As a Financial Coach who teaches budgeting, investing and how to build generational wealth, I’ve seen the entire gamut of socioeconomic statuses that are poor. I’ve consulted with lawyers, doctors and engineers who make over $500K and still live paycheck to paycheck. I’ve met teachers making $45,000s a year that will retire millionaires. Moreover, your income doesn’t mean much if your spending habits are reckless and undisciplined. Poverty and wealth come in every color, religion, shape, size, and socioeconomic status and that is the purpose of this blog, we will discuss 4 Signs of broke people.
1. Living Paycheck To Paycheck
They spend more money than they make, and they live paycheck to paycheck. They may make $15,000 a month but spend $20,000. The government may give them $500 a month, but they spend $1000 a month. Regularly having a low bank account balance or frequently overdrawing your account is also a clear indicator of not properly budgeting or taking care of the household responsibilities FIRST. The rule of thumb is to spend less money than you make.
2. High Consumer and Credit Card Debt
Usually when a person wants something that they can’t afford, they put it on their credit card and buy it. One of my bank accounts is with Wells Fargo and they currently give an APY of .01% of interests. That means if I have $1000 in my account, leave it there, in 10 years I will have only made $1. Conversely, my credit card has an APY of 22%. That means if I have $1000 of credit card, don’t pay it, in 10 years I’ll owe that credit card $7500. It is almost IMPOSSIBLE to find an investment that returns 22% over a 10-year period, and usually when people want something they can’t afford, they put it on their credit card and buy it. This is does not bode well for those seeking to get out of debt.
3. No Retirement Accounts
Broke people rarely, if ever, have an ROTH IRA, a 401K, an HSA, a SEP IRA or a traditional IRA. In fact, if I throw out words like Individual Retirement Accounts, Health Savings Accounts or the Employer sponsored match for a 401K a plethora of people are confused. The good thing is that if YOU have no idea what a ROTH IRA or an HSA is, you are in the right place as I have videos about all this stuff on Financipation’s YouTube Channel.
According to a 2019 study done by the Motley Fool in 2019, 69% of Americans today have less than $1000s saved in the bank. In other words, if the federal government doesn’t step in, or a person’s family doesn’t step in, 7 out of 10 people you know will literally be HOMELESS in less than 2 months at retirement. My idea of retiring with dignity and respect is having over $5 million in my retirement portfolio, my kids are starting their own successful careers and my wife and I are traveling to a different country every month. This is what I also want for you.
4. No Financial Goals
Financial goals encourage you to learn about investing, budgeting, and managing your money effectively. Without these goals, you will miss out on opportunities to grow your wealth and financial knowledge. Without financial goals, you will struggle to maintain a stable and comfortable lifestyle. You could find yourself constantly worrying about money and missing out on experiences due to financial constraints. Set financial goals and if you’re having trouble with setting these goals, then book a session with me and I will help you through the process. Set your future self up for success by making wise financial decisions now so you can focus on having a quality life instead of stressing about whether you can pay your bills at the end of the month.
In closing, if you’re experiencing these signs, it’s important to take proactive steps to improve your financial situation. Seeking advice from knowledgeable financial coaches, creating a budget, cutting unnecessary expenses, finding additional sources of income, watching YouTube channels, like Financipation, and exploring debt consolidation options can help you regain control over your finances.
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