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4 Ways To Avoid Being Broke

4 Ways To Avoid Being Broke

In today’s world, we are now running faster than ever to be able to make more every hour. We compete with the people next to us and people on the opposite end of the continent to make our mark and to make our living.

However, as the number of millionaires increases, the number of people reaching bankruptcy and being broke is ultimately increasing too. News of the once rich and famous going broke often pops up in the Financial Report.

How can you avoid the mistakes of the once rich who’ve gone broke? Here are some common-sense tips to help you avoid being broke.

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    1. Don’t purchase what you can’t afford just to impress.

    These days, we are all looking to impress. Looking less is unacceptable in certain parts of the world. While some believe beauty is found within, others believe that beauty is in the Prada you wear and the sports car you drive. So, to impress those who really don’t matter, we spend our paychecks in a department store.

    Take this lesson from history: one should never spend beyond their means. If you can’t afford it, then find alternatives according to your means. This is a survival mechanism which allows you to save and prevents you from going into debt. Getting away from your need to impress is a great way to avoid excessive spending.

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      2. Freeze your credit cards in your freezer.

      The trend these days, instead of carrying cash, is carrying different cards from different banks with different interests in your purse or wallet. You swipe at every single purchase with your mind on your purchase and ignore the bills you’ve been racking up. According to research, one of the biggest reasons for an individual to be broke is overspending on multiple credit cards.

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      Running away and changing your identity is one option, while another is to declare bankruptcy. To avoid either of these, try going old school and carrying cash instead. This limits what you can spend in the moment. If the temptation of using your credit cards is too great, try freezing them in ice in your freezer. This adds another obstacle between you and your next charge.

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        3. Invest smartly, not impulsively.

        Investing is a great way to make money and protect your assets. However, we aren’t all experts in investing. We may be great moneymakers, but the talent of wise investing doesn’t come to us all. Investing emotionally is the same as gambling — we gamble impulsively, hence we lose big or win big.

        As a precaution, always have an advisor who is trustworthy and an expert on investing either in real estate or stock markets. However, research on your part is also important. It will give you the confidence and knowledge you need to make smart investments. After some time, you will be used to investing and your experience will be your greatest advisor.

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        Concept of investment with eggs in the same basket.

          4. Focus on diversifying your assets.

          In the dating world, we are often told to focus on differences rather than similarities. Why? Because it gives us the confidence to secure our emotional selves. Why not act the same way with your assets?

          In the 2000s, the “Get Rich Quick” scheme was on the rise. Many went broke when they invested all their assets in one scheme. History teaches us to never leave all our eggs in one basket. This is an important lesson when it comes to investing.

          Investigate how you can expand your assets and diversify your investments in different markets and different sectors. Read books to help you understand how you can best go about diversifying your assets.

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          Thinking about finances is always uncomfortable and spending is always tempting. However, in today’s world, your assets and your bank balance will give you a sense of security, while extravagant spending may leave you at the bottom of the barrel.

          Featured photo credit: VIKTOR HANACEK via picjumbo.com

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          Published on September 17, 2018

          How Being Smart With Your Money Leads to Financial Success

          How Being Smart With Your Money Leads to Financial Success

          Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

          With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

          So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

          1. Avoid being “penny wise but pound foolish”

          It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

          You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

          So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

          2. When you want something big, wait

          Impulsivity can get you in trouble in most aspects of life. Finances are no different.

          It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

          We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

          A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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          So, you get the itch.

          You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

          Here’s where you have to take a step back.

          Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

          Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

          It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

          The impulse faded. And you just saved yourself a ton of money.

          3. Live smaller than you can afford

          You finally get that big raise. And you want to celebrate – and why not?

          You’ve been looking forward to this forever. And after all, it was all due to your hard work.

          That’s fine, splurge a little. However, make it a one-time deal and be done.

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          Don’t get caught in the trap that just because you’re now making more money, you should spend more.

          Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

          The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

          But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

          4. Practice smart grocery shopping

          Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

          But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

          Create a grocery budget

          Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

          Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

          I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

          Make a list… and never deviate

          Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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          You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

          These impulse decisions will lead to overspending, which will derail your grocery budget.

          Eat before going grocery shopping

          It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

          If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

          After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

          Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

          However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

          This makes it much easier to stick to your grocery plan.

          5. Cancel your gym membership

          Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

          The average gym membership costs around $60 per month. That’s $720 a year.

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          Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

          I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

          Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

          Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

          For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

          Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

          There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

          It’s baby steps… And baby steps can start now!

          I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

          Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

          The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

          Featured photo credit: Unsplash via unsplash.com

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