If you’re living paycheck to paycheck and struggling to make ends meet, it’s time to reassess your spending and saving habits. Although making more money might seem like the only solution, it’s not a realistic option for everyone — and doesn’t solve the underlying problem.
After all, it’s not how much money you make but how you handle your money that counts in the end. This is why you must pinpoint which behaviors are keeping you in debt. From there, you can make a plan to banish these bad money habits for good and finally get on the road toward financial freedom.
Here’s a look at six reasons you’re always broke — and how to turn things around.
You Have Little to No Savings
Saving money might not seem feasible when your budget is tight, but it’s a crucial step toward getting out of debt. Unfortunately, many consumers are struggling to stash away cash. In fact, a 2017 survey from GOBankingRates found that more than half of Americans have less than $1,000 in savings. When your rainy day fund is limited — or nonexistent — you might have to borrow money or rely on high-interest credit cards to cover unexpected life moments such as a car accident or home repair. An emergency savings fund gives you the opportunity to get ahead even when things get tough.
Treat savings like any other bill and pay yourself first. Transfer a percentage of your paycheck directly into a separate account so it’s out of sight and out of mind. Otherwise, automate transfers from checking to savings on a weekly basis for small amounts you won’t miss such as $5 or $10 — over time this adds up.
You Carry a Revolving Balance on Your Credit Card
It’s tempting to charge purchases with the idea that you can buy now and pay later as you’re also earning valuable rewards like cash back or travel points. If you’re carrying a revolving balance from month-to-month, however, this is a clear sign you can’t afford the purchases you’re making.
Refrain from throwing down the plastic until you pay off your balances in full, and only use your card to pay for expenses you can afford. Pay down your debts faster by consolidating debt using a low interest, fixed-rate personal loan. Just make sure you don’t get slapped with sign-up fees, and read the terms carefully. Moving forward, stick to cash or debit to make your purchases as this will train you to live within your means.
You’re Paying for Things You Don’t Use
You might be surprised to realize how often you’re paying for products and services you don’t use. For example, do you watch all the channels included in your pricey cable package or use all the data associated with your mobile plan? If not, adjust your packages accordingly. There might be other memberships and services you signed up for with good intentions, like joining a gym or a monthly sample box delivery, but fail to use regularly. Take time to review your bank and credit card statements to reassess which recurring expenses are needed and cancel those that aren’t.
You Give in to Impulse
According to a new survey by Slickdeals, U.S. consumers make three impulse purchases each week, adding up to $450 a month or $5,400 per year. Although occasionally picking up a magazine or candy bar won’t hurt, giving in to impulse regularly will keep you stuck in a lifestyle that doesn’t offer much financial flexibility. Take control of these bad buying habits by tracking your finances. Apps like Mint link all your financial accounts in one place and provide notifications on purchases in real time, keeping you accountable for each and every dollar you spend.
It’s also important to identify your spending triggers. If you shop after a fight with your partner or as a reward after a great day at work, it’s time to take control of your emotions in ways that won’t wreak havoc on your budget. The next time you’re feeling blue, go for a run or call a friend to vent instead of whipping out your credit card.
You Dine Out Regularly
The average U.S. family spends over $3,000 annually at restaurants, according to the Bureau of Labor Statistics. While the convenience of dining out is tough to beat, the premium you’re paying for someone else to cook is another reason you’re broke. Cooking your own meals at home — even if it’s just brown-bagging a few lunches a week — can help you save big bucks on food. Spend time meal planning and look for recipes using overlapping ingredients in order to reduce food waste.
If cooking feels like a chore most nights, carve out some time over the weekend to meal prep. You can even prepare several freezer meals once a week that are easy to reheat after a long day at the office, reducing the temptation to order take out.
You Have Serious FOMO
FOMO, aka the “fear of missing out,” can sabotage your budget and derail your efforts of overcoming debt. If you constantly feel pressure to keep up with a lifestyle you can’t afford, it’s time to assess how much influence your social circle has over your spending. It’s better to surround yourself with people who are financially savvy and enjoy activities that don’t cost a lot of money. If social media is causing you to spend beyond your means, limit usage and unfollow those who regularly post pictures of activities and purchases that make you feel less than your best.
Click here to read more about money habits that can leave you broke.