LAGOS – Many people will always end up being poverty-stricken regardless of how much money they earn or how much they make monthly due to the inability to plan their finances.
This is not only common with low-income earners, but also some big shots with fat pay-packets find it difficult to live within their means either due to reckless spending or wrong financial decisions.
The fact remains that irrespective of what one earns, proper financial planning can never ruin you or make you broke.
Agreed, once in a while, one can be broke but when it becomes a perpetual thing, then there is a need to seek the help of a financial expert.
For instance, you have a job, maybe even a good one or a source of livelihood and you fail to save more or spend less, yet you expect your finances or financial status to turn around, it is impossible.
Worse still is when you keep on acquiring debts and keep piling them up, awaiting payment. With this, it is difficult not to be broke or financially unstable.
Also, failure to prioritise your needs, and always desiring to have anything that comes your way once there is money in your pocket, without giving it a serious thought, would always lead to financial regrets.
Instead of waiting for your financial situation to improve mysteriously, it is time to take a cursory look at all the things you are doing that are contributing to your financial miseries. Truly, it might be your own fault that you have no money.
Nonetheless, here are some common reasons people find themselves broke or financially unstable:
Because of lack of financial planning, people get caught up by small loans, using credit cards for emergencies or even bank loans. They ask for loans they are ineligible for but are unable to pay back, thereby incurring more interest rates which leave them very broke.
Also, when you are really broke, it is quite easy to get stuck in a debt trap because you are desperate and in the process, make rash decisions.
In a state of cash strap, people often lack the ability to foot their bills and so end up amassing more debts with the penalties and interest rates. When you are broke, heaps of bills and overdue notices are a huge source of anxiety and fear. But avoiding those problems and failing to manage your debts only makes them worse.
Lack Of Knowledge
Not getting correct, fair knowledge and advice, people lack confidence in their personal finance decisions. Also, they lack knowledge about personal finance and how to use their money to gain financial freedom.
This is a situation where people do not practice cheaper or more affordable and long-lasting ways to do things. They spend recklessly and fail to invest in what could give them a better future.
Refusal To Pay Yourself First
Financial experts believe that the main reason why people are poor or broke is that they do not pay themselves first. This implies not setting aside a certain portion of their monthly income into a savings account before earmarking the rest for expenses.
It is expedient to try as much as possible to invest part of your money if you really want to opt out of financial hassles.
No Emergency Fund
If you don’t have an emergency fund, there is no way you will not run from pillar to post when emergencies which are inevitable occur. Having an emergency fund prepares you for the rainy day or future financial challenges such that you are able to address any financial unpleasant situation that may come your way. But, a situation where there is none will make you continue to look like a beggar that have no choice, because if you have to depend on the mercy of people.
No Plan For Your Money
One of the reasons people remain poor or broke is the lack of a proper plan for their money due to bad spending habits. Some people think they do not have enough money to invest as they have this mentality that they need to have enough money before they can start investing which is simply not true. Of course, you can commence investing with very little money and increase it as your income improves.
In fact, the earlier you start investing, the better off you would be in building wealth for yourself as it is all about time. The more time you have, the more your money would work harder for you and grow progressively.
Lack Of Budget
If you do not know how your money is spent or what goes out and comes in, there is no way you can monitor your finances and control your spending habit. More so, if you do not know where your money is currently going, you cannot turn it in the direction you would prefer it to do the most that would favour you.
Still, it is only through creating a budget which helps to curb your excesses in terms of expenses that you can keep track of your money and failure to create one and stick to it would make you to be perpetually broke.
Not Making Enough Money
Some usually complain of not making enough money due to poor remuneration, which can hardly meet their needs especially in a country where survival is a major challenge. The excuse is tenable to a large extent but with determination, you can lay your hands or get engaged in other means of making extra income to better your lot.
Laziness And No Ambition
Saving money involves earning money and if you do not have a purpose, you will never go anywhere in life. People with ambition are not lazy because they have drive, motivation and inspiration. But those who lack one, lack all, and people who lack are truly broke
Getting up every day to work toward something you love and are passionate about makes you more productive, which, in turn, leads to more money.
For the lazy ones, they find it difficult to do something on their own either because their parents are well off or they have the inheritance to fall back on. They always have the habit of complaining and never see any good in the efforts of productive ones.
Get Rich Quick Syndrome
Too many people are looking for the quickest and easiest way out of poverty and as such are trying to get rich through whatever means. They do not know that it does not work that way as hard work is required to become financially buoyant and stable.