Reasons You Go Broke Before The Month Ends
Running out of money before the month ends can be a daunting experience especially when there are a lot of problems to solve. While several factors such as spending beyond your means, insufficient savings, excessive debt, and unforeseen expenses can be responsible for this, it doesnt have to be so.
As Suze Orman advises, “If you expect your money to take care of you, you must take care of your money”. In this article, we explore reasons why anyone would likely go broke before the month ends and what to do.
Here are 5 Reasons You Go Broke Before The Month Ends
1. Excessive Spending
Spending more money than you earn or can afford is a common reason why people go broke before the month ends. In most cases, you would likely find yourself in a cycle of debt, where you are constantly borrowing to cover your expenses.
Most impulsive spenders get instant gratification from spending money while others find themself following the latest trends or simply trying to keep up with their friends and family’s lifestyle.
To avoid going broke as a result of overspending, it is important to create a budget and stick to it. This would also require tracking your expenses, setting limits to your wants, and avoiding frivolous spending.
2. Taking High Debt
Taking debts has somewhat become part of life in today’s economy especially when you have an emergency to handle. However, high levels of debt leaves you with little money to cover your expenses for the month as you will be required to make large monthly payments to your creditor which can quickly take off your income.
While it’s not always easy to avoid debts, it’s important to look out for low-interest charges. Also, if you already are struggling with high debts, you should consider creating a budget, cutting back on unnecessary expenses, and finding ways to increase your income.
Read Also: 10 THINGS TO DO AT THE BEGINNING OF EVERY NEW MONTH
3. Lack of Savings
Dave Ramsey once said that saving must become a priority, not just a thought. Which means you must pay yourself first. One reason you go broke before the month ends is because you likely don’t have any savings to fall back on. Consequently, unexpected expenses or emergencies such as job loss, medical bills, major car or home repairs would quickly drain your bank account.
To avoid this, prioritize saving as part of your overall financial plan. This simply requires that you set aside a portion of your income every month into your savings account or emergency funds. Ideally, your savings should be enough to cover at least 3 to 6 months worth of expenses.
4. Inadequate Income
Admittedly, low income is one reason you go broke before the month ends. If you dont earn enough money to cover your basic living expenses such as rent, utilities, food, and transportation, then you will find yourself struggling to make ends meet.
From what we’ve garnered, inadequate income can also make it difficult to save or even pay off debt which can lead to additional financial stress. According to Charles Caleb Colton,
“Our income are like our shoes; if they are too small, they gall and pinch us; but if they are too large they cause us to stumble and trip”
In the case of low income, you may need to explore other ways to increase your income such as finding a higher-paying job or taking on a side hustle or part-time job. You can also negotiate a raise with your current employer if you think you are underpaid.
Aside from this, you may also consider downsizing your living arrangement and finding other ways to save on utilities or transportation costs.
5. Unemployment
It’s simply true that an unemployed person is always broke since there’s no source of income to meet financial obligations. If you are unemployed, then you’ll need to cut back on all non-essential expenses until you are able to secure a new source of income.
To address the financial challenge of unemployment, you also need to take action as soon as possible. Consider applying for unemployment benefits, take temporary or part-time work, or explore other sources of income or skills that you have.
If you’ve been able to figure out why you get broke before the month ends, then it’s important to adopt good financial habits such as budgeting, saving, and investing to achieve financial stability.
