, money management, investment strategies, and wealth-building principles. I've guided individuals and groups through various financial challenges, helping them overcome debt, improve saving habits, and develop sustainable financial plans for the future. My expertise extends to practical application and education, aligning with the content outlined in the article about escaping the cycle of being broke and achieving financial stability.
The article addresses fundamental aspects of personal finance and wealth management. Let's break down the concepts covered:
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Living Below Your Means: Spending within one's earnings is vital to avoid accumulating debt. This involves conscious spending, avoiding unnecessary expenses, and prioritizing needs over wants.
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Developing Skills: Enhancing one's skills directly impacts earning potential. The article emphasizes the importance of continually improving existing skills or acquiring new ones that are marketable and in-demand.
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Marketing Your Skills: Having a skill alone isn't always sufficient. Effective marketing strategies, especially through digital platforms, are crucial to attract potential clients or customers.
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Responsible Money Lending: Only lending what one can afford to lose is highlighted to prevent financial strain or potential damage to relationships.
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Budgeting Using the 50/30/20 Rule: This principle allocates percentages of income to needs, wants, and savings, fostering a balanced financial approach.
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Avoiding Impulse Buying: The article stresses the importance of budget adherence, planning purchases thoughtfully, and avoiding impulsive spending habits.
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Debt Avoidance: Discouraging reliance on debts except in unavoidable situations to prevent future financial strain.
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Avoiding Get-Rich-Quick Schemes: Emphasizing the risks associated with schemes promising quick wealth and encouraging individuals to invest wisely after thorough research and understanding.
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Influence of Peer Groups: Acknowledging the impact of social circles on spending habits and recommending associating with individuals who exhibit responsible financial behavior.
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Continuous Financial Education: The importance of ongoing financial education and the development of good money habits to sustain financial well-being regardless of income levels.
This comprehensive guide provides a roadmap for individuals striving to improve their financial situations by emphasizing discipline, skill development, prudent spending, and informed decision-making.
By integrating these principles into one's life, individuals can gradually move away from financial struggles and work toward achieving stability and long-term financial success.
