Life is expensive.
The cost of living seems to be increasing almost as swiftly as Sydney’s house prices, and it can be a struggle to keep your head above water financially, let alone prosper.
But do you want to know the truth?
Deep down, there’s usually a reason why you’re broke… and it’s often because you aren’t making the wisest decisions.
You know this already, right?
In fact, you probably don’t even need to read on.
But if you want a little reminder as to where all your money is going – and more importantly, how to break these bad habits – here is our list of the 10 main reasons why you’re broke:
Let’s be honest – most of us can always think of something new we’d like to spend money on.
Whether it’s electronics, books, shoes, clothes, music, or even a spontaneous holiday, we will always be able to find a reason to spend more of our hard-earned money.
But too much unnecessary spending will put you in the red faster than you can say “Ooooh, it’s on sale!”.
Solution: Create a budget, pure and simple. And then, stick to it!
2. And, you’re also under-saving
If you find yourself with a little too much month left at the end of your pay packet, then you are likely finding it difficult to sock away any savings.
Overspending whilst failing to put aside any cash for savings is a double financial blow, and will ensure you feel the pinch even harder.
Solution: Commit to saving a set amount each pay period. It could be as little as $20 – the amount doesn’t matter as much as starting the habit does.
3. You’re battling credit card debt
Credit cards seem like such a wonderful thing.
They allow you to have whatever you want, just by swiping a piece of plastic. It’s like magic money!
That is, until the bills come in – and you realise the interest you owe is going to cost you more than all the lovely things you’ve bought yourself.
Don’t feel bad, as plenty of Australians are in the exact same boat.
But keeping up with the repayments can feel like you’re constantly taking one step forward, two steps back, without really making a dent in your debt.
Solution: Don’t put the stress on yourself anymore. Remove your credit cards from your wallet or purse so you aren’t tempted to continue using them, and work towards paying off your existing debts, a little bit at a time. Remember, when it comes to paying debts off, it’s a marathon – not a sprint!
4. You live a champagne lifestyle on a beer budget
Well, it might seem like fun for a while, but soon enough you’ll be feeling the pressure. Instead of trying to keep up with the Joneses so you can post lavish lifestyle pics on Instagram, get real about your finances and become settled in your own, comfortable lifestyle instead.
It’ll put more money in your pocket, and you won’t have the added stress about trying to find ways to support the more expensive lifestyle.
Solution: Save the splashy spending for when you can genuinely afford it.
5. You make impulsive purchases
Buying something without properly thinking it through can be a huge budget killer – yet we’re all guilty of doing it.
While it’s not a terrible thing, if you’re doing it only occasionally, too many impulsive purchases can quickly lead you back down the rabbit hole into the depths of money woe hell.
Solution: Next time something sparks your interest, imagine that you already own it. Are you really going to use this purchase a lot? Or will you just end up throwing it out within a year because you’ve only used it once?
Don’t feel the burn of buyer’s remorse anymore, and think before you spend.
6. You don’t know how to delay gratification
Ever feel like you need to have something right this second, and you can’t possibly wait another minute before it’s yours?
The emergence of credit cards, loans and systems like ‘buy now, pay later’ make it all too easy to avoid ever having to save up for anything. But though it can be fine to seize the day, try not to seize every single day!
Just because you can have something now, doesn’t mean it’s always a good idea to follow through.
Solution: Instead of being tempted to spend money that you don’t have on something that you don’t need, try to delay gratification by focusing on saving for it.
This way you’ll learn a lesson in patience and experience the feeling of finally reaching your savings goal and being able to buy something with your own money.
7. You have expensive vices
We all have our bad habits, but some are definitely more expensive and unhealthy than others.
Things like smoking, drinking too much, retail spending and gambling can cause serious financial strain, not to mention wreak havoc on your health and wellbeing.
To quit a bad habit isn’t easy –you need persistence, willpower, dedication and support – but a great way to maintain motivation is to focus on all the money you’ll be putting into your pocket, instead of spending it on unhealthy things.
Solution: The first step is admitting that you have a problem to begin with – and there’s no better way to face reality than by doing an audit and acknowledging just how much your addiction is costing you.
8. You lack financial goals
The benefits of setting financial goals are endless and failing to do so can leave you treading water for years without actually getting anywhere.
Goals can inspire you and give you purpose.
Whether you want to save money for a car, a house, an investment property, or just as a safety net (which is always a good idea!) setting goals help you get what you want faster.
Solution: Decide what it is that you’re aiming for. Write down why it is important to you, and then set yourself specific goals that can help you reach your destination.
9. You hang out with the wrong people
External influences, like friends and family, can be very persuasive when it comes to making right or wrong decisions.
You can tell which influences are negative by taking some time to think about your interactions. Are they encouraging you to grow, to think bigger, to elevate yourself and your situation?
Or are they the types to make reckless financial decisions that leave them feeling regretful the next day – and therefore, they encourage that behaviour in you, too?
Solution: If you don’t want to be dragged down by people who are bad influences, do some soul-searching and ask yourself whether your circle of friends really represent the most healthy choices.
10.You fail to budget
An oldie, but a goodie. If you’re aiming for financial stability, you need a budget, pure and simple.
Budgeting might seem difficult, but there are so many different methods of creating a budget these days that you will be able to find a way that is easy, straightforward, and that works for you.
Your budget doesn’t even have to be restrictive or make you feel like you’re missing out on living, as having a well-thought out budget can lead you to financial freedom faster than you can say “Ooooh, look at all my savings!”
Solution: If you don’t already have a budget in place, it’s time to set one up, pronto. This $70 budget exercise is the perfect example of how some foresight and inspired thinking around your how a well thought-out budget can positively transform your life.
Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.