This post may contain affiliate links. Please read our disclosure policy for more information.
Are you looking for saving money tips and personal finance lessons from the financial experts so you can finally stop saying “this is why I’m broke”?
I did a lot of research and noticed that many people are constantly asking why they are completely broke and struggling financially.
What I discovered is that most people have no money or savings left at the end of each month due to bad financial habits and spending behaviors.
How can I stop being broke?
I know and feel your financial pain.
You’re in a situation where you’re thinking: “I’m tired of being broke. What can I do?”
You’ve probably already scoured the Reddit community and read about other people’s personal finances to understand their situation and how they deal with it.
Some individuals stated that they are broke and stressed in their 20s whereas some are in their 30s with no job.
The result is that everyone has the same problem. And that is sick of having no money.
So, today, I’m going to go through a list of things that most Americans are spending a chunk of their money on and what tips financial experts recommend to help you save money. These are things that are preventing them from building a savings account and being one step closer to achieving financial freedom.
Here are 10 things that may be causing you to be broke and how to fix them.
They are mostly things that you may want to stop buying, or limit your spending on, to save money. When you add up the numbers, you could be unknowingly spending as high as $18,000 or more per year on things that go beyond your basic needs.
1. Your monthly expenses are too high
How are your monthly expenses looking – cable, Internet, cellphone, subscriptions, etc.?
Are you still on your old and expensive plans?
Try hunting for deals and calling in your service provider to negotiate a better rate.
It may take a little bit of research and upfront leg work to find the best prices, but it’s all worth it in the end when you can save yourself several hundred to thousands of dollars a year.
It’s not surprising to hear that many people save as much as $3,000 per year just by negotiating or looking for better deals on common expenses like cable, Internet, cellphone, home insurance, car insurance, rates on your credit, etc. and canceling any unused subscriptions.
All countries and cities offer different plans so do a simple search online within communities like Reddit, Slickdeals, or Red Flag Deals to see what’s available in your area.
You can also take a look to see which monthly subscriptions you’re not fully taking advantage of. It’s recommended you cut these services if you’re not using them.
2. Overspending on Amazon is making you broke
Americans are increasingly using online shopping services like Amazon on a regular basis.
With Amazon offering Prime members so many benefits like 2-day free shipping and money-saving perks, it’s hard to not shop online with their easy one-click checkouts.
Could you be one of those people who are overspending each month on Amazon without realizing it like the story about a woman who spent over $41,000 on Amazon purchases?
Before making impulse purchases online, be a more mindful spender and ask yourself whether you truly need the item.
Will you actually be using the item?
Does the item add value to your life?
Think about the true cost of any unnecessary spending and estimate how big your money tree could’ve grown when stashed away in an investment account or retirement fund.
PRO TIP: Want FREE Amazon gift cards to help you save money when you actually do purchase something you need online?
I recommend using this FREE Swagbucks resource to earn FREE $50 Amazon gift cards!
After signing up, remember to confirm your e-mail from Swagbucks to get your FREE $5 bonus NOW. I’ve been using this money-saving tool for over 10 years to redeem free gift cards online to reduce or eliminate my spending!
I’m really thrilled because I have enough Swagbucks points to redeem a FREE $50 Amazon gift card right now! This is how I’m able to save money and not spend my real money on Amazon purchases!
3. Bank fees are robbing you
Run, because your bank is literally robbing you!
You know those blood-sucking banking fees that lurk everywhere like maintenance, overdraft, bounced checks, insufficient funds, minimum account balance requirements, and other charges that are making you broke every month.
Overdraft fees are one of the worst and it can make you broke if you keep getting hit — that’s because many banks charge on average $35 each time!
In a year, the average person could spend up to $300 on overdraft fees. According to Chime Bank, this sheds light on how banks made $33 billion in overdraft fees alone last year.
Over the long span of many years, your overdraft fees alone add up to thousands of dollars which could have been earning interest in a high-savings account or invested in the market for potentially much higher returns.
4. You’re broke because of Uber
First of all, I want to say that there’s absolutely nothing wrong with spending on Uber rides.
There are times when you stumble upon an emergency and need to cab or call for an Uber.
Like the time when you and your friends had a little too much to drink and aren’t in the right state of mind to drive. Or when there’s no one available to drop you off the airport to catch your flight.
Aside from emergencies and those “once in a blue moon” rides, are you that person who is spending $400 to $700 per month on Uber rides?
Yeah, it’s no wonder why you’re always saying “this is why I’m broke”.
According to a source from money.com, Americans who use ride-sharing apps spend over $4,000 a year! This number is based on the average Lyft and Uber ride that charges of about $22 and assuming three to four trips per week.
If you’re a taxi or Uber addict, I recommend reviewing your bill to find out how much you’re spending. TRUST ME, you may not realize how much convenience traps are actually robbing you!
PRO TIP: You may even want to consider investing those Uber savings with an online brokerage like Betterment. According to money.com, you could save over $300,000 just by giving up Uber!
5. You’re overspending on groceries
You may be broke because you’re spending too much money on groceries that add no value or end up going to waste.
According to the Market Watch source, as high as 40% of food goes to waste in the U.S. They said that according to the Harvard Law School’s Food Law and Policy Clinic and the Natural Resources Defense Council, Americans throw away $165 billion in wasted food every year!
To reduce waste and save money on groceries, I recommend following this clean eating and healthy grocery list to avoid buying on impulse. Using this to menu plan your meals can help you stay within a reasonable budget the next time you shop.
6. You’re broke from overspending on clothing and shoes
One source from Credit Donkey states that adults spend on average $161 per month on clothing. Those who are middle-aged spend $209 per month.
Based on those stats, you could easily spend over $2,000 per year!
If you’re someone who loves to shop, then it’s no surprise that you may end up spending as high as $5,000 each year on clothing, shoes, and accessories!
What’s interesting is a source conducted by One Poll said 52% of women have shoes in their wardrobe that they never wear.
Credit Donkey said the average person buys 7.8 pairs of shoes per year. This is consistent with shoe retailer DSW findings where they reported that 75% of women in the U.S. own more than 20 pairs of shoes!
According to one of the many famous money quotes:
“We buy things we don’t need with money we don’t have to impress people we don’t like.” Tyler Durden (Fight Club)
If all this sounds like you, and you’re spending more or as much as you earn, then that may be the reason why you’re always broke, girl!
I know it’s important for you to look your best and keep up with fashion, but there are ways you could do that without overspending or wasting money.
SOLUTION: To save money and still look your best, be sure to plan ahead, shop the best sales, go for quality over quantity, and opt for more timeless pieces. If you’re opened to the idea, you may want to try thrifting strategies to see if how good you are at scoring brand-new clothes for dirt cheap! You may end up enjoying it!
7. You’re not taking advantage of FREE money!
Tying this with my last point about finding ways to save money while you shop, don’t forget to take advantage of free saving resources like Rakuten.com.
I ALWAYS use Rakuten to get money back on my purchases. That’s how I was able to rack up over $1,000 in cashback within the year!
You can take a look at how much FREE money I got back in my Rakuten account — $1,226.53. Free feels good! 🙂
Overall, you get FREE money of up to 40% cashback on your purchases plus it’s an efficient way to save on almost all your favorite retailers without putting in any effort! You could even combine this with other deals and promos to save even more!
SOLUTION: Want to save money and be a smart shopper? When you create a FREE Rakuten account HERE today, you’ll get a FREE $10 bonus! All it requires is your e-mail to sign up!
8. Excessive spending on beauty and cosmetics
Aside from Uber, takeouts, delivery and an excessive amount of clothing, we tend to spend a lot on beauty and skincare products that we may end up not using!
An effective moisturizer that costs $30 and a high-quality foundation that goes for $65 adds up very quickly. Think about all the other individual skincare and makeup products we spend on!
According to Byrdie, the average woman spends $313 per month on her appearance. That’s almost $4,000 a year!
We’re all very conscious and I totally get that.
Looking our best gives us confidence (that includes men too), so there is absolutely nothing wrong with investing in your appearance especially if it’s something that truly makes you happy.
The only downfall is there are gazillion beauty products out there and we may be wasting money because we end up throwing away the ones that weren’t right for us.
Having said that, consider looking for free makeup and skincare samples and doing some research on your skin type before investing in the full-size product to save money. This will prevent you from overspending and being broke!
Once you’ve tried the product and you like it, be sure to take advantage of big sales, store membership discounts, and free money resources to get cashback on your purchases.
PRO TIP: One of the most effective ways to maintain good skin without breaking the bank is to drink plenty of water, eat healthy, stick to a skincare regime that works for you, AND don’t forget to apply sunscreen EVERY DAY (even in the winter). Try THIS highly effective Korean sunscreen that SO many people love including me!
9. Loosely spending on food deliveries and takeouts
Are you one of the many Americans who spend $100 per month on food deliveries to your home?
CNBC also reports that a person on average spends $2,500 per year on takeouts alone.
Like Uber rides, spending money on food deliveries due to “laziness” could be another convenience trap that’s making you broke.
So what is the cause of so many food takeout and deliveries?
According to a source from New York Post, the top reasons for reluctantly ordering take-out are cravings (44%) being too lazy (37%) and not having time to cook (26%).
If you’re not aware, bad habits like “cravings” and “being too lazy” may be costing you thousands of dollars.
For middle to higher income earners, if you reside in big and popular cities like New York where you’re mostly eating out, you could easily spend between $8,000 to $15,000 per year on food alone! Just pull out your past bills, add up your food cost for the entire year and you’ll see what I mean.
Trust me, when you include “small costs” like appetizers, sides, desserts, and drinks (let’s not forget about tips), it’s not hard to spend that much. You may want to consider switching up between eating out and cooking at home.
SOLUTION: Sign up for a FREE 14-day trial of this tasty $5 Meal Plan to save BIG on food every month!
For just $5 bucks a month, this meal plan is aimed to help you save both time and money by providing weekly delicious and healthy meal plans for you. Each meal works out to be only $2 to $3 per person!
That definitely beats spending the average of $10 to $12 per takeout meal, so imagine how much money you’d be saving every year!
Related post: 15 Easy Cheap and Healthy Meals Under $10 For Families
10. You’re wasting money on lottery tickets
An interesting survey by Bankrate revealed that 28 percent of Americans who earn less than $30,000 a year purchase the lottery at least once a week. These people reported spending $412 a year on tickets.
Though this amount may seem trivial, Amanda Dixon, a Bankrate analyst said:
“The idea of striking it rich by winning the lottery is enticing, but you can earn a guaranteed return by putting the money in a high-yield savings account.”
It’s not uncommon to hear that your chances of getting strike by lighting or dying from a coconut that falls onto your head are higher than the chances of you winning the jackpot.
Knowing that your chance of winning big is close to nothing, you may want to think about limiting those so-called “investments” on lottery tickets. No, they are not considered an investment!
Instead, use those savings to build an emergency fund or for other purchases that guarantee a valuable return.
11. Credit card charges are keeping you broke
The average interest rate that credit card companies charge on outstanding balances is 17.71%. Depending on which credit cards you have, that could be as low as 12.99% or as high as 24.99%!
Making a minimum payment on your credit card each month may seem harmless, but it’s actually robbing you thousands of dollars and keeping you broke (for almost eternity) thanks to those high-interest rates!
An article from NerdWallet states that debt carried over from one month to the next is revolving debt and usually incurs interest charges. The average U.S. household with revolving credit card debt has an estimated balance of $6,849, costing an average of $1,162 in annual interest.
Just imagine the total cost of interest charges over the years!
By only paying the minimum and continuing to carry a credit card balance means you’ll be in debt for a very long time and paying a lot in interest payments.
Credit card companies want you to keep paying the minimum balance because that is what’s making them rich and keeping you poor.
SOLUTION: In an ideal situation, you’ll want to make the payment in full and pay zero interest. However, if money is really tight, find creative ways to make extra money on the side and make additional payments to the minimum balance each month. Doing the latter can still help you save thousands of dollars!
12. You buy more just to “save more”
Don’t you just love the good ol’ slogan “BUY MORE, SAVE MORE”?
I have to admit I get lured into this marketing trap all the time.
In fact, I have no problem with buying more to save more. That’s only if I know I’ll be putting the item to good use, but admittedly sometimes I don’t!
The unfortunate truth is a lot of consumers are brainwashed by marketing and we fear missing out on huge savings if we don’t purchase more.
As a result, consumers end up buying more than they need leaving them with more clutter at home.
SOLUTION: Don’t shop when you’re emotional. Ask yourself if you really NEED to “buy more” of that product.
If it helps, sleep on it for a day because that “buy more, save more” event is usually on for more than just a day. Use “cash only” if you are someone who is addicted to shopping or loves to buy things on impulse.
Lastly, give yourself an affordable monthly allowance to splurge on whatever you want. Once that allowance is used up, you have no choice but to wait for next month.
What do you do when you have no money?
The first step to stop being broke is to assess your current financial situation.
Start off by listing out all your income vs. expenses. This will give you the bigger picture of how much you spend compared to how much you make.
Next, analyze the last 3 months of your transactions. This will indicate your spending behavior and allow you to adjust based on your needs, wants and priorities.
Check out these frugal living ideas for non-cheapskates to see where you can reduce your spending and save money.
If you’re jobless and have no income, then I recommend finding ways to make money on the side while looking for full-time employment.
Related posts on ways to make extra money so you can stop being broke:
- Earn up to $50 in PayPal Cash per Survey with these Companies
- How to Make an Extra 100 Dollars Every Day (Without a Job)
What does “I’m broke” mean?
The definition of being broke is not the same as being poor.
When someone says “why I’m broke” they are really saying why they have little to no money left by the end of each month. By definition, they have just enough to pay for the basic necessities.
More often than not, they may even have enough to splurge and spend on unnecessary things. It is the latter that likely makes a person broke with nothing to show for.
This is why it’s important for you to thoroughly read this post to learn where your money is going and what sorts of things you’re spending on. These expenses could add up to a total of $18,000 per year and causing you to be broke.
By understanding your spending behavior and knowing the root cause, you can fix the problem and achieve financial independence sooner.
On the other hand, being poor means you have absolutely no money or very little to live on.
When you’re poor, you have no assets, no job, and close to no income.
Overall, quality of life is poor and you have no option to upgrade. You could even be close to homeless barely meeting your basic needs for survival.
Final words on why you’re broke (and things to stop buying)
One person could be broke because they earn an average income that is just enough to cover for the basic expenses but uses debt to upgrade their lifestyle.
On the other hand, another person could be earning a high income but they’re broke because they cannot control their spending. As a result, they may be spending all or most of what they make leaving them with no savings.
As you can see, everyone’s financial situation varies and depends on many factors.
Although we are all different, one thing we do have in common is we like to spend our money on similar things.
For example, we all love spending on conveniences like takeouts, deliveries, and Uber.
Most of us care about our appearance so we love spending on the latest fashion trends like clothing, shoes, beauty, and the newest gadgets.
Another thing we can agree on is almost everyone loves to shop online for Amazon deals!
We are also tempted to buy all these things on credit so most of us only make the minimum payments which are costing us a lot of money in interest charges.
This is why it’s important to assess your financial situation and ask yourself whether you can truly afford all these things without going broke!
It’s time to sit down and take a look at the big picture to see where you can reduce your spending and save money.
If your savings are maxed out and money is tight, then it’s time to find ways to increase your income so you can finally say goodbye to being broke!
Love your tips on what I should stop spending money on! I keep buying and buying like it nothin. Shopping heals me but not lasting too long and that’s my problem. I’ll be sure to use your tips in this article to help me stop being broke. Thanks for this list.
This is a great article about what things Americans are buying to cause them to be in debt and broke. I confess I don’t negotiate and I’m not much of a good one. I shall change in what I spend in 2020! Really wishing to be debt free so I can start saving. That would be my 2020 dream come true. Thank you so truly for sharing your tips!