This post is by our regular Wednesday contributor, Erin.
How many times in your life have you said, “I’m broke,” and actually were broke?
How many times have you been broke and not been actively doing anything about it?
Chances are, there have been at least a few times. Maybe you’ve felt broke, or you were waiting for your paycheck to hit, but you weren’t in a dire situation. You were getting by.
I know quite a few of my friends who say they’re broke, but go out to eat, have $90 cell phone bills, and still manage to buy games, books, and movies they like. That’s not being broke.
For some people, especially young adults, being broke is a result of mismanaging your money. Or it’s due to not taking the correct actions to improve your financial situation.
Either way, it’s possible to push past the “broke” mentality and into one of wealth. Here’s how!
Stop Saying You’re Broke
Is it really that easy? Yes and no.
If you’re constantly saying you’re broke, telling others that you’re broke, and essentially, telling yourself that you’re broke, you obviously believe it to be true on some level.
Don’t let your money (or lack of money) control you like that.
I used to do something similar, saying I couldn’t afford certain things, when it wasn’t completely true. I was just unwilling to spend the money because I didn’t find the purchase worthwhile.
Yet, negativity started seeping in anyway. I seriously started believing that I had to live on a super tight budget, and had to watch my spending like a hawk.
That was emotionally draining. I was letting my money control me.
It’s almost like a self-fulfilling prophecy, and only you can put a stop to the cycle.
Stop saying you’re broke, and instead, put a positive spin on it. Tell yourself (and others) that you’re working to get your finances back on track. Set financial goals and tell people what you’re working toward.
Remember, if you’re not actually broke, you’re just in the broke mindset. You can absolutely choose whether or not to get out of it or stay in.
Stop Living Paycheck to Paycheck
If you feel broke, or you’re near broke, you might be living paycheck to paycheck. I know far too many of my friends that do this, and it kills me.
Again, it’s one of those vicious financial cycles you need to break yourself out of.
First things first, you need to get a hold of your money. Have you been tracking it? Do you have a spending plan? If not, get on that!
Money could be slipping through the cracks without you knowing because you’re not bothering to figure out where it’s going.
Next, create a spending plan, or at least evaluate how your expenses compare to your income. Are you bringing in enough every month to cover all your basic expenses? Or are you in the red?
If you’re in the negatives, do whatever you can to fix it. Change your living situation to a cheaper one if possible, negotiate any monthly bills you’re paying, do your best to save at the grocery store, and be mindful of how much you spend on things that aren’t necessities, like entertainment and dining out.
I know living paycheck to paycheck might seem like the norm – and it is to many people – but that doesn’t mean it has to be your norm.
If you’re tired of the anxiety you feel while waiting to get paid, it’s time to start figuring out how you can save.
Be Open to Opportunities
Growing up, my parents weren’t very well-off. They’ve had consumer debt ever since I can remember.
As a result, I figured my financial life would look much the same. I never thought I’d be a millionaire or anything special. I assumed I’d be working some mediocre job from the time I entered the workforce till the time I retired.
That was no way to think, especially as a young adult with so many years ahead of me!
Again, it’s all about your mindset. I had grown up with the “broke” mentality because my parents were always broke. But I didn’t have to follow in their footsteps.
I might have started off that way, but within the last year, things changed – a lot.
I quit my job, relocated, and started my own business. I’m now making more than I ever did at my day job.
You don’t have to make such drastic changes, but you do need to be open to other opportunities. Don’t limit yourself! It only leads you to undervalue yourself.
Even if you’re in a not-so-great career situation right now, just remember it’s only temporary. If you get your finances together and establish an emergency fund, you’ll gain the freedom you need to leave.
Money gives you choices, but only if you leave yourself open to them.
Remain Grateful for What You Have
Going back to my childhood, there were a lot of rough financial times, as my parents couldn’t seem to catch a break. Major expense after major expense came our way, and what little savings we had couldn’t keep up.
However, I still had it good compared to a lot of people.
Food was always on the table, I had clothes, and I was spoiled by my grandma. Even though there was a lot of tension, my parents are still together and they’re thriving in retirement.
Keep an eye on the big picture and be grateful for the things you have. I know this sounds cliche, but having perspective does wonders for your attitude.
I’m sure there are at least one or two things you can find to be grateful for, even when things seem bleak. Focus on those things, pull yourself up, and surround yourself with positive, supportive people.
_______________
If things seem unbearable, do your best to change what’s in your control. Create a plan to improve your finances, and take action. The worst thing you can do is stay in the broke mentality. By default, it’s a limiting one. There’s no reason to create extra obstacles for yourself.
Have you ever been stuck in the “broke” mentality? How did you push past it? Were there times in your life when you were truly broke? How did you deal with it and bounce back?
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Living paycheck to paycheck was my worst habit. As soon as I started spending less and having more available cash each month into the next, my financial stress lowered quite a lot. I think breaking the paycheck to paycheck cycle is the best thing to do to get out of the “broke” mentality.
– Aliyyah @GiveCoolGifts
Latest Post: http://www.givecoolgifts.com/8-realistic-ways-to-make-money-fast/
I know a lot of “broke” people who have nicer stuff than I do! It gets old.
I think half the “broke” people I know are as a result of largely spending on stuff they don’t need only to find themselves not having the cash to get things they truly need. I’ve been in that spot as well in the past and made quite a few changes so as to not let money control me.
I’ve been there. I’ve been there a ton. Mine centers around the gratitude. I have a hard time appreciating what I have earned versus what I could earn.
It really is a long term versus short term mindset. The broke people that I do coaching with always run from fire to fire putting out the most pressing thing they see.
Car breaks down and you don’t like it? Buy a new one on credit.
Home repair that you didn’t “expect’? get a home equity loan to fix.
They just dig deeper and deeper until they cannot possibly pay all the payments. That’s when they finally get help.
I really believe in the power of positive thought and I think the more you say something, eventually you will believe it. Instead of telling yourself you’re broke, remind yourself of the things you have in your life and how rich that makes you!
I totally agree with the idea of being open to new opportunities. Most people who claim they are ‘broke’ may not ever try to do anything different to change their lifestyle or increase their income. I try to never say or think that I’m broke or can’t afford something because that’s not the right mindset to have. Even if you don’t have a lot of money because you’re sacrificing for something better, that should be your main focus your be your goals and what you’re choosing to do with your money.
Holly at ClubThrifty Indeed it does!
FrugalRules I think so too, John. It’s simply a result of not thinking twice before you buy something – or not checking in with your accounts to see how much you can spend!
fitisthenewpoor I hear you on that one. It seems like whatever we do is never enough. I have a horrible habit of always wanting to save more or earn more, when I’m doing pretty well for myself! There needs to be some balance.
SavingFreak Good point about long term vs short term – I totally agree. There’s way too much “instant gratification” that also goes on in our culture that leads to that mindset.
SimplySave Yes, definitely agree on this! It’s crazy to realize how much our thoughts influence our actions, and that we can actually change our thoughts to reflect positivity instead.
Chonce Agreed, Chonce. You might feel like you’re broke, but just because you’re putting tons of money toward debt or savings doesn’t make it so. Honestly, if you’re paying money toward debt, I’d argue you’re getting closer to not being broke and closer to freedom!
I have clients all the time use the word “broke” and it has such a negative impact on the psyche, not to mention the fact that they aren’t actually broke, they are just making frugal choices to prevent themselves from literally becoming broke.
I love the angle here. People rarely think about the money tied up in current, recurring spending when they say they’re broke. If we took a critical look at our baseline (Why am I house poor? Do I really want to spend $200 on tv, internet, and a cell phone every month? How important are dinners out?) then we’d find we always have a bit more money than we think.
Good tips, Erin. I am a firm believer that our words create our reality so if we tell ourselves we’re broke or we can only live paycheck-to-paycheck, our situation will remain that way. Even if it is true in the moment, it doesn’t need to stay that way. But if you believe that is the best you can do or the way life is supposed to be, than you will likely make it so. It’s so important to watch our words and attitude to make sure they are truly in alignment. Gratitude is also key because even though you may be going through a rough time and struggling, if you have a roof over your head, running water, electricity and food – you have so much more than a lot of people do in this world.
Ah, the power of a positive mind. I love this!
I used to say that I was broke all the time. I’m slowly moving away from that. Honestly, I’m still a work in progress. There has been 2 times where I have been truly broke. I bounced back because I knew I couldn’t stay down.
Mr. Money Mustache preaches the “your hair is on fire” mentality that should be adopted by anyone with a significant amount of debt. While it may keep your spending in check, you certainly can’t be that stressed out about your finances every day of your life. We have a lot of debt which destroys our net worth, but I don’t ever think of us as being broke. We have a lot of things going for us as well. Being aware of our situation keeps us grounded, but staying positive and optimistic keeps us motivated.
blonde_finance Exactly, there’s nothing wrong with that! I wish more people put a positive spin on frugality. It’s certainly not about being or feeling broke/limited.
DonebyForty Yes, for sure! I’m just reminded of that because many of my friends and family members are guilty of it. My parents refused to get rid of their cable package, even when we were in dire straits. There are a lot of unnecessary expenses that could be draining our resources, leaving us “broke.”
ShannonRyan “Our words create our reality” – Love that, and the rest of your comment, Shannon! I’ve been through a few financial ups and downs in life, particularly with my parents when I was younger, and I can definitely say financial situations are capable of changing. It just takes action, which a lot of people don’t take.
Anum Glad you liked it!
Jason @ The Butler Journal Good to hear you’re working on it, Jason. I think having experienced truly being broke actually helps push you away from the mentality, since you know if you’re getting by or not. Having a positive attitude always helps.
Harmony@CreatingMyKaleidoscope I get that people need to focus on their debt and prioritize payments there, but you’re right that not focusing on it 100%, and realizing there are other positives, is a good thing. I’ve been paying off my student loans for 3 years now, and it can be a downer when all I do is harp on them. I’ve come a long way since graduating, and it’s nice to recognize that (and I also don’t think I’m broke!). Thinking about debt 24/7 is emotionally draining.
In reality, I haven’t been broke in a long time, but it surely felt that way when we had tons of credit card debt. You are right that people who eat out all the time and shop for recreation are not truly broke. They are choosing to spend money mindlessly, which always catches up to you in the end.
Eyesonthedollar I do think a side effect of consumer debt is feeling broke, especially when so many payments are being sent out to so many creditors. It’s not fun when your resources are being stretched thin due to debt.
It’s a mindset that can prove to be a self-fulfilling prophecy and I get caught in it myself sometimes, too.
Being grateful for the basics – food, clothing, shelter – can help shift your mindset in the direction of abundance rather than lack. When you’re feeling positive it’s a lot easier to spot opportunities as they arise. And, you stop spending as a form of therapy!
You are absolutely right that your mindset has a lot to do with how you perform on a daily basis. Until you realize how you are sabotaging yourself the habit will not change and broke will be your last name forever.
smartmoneysimplelife I agree that focusing on gratitude helps shift your mindset, and it’s an important shift to make – not just for your finances, but for life in general. It never helps to feel like you don’t have enough.
Petrish @ Debt Free Martini That’s the thing – I feel like so many people don’t realize how they’re sabotaging their finances. There seems to be a disconnect a lot of times, mostly due to shortsightedness.
Like everything in life, it’s all about balance. Make a financial plan and stick too it, but be grateful for what you have. It’s so easy to get carried away on your journey to financial independence. At the end of the day you don’t want to lose yourself in the process.
My husband and I had this argument for quite some time. He would say that he wanted such-and-such, but then he remembered we were broke. It was infuriating because we had savings and a small emergency fund. It felt like he was denigrating all the hard work I put in to get us there.
But I finally stopped nagging him about it. Why? Because he has severe ADD. He needs a hard and fast “no” or his impulse control goes away.
That said, people will be surprised as to just how much phrasing will change their mindsets. My therapist asked me to change the words I used to describe why I didn’t do something — I’d say I was too lazy rather than that my chronic fatigue was bad — and I thought it was the dumbest thing ever. But sure enough, a week or so later, I noticed I was being much kinder to myself.
If it can work for something as deeply ingrained as negativity toward limitations, it can work for financial mindset.
I go back and forth on this all the time, and my wife hates it. Some days we’re doing well, and other days we’re broke! In reality nothing has changed, it’s all in the head.
Financial Tour Guide So true, especially when our journey is so long. It can be 10-20 years before financial independence, and that’s quite a long time for plans and thoughts to change.
AbigailP I like that point, Abigail. I never thought about it in a couple situation, but I think I would feel similarly if my spouse said he felt like we were broke and we had savings!
Yes, yes, yes! I studied cognitive psychology in college and found it fascinating. A lot of people don’t realize the power their thoughts hold over them, or that they can change those thoughts (or reframe them). Words are definitely powerful.
Mark@BareBudgetGuy Good point, Mark – a lot of our financial beliefs are “in our head” so to speak. It’s hard to push away from them when we’re staring at the numbers.
There have been times when I’ve felt broke, but I don’t know that I’ve actually ever truly been broke. But as you say, language and perspective are important, and being grateful for what you have can really help your attitude.
Gary @ Super Saving Tips I think we’ve all had those times, Gary! Perspective has definitely helped me. As long as you have food and shelter, you’re definitely not broke.
YES! The broke mentality is really self-destructive. Most of my peers like to say that they’re broke, but we’re all far from it! I think focusing on the positives more than what we “can’t afford” is always better.
LisaVsTheLoans Agreed – I know focusing on the positives has really helped me not only with my financial situation, but my entire perspective on life.