6 Behaviors That Will Make You Go Broke

This is basically a ‘how to’ post except normally ‘how to’ articles are written in the positive rather than the negative. I thought I would change things up a bit and share with you ways that people go broke, which in turn means these are things you should most likely avoid doing. Don’t worry; you won’t find “buy avocado toast” in this list because I’m sure that’s not going to be the thing that drives people to go broke.

What you will read below are things I’ve determined based on observances I have made. Being an accountant, I am extremely analytical by nature and I am constantly analyzing people (sorry, I can’t help myself!). I like to observe people’s actions and then try to figure out the reason for those actions based on things they say, other things I’ve noticed or by just making assumptions. These are 6 ways to go broke, which I have witnessed people doing some of or all of at once.

1. Compare Yourself to Others

Living in the time of social media can be difficult. Everyone is constantly sharing everything they are doing for all the world (or their 900 Facebook friends, 1,300 Instagram followers, and 100 Snapchat friends) to see. I am a millennial, so I am not making fun. I do it too. The problem is that social media is generally where people show off their BEST self; whether it is the best selfie after 22 takes or posting the ONE time they went to an expensive restaurant.  The point is social media is a façade, so comparing yourself to what you see on there creates impossible expectations to live up to. It also makes you strive for things that you cannot afford (see item 2 below).

2. Live Above Your Means

This goes hand in hand with the above. I know SO many people who follow celebrities on social media and envy their lives. This would be fine, but they go one step further in trying to buy the same things that these celebrities are wearing or decorate their house the same way or vacation in the same spots as these people. I’m not trying to imply that celebrities are not humans; they are. The issue is that celebrities have and make much more money than the average person. You shouldn’t be living the same way as them because you simply cannot afford to.

Do not charge things on your credit card if you can’t pay it off right away. Do not buy a car that costs more than your salary. Do not spend more than 28% of your income before taxes on housing payments, such as mortgage, taxes and insurance (according to Bankrate.com).

3. Care More About Your Image Than Your Financial Situation

Up there with comparing yourself to others, people are constantly doing and buying things for show. You want people to THINK you’re rich, when you’re really poor. As long as you are eating at expensive restaurants, wearing designer labels, vacationing in the best spots, then it doesn’t matter how you’re affording it because people will think you can afford it, right? Wrong. Who cares what people think of you based on the image you’re portraying? What do you get from putting on an act? A few likes on Instagram?

I realize that this post is making it sound like I hate social media, but I actually don’t. I just think posting honest things or nothing at all makes much more sense. It would make me more sad if people liked a “fake me” more than the real me. Your financial situation is no one else’s business, but make sure that you at least make it your own business.

4. Feel Entitled

I’m not entirely sure where people’s sense of entitlement comes from, but it’s pretty crazy. People will charge designer shoes on their credit card and justify it by saying “Well, I deserve these.” No. You don’t. If you cannot afford to buy them outright without taking on debt, you don’t deserve them. If you want to reward yourself for doing something, contribute to your savings account or retirement plan! Your future self will certainly deserves more than you do because your future self will have worked a lot longer and been through a lot more than you’re going through right now. You shouldn’t expect things to just be handed to you.

5. Be Impulsive

This is one of the reasons I enjoy shopping online more than shopping in person: it helps reduce my impulsiveness. When I’m in a store and I see something I like, I tend to buy it (as long as it’s reasonably priced). A majority of the time I won’t do research for price comparisons and I won’t wait before buying because I’ll most likely be too lazy to come back. When I shop online, though, I add things to my cart and then ask my husband and my friends for their opinions or I save it for later and go back to see if I still really like it.

Additionally, I always price compare online AND look at reviews. This saves me money no matter what; even if it’s just on shipping costs alone because another website offers free shipping. Being impulsive can be costly for a few reasons: 1) you think you like something and then realize you don’t like it that much, so you’re either stuck with it or have to return it (shipping fees, gas cost, temporarily being out that money, etc.) 2) by not researching ahead, you can end up purchasing something that is poor quality that you need to replace sooner than expected 3) you just don’t think about the cost and focus on your impulse.

6. Make Excuses

I can’t contribute to my savings or retirement because I have too much debt. It’s not my fault I’m in financial trouble; I didn’t have anything handed to me. I don’t need to save now because I’m young. These are all excuses people make for why they are not in good financial shape. While there may be some truth in some of these excuses, if you really want something you will make it happen. If you really don’t want to be broke, you won’t be broke.

Sure, it is tough to save money while you’re paying off debt; however, if you come up with a debt repayment plan and you keep your expenses low, you can save money, even if it is just a small amount. No amount is too little when you’re adding to your savings or retirement because compounding interest does wonders over time. Yes, it is harder to get yourself where you’d like to be financially without help, but with determination and focus on this goal you can absolutely do it. Don’t make excuses; make plans.

If you’d like to NOT go broke, I suggest the following: avoid debt, pay yourself first and never underestimate the power of compounding. Clearly, this is oversimplifying, but, combined with doing the OPPOSITE of above, it’s a good starting place.

Have you witnessed any behaviors that are leading people to go broke or will eventually do so? What advice do you have?

17 thoughts on “6 Behaviors That Will Make You Go Broke

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  1. I think the one I see most is Comparing Yourself to Others. You’re so right about people only putting their very best on social media. Who knows what their life is really like.
    Even HGTV shows drive me crazy. People buy these amazing homes that are oh so perfect but it’s just a TV show. So you don’t have a fireplace or inground pool…boo hoo. Just be happy with what you have,

    1. As much as I get sucked into all those HGTV shows, owning a house makes it obvious that they’re setting unrealistic expectations for the average person. You hit the nail on the head- be happy with what you have!

  2. Definitely with you on #1. I’ve had to step back from my personal social media for a bit because of it. And you’re right, re: people just post their best stuff. I heard a great analogy once, don’t remember who said it, but that Facebook and the like is everyone else’s *highlight reels*, not their daily lives.

  3. Yes! That is a great way to put it!! I try to keep reminding myself of that when I see things that make me envious because I absolutely love my life and who cares about the highlights of other people’s? I don’t make it a point to post every single highlight of my own.

  4. I have witnessed a hundred times and even myself sometimes these above things.

    Number 3 is so true and probably the place I see people fail the most! Who cares what you drive, wear, or vacation at if you cannot afford them in cash!
    Sometimes the overly simplified version is just what we need!

    1. Absolutely! I mean, to each their own, but if you’re buying expensive things or doing things specifically just to show off for other people, it’s sad and it will certainly make you run out of money at some point.

  5. #4 and #6 are the worst. I think a lot of young people get used to a certain lifestyle growing up without understanding the sacrifices it takes to achieve said lifestyle. Then kids come out of school expecting the same level of activities, vacations, and entertainment without a clue on how to get them responsibly. I definitely understand it, but well-meaning parents aren’t doing kids any favors by shielding them from money.

    One that will piss you off: I had a roommate who bought a lot of clothes, had a low-paying job, and lived paycheck to paycheck. I asked her why and she said she didn’t want to get old, so there was no reason to save! I don’t know how she was going to guarantee that…

    1. WHAT!? I hope she changed her mentality since then. Not saving for what you get old, doesn’t stop the aging process!

      It’s so true that people get accustomed to a certain lifestyle that someone else is paying for and they don’t realize it’s not that easy to keep up with that on your own (at least not when you’re starting out).

  6. I have over 200 friends on FB, but am following maybe only 10 of them now. People post so much stuff and we get locked in to what they have, did for the weekend, restaurant they go to so I just don’t need to see all that cause it really doesn’t entertain me. But I added a couple of companies I follow and that “Bright Side” page just cause it has cool and useful hacks. I deleted my Instagram app because I just don’t have time anymore.

  7. I enjoy Facebook, even if it is other’s highlight reels, because I am so far away. It helps me feel more connected. But it is important to note that 90% of the time, that’s what it is: a highlight. I have bad days, but I usually do not post about them. And I find that most people really don’t want to read about it, unless it is something super serious.

    It is very hard for me to imagine that keeping up with the Jones’ mentality. I am happy living within my means. Happiness is more than just things; to me it is experiences. I am just as happy enjoying a night out with my boyfriend at the Chinese Buffet as I would be in a fancier place, or cooking a great meal at home. It’s all about the people and what you’re doing. I LOVE going to the beach, but I can’t afford to travel. So we’re going to Delaware. There’s sand, sun and that’s all I really need.

    Now and again I think everyone has a moment where they are down and everyone else’s life looks so shiny. Its important to remember like you said that social media isn’t the whole story!

    1. I actually enjoy social media too! It’s a great way to be able to stay in touch with friends and family that you otherwise wouldn’t be in touch with, or at least not as often.

      You’re clearly much more grounded than many people I know, which is great. There will always be someone out there who has more money or better this or that no matter how much you may have, but what matters is learning to be happy with what you have. You hit the nail on the head- happiness is so much more than just things. One of the things that makes me happiest is just taking my dog for a long walk with my husband on a nice day.

      That’s exactly my point is just to remember that when you become envious of someone’s life on social media, just to realize that it’s not the whole story.

  8. The entitlement thing is crazy to me. I had friends who barely made it through college and then bought a new BMW because they deserved it. What! You think the universe somehow owes you a new car because you just finished partying for five years in college and owe the University 50 grand.

    1. Wow! I have one friend who did that, as well, and a few more who have talked about doing it. Meanwhile, they’ve got tons of debt. I don’t understand the mentality.

  9. “People will charge designer shoes on their credit card and justify it by saying “Well, I deserve these.””

    Ouch, that hits a bit too close to home. I do clothing hauls and book hauls after each payday and told myself ‘I deserve it’ after all the hard work!

    1. As long as you can afford it, it’s totally fine!

      I know people who are in debt who decide to spend hundreds of dollars on designer shoes. Instead of paying off their debt, they build their credit card debt even further, and barely make ends meet 🙁

  10. I think the No. 5 and No. 6 are the most common and important in the list. Impulsive buys can be small but they can also be large…like a car. Then there are always reasons why people state why they cannot pay off debt or save, ultimately it is just too many excuses.

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