I know of several people who earn six figures– something I just dream about for all my working years– but after every paycheck their income just vanish into thin air and they are back, broke again.
For all the years I have worked, with whatever little I earn, I have managed to make ends meet, or until the next payday instead of borrowing money from loan sharks or losing face borrowing from friends or family members.
When I had to raise singularly three kids from grade school to much of college– paying rent, feeding and tending to their health care needs, bringing them for recreation every once in a while when there is little left after computing their daily school allowances, bills and groceries– I thrived on just the lower end of five figures. How I managed is one great miracle, thanks to God's help.
But going back to those people with six digit salaries, a great job, solid income and even perks that spell “successful adulting” they constantly complain about being broke the minute they get their paychecks through the ATMs. (My thinking is that sometimes it pays to obtain your pay the hard way– through payroll in the office– so that the convenience offered by ATM machines with just a click of a finger would not make it easy enough to spend the cash just as fast.)
The truth, according to blogger Ethan Sterling, is that financial struggles aren't always about how much one earns but about habits that quickly drain your money.
He shared seven common habits that keep people stuck in the cycle of being broke always:
1) Living for today– the common excuse is that we deserve to enjoy what we earned. There is no question about this. But not to the extent of draining your wallet in just one day and living like a one-day millionaire.
When this habit is not corrected, every paycheck becomes an excuse for another shopping spree or a lavish night out, it can lead to a perpetual state of financial instability. If you spend everything you earn (or more) once you get it there would be nothing left for the rainy days.
2) Ignoring the budget
Tracking every peso that came in and went out is tedious but it is a good eye-opener. Unless you do this, you might not be aware that you are splurging on things you don't need like fancy coffees, takeout meals, dining and drinking out in expensive places, riding taxis or TNVs even for short distances when you could walk (good exercise), buying clothes, perfumes, shoes, bags that you don't need and more. By sticking to your budget, you will have some money left and feel good about it.
Creating a budget might feel restrictive at first, but it certainly is freeing. He says it gives you control, clarity, and, a roadmap to stop living paycheck to paycheck.
3) Falling into the debt trap
Credit is abundantly available these days. It’s easy to think of credit cards and loans as free money or a quick solution to our financial woes. But the average credit card interest rate is at 16 percent. So if you are careless you would rack up debt that could easily become a massive financial burden later on.
What does this mean? Well, if you’re not careful with your spending, and you start racking up debt, it can quickly snowball into a massive financial burden. But how about mortgage or rental, bills and other expenses. You might fall into a debt trap.
4) Neglecting savings
The popular finance mantra of ‘Pay yourself first’ emphasizes the importance of saving. It means setting aside a portion for savings, before paying your bills or spending on other things. Be like Warren Buffet, one of the world's wealthiest, who is known for his frugality. Despite his billions he still lives in a house he bought in 1958 for $31,500, drives an unpretentious car and shuns luxury and branded items. His mantra has always been: “Do not save what is left after spending; instead spend what is left after saving.”
Remember, every small saving can grow into millions later.
5) Chasing the high life
Spending on the glamorous life like designer clothes, luxury cars, extravagant vacations is not what you need or even want just to fit in. The high life often comes with a high price tag that would not necessarily make you happy, fulfilled or even feel accomplished.
6) Avoiding financial literacy
Money management isn’t always taught in schools, and it’s not a subject everyone feels comfortable discussing. Without it, can lead to serious monetary problems. Understanding concepts like interest rates, investments, taxes, and retirement plans can be overwhelming. But it’s crucial to take charge of your financial future.
Those who earn well but are always broke often lack financial literacy. They might earn a good living, but without understanding how to manage that income wisely, they may find themselves in a constant state of financial stress. Before it's too late, invest some time and effort to boost your financial literacy with resources online most of which are free.
7) Neglecting long-term goals
While it’s important to live in the present, you must keep an eye on the future, financially. Having long-term financial goals gives you direction in spending and saving. It could be buying a house, starting a business, or saving for retirement.
Those who earn well but spend much neglect long-term goals. They are caught up in present day demands that they forget to plan for the future. Your financial decisions today will shape your financial reality tomorrow. So, don't neglect your long-term goals, which could spell perpetual financial stress and financial freedom.
Remember, it's not how much you earn but how you manage what you earn.
So if you are always broke despite earning well, remember that your financial destiny is in your hands. The power to break free from these detrimental habits and take control of your financial future lies with you.
#WeTakeAStand #OpinYon #OpinYonColumn #ColumnbyRosedelaCruz #BareTruth