The phrase “the definition of insanity is doing the same thing but expecting different results” may be overused, but when it comes to finances, it rings true. If you have a job that pays you enough to be financially stable, yet every month you’re running out of cash, there’s something amiss. You need to break the cycle. And that starts with recognizing the behaviors involved.
Life requires planning. While wealthy people can live spontaneously and fly — or rather spend — by the seat of their pants, that’s just not the way things work for most of us. One reason you might be going broke is a lack of planning ahead. As Mike Pruitt, a certified financial planner, told US News, “The primary reason people run out of money is a failure to understand just how much more expensive life will get over time.” You need to account for things like inflation and lifestyle creep (when you spend more after you start earning more). You should build an increase in costs into your monthly budget and your long-term financial plans. If you don’t recognize that some expenses will go as you get older (healthcare is a prime example, as you age you need more in the way of tests) you’ll likely end up accumulating debt. And paying down heaps of debt is another easy way to end up broke every month.
Another reason you might feel broke all the time is that you’ve never bothered to create a budget, or you’ve let your budgeting habits slip away. As rudimentary as a budget seems, it’s absolutely vital to financial wellbeing. It is extremely difficult to maintain stability when you don’t know what money is coming in and what money is going out. Get on track with a sensible budget and stick to it. There are plenty of apps to help with that if you’d prefer a high-tech approach. But if not, start by tracking your spending for a month to see where it’s going. Let the numbers point you in the direction of making cuts — first small, than medium, than large — until you can live on what you make and save habitually.
As you can see, the path to going broke is a relatively easy one. If you’re struggling from paycheck to paycheck, the issues behind that are likely fixable. Take some time to examine your behaviors so you can find the root of the problem. Start there, and eventually things will sort themselves out. You just have to be dedicated and consistent.