10 Traits Of People Who Stay Broke No Matter How Much Money They Make
Financial responsibility is about much more than budgeting.
christinarosepix | Shutterstock Financial security translates to financial freedom. But having access to money doesn't always translate to having wealth, especially for people who haven't examined their relationship to money from an emotional and psychological standpoint.
While it might not be initially obvious, the traits of people who stay broke no matter how much money they make are linked by a common thread. Having unhealed financial wounds will inevitably impact how people manage their money. Uncovering the root causes of their money mindset can set people free from patterns that limit their ability to build up wealth.
Here are 10 traits of people who stay broke no matter how much money they make
1. They don't establish financial goals
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Not planning for their financial goals is a trait of people who stay broke no matter how much money they make. They might have a considerable income, but they're still stuck in the cycle of living paycheck to paycheck because they haven't mapped out their goals for the future. They tend to spend impulsively, without considering how they could channel money toward big-ticket items, like owning a home.
The University of Chicago shared that shuttling money into savings is part of having a financial safety net for the years to come. They referenced the "50/20/30" rule, in which people use 50% of their paycheck for their needs, 20% for saving and debt, and 30% for their wants.
Putting money aside will pave the way for financial security, but it's still important to have a clear idea of what you're saving money for. The University of Chicago suggested organizing your financial goals according to the time it will take to reach them.
Short-term goals can be achieved within one year. Mid-term goals can be set for what you want to afford within five years, and long-term goals for anything over five years.
While staying present is beneficial to our mental health, it's possible to be too present when it comes to spending money. Without financial goals, it becomes incredibly easy to spend money as soon as you get it.
2. They're disorganized
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Even though they have a steady stream of income, disorganized people never know exactly how much money they have in the bank. They buy what they want, when they want it, which holds them back from accumulating wealth. Disorganized people who stay broke no matter how much money they make usually feel like their finances are out of control.
The first step to reclaiming control is to track their spending and see where their money is going. Once they've mapped that part out, they can build a budget and allocate money to specific areas of their lives. Budgeting might seem like one of those boring, adult tasks that suck the joy from life, but in reality, a budget is a tool that brings you closer to your dream life.
Making a budget can help you decide what's important to you. Ultimately, making a budget is an empowering act, because it signals you have agency over your financial future.
3. They struggle to set financial boundaries
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It's hard enough to determine limits around your own personal spending, and adding other people to the mix can derail your finances. While generosity is something to strive for, giving beyond your means strains your wallet and leads you to resent the people you love. Setting financial boundaries is a protective measure, one that fosters financial responsibility and keeps your relationships in tact.
According to an article from The Financial Gym, written by certified financial trainer Kylie Lipinski, a financial boundary can be defined as "a limit you set to protect your financial health and well-being [that] allows you to prioritize your goals and values."
The first part of setting a financial boundary involves thinking about situations where you feel pressured to spend money in a way that doesn't suit your needs. Then, make an effort to communicate your boundaries as early as possible.
It's easier to let a friend know that you can't pitch in for her birthday dinner before going out, rather than the moment the check is passed around.
Be clear about what you can and can't afford. It might feel uncomfortable, but like any boundary, setting financial boundaries is a muscle you build with practice. Knowing your limits lets you spend your hard-earned money in alignment with your values, versus feeling like you can't say "no" to being a bridesmaid in yet another destination wedding.
4. They're overwhelmed by financial anxiety
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Anxiety is a subtle yet sneaky force. It threatens our sense of safety, erodes our self-confidence and undermines our best intentions. Financial anxiety can manifest in various ways, including avoidance and anger.
Someone with financial anxiety might wait to open their bills until the very last moment or ignore how much money they have in the bank. They might get caught up in arguments that never seem to reach an actual endpoint.
Licensed clinical social worker Cheryl Gerson questioned why it's so hard to talk about money.
"Why is money such an emotionally-infused subject?" she asked. "Money, in essence, is simply a medium of exchange. However, money stands for everything we need for survival — and that's what makes it so fraught with anxiety and defensiveness."
"Personal finances are anything but rational," Gerson explained. "Partners can get deeply entangled in the idea that one point of view is 'better' than another. As a result, many couples just give up and resent one another's choices, feeling impoverished by what feels like the other's greed or lack of flexibility — and the wedge between you grows."
Giving voice to financial anxieties removes some of its power, which creates a safe space to unpack our emotions and discuss how to change our approach for the future.
5. They avoid accountability
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Avoiding accountability is another trait of people who stay broke no matter how much money they make. They blame their financial struggles on anyone or anything other than themselves. By not owning up to how their spending habits and money mentality impact their lives, they resign themselves to being stuck in their patterns forever.
Physician and clinical mental health writer Kristen Fuller, MD defined accountability as "taking responsibility for your actions or holding another human being responsible for their actions." Asking for accountability means asking difficult questions like, "Why did this happen? What thoughts existed behind the actions? Can anything be learned from this experience?"
There's a stark difference between accountability and shame. Accountability requires us to accept responsibility for harmful behavior, while shame declares that our behavior means we're bad people.
Empathy is the only way to counteract shame, which is why it's so important to hold ourselves accountable with compassion. True accountability brings discomfort, but it also gives us a deeper understanding of who we are, which leads to growth.
6. Fear keeps them from learning financial literacy
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Being financially literate involves understanding financial skills and using those skills to make informed decisions around how to manage your assets and resources. While this is crucial information, financial literacy is often overlooked in schools or not openly discussed in families. It's human instinct to be scared of what we don't know, which is one reason why people who stay broke don't learn financial literacy.
As money coach Nicole Victoria explained, "When you grow up hearing, 'We don't have the money for that,' it changes you. You spend money the second you get it because holding onto it feels unsafe. You avoid looking at your bank account because you're scared of what you'll see. You feel guilty when you spend, even on things you love."
"It's not your fault," she said. "You learned to fear money. But you can unlearn it." Facing our fears is the only way to overcome them, which doesn't mean someone who's scared to learn financial literacy has to know everything all at once. Making small, manageable goals will lead to small, impressive victories, which are absolutely something to celebrate.
7. They rely on material possessions to prove their worth
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When people lack a core sense of self-worth, they usually use external validation to make themselves feel worthy. While this strategy might work for a little while, true self-worth has to come from within.
Over time, the fancy cars, designer clothes, and cutting-edge tech gadgets will lose their luster. That hollow, empty feeling will return, stronger than before, and it will take even more to satisfy its eternal hunger.
People who believe in the power of materialism tend to think that spending money will make them happy, or at least distract them from their inner turmoil. The sad truth is that throwing money at their problems won't change who they are or how they feel about themselves. If they really want to change, they have to reassess why their self-worth is so low and commit to loving themselves fully.
8. They compare themselves to others
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Measuring what they have against what someone else has comes from a scarcity mentality that traps people in a vicious cycle. They don't feel fulfilled by what they do have, because they only notice what they're lacking.
YourTango CEO Andrea Miller called this experience "Comparison Culture," which she defined as "a societal phenomenon in which individuals habitually engage in the practice of constantly measuring themselves, their achievements, possessions, and life situations against those of others."
"The impulse to compare is normal and natural to a large extent," she explained. "But in our society, it's become much more extreme. It is a symptom of sorts. People who are more inclined to feel 'less-than' or suffer from insecurities are more likely to compare themselves in hurtful ways."
According to YourTango's Comparison Culture Survey, 62% of people reported that comparison culture is "super problematic or somewhat problematic in their lives."
Miller shared that cultivating gratitude is an antidote to getting caught in the trap of comparing yourself to others, noting that "When you feel genuinely grateful, it's tough to simultaneously feel the scarcity/fear/doubt that Comparison Culture engenders."
9. They equate wealth with success
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By defining success solely in monetary terms, it's highly likely that they'll spend the money they have in indiscriminate ways. They don't save for the future or make sure they have an emergency fund. They're more concerned with appearing rich than staying rich in the years to come.
People who see wealth as a sign of success lose sight of what's really important. They place more value on the number their bank account reports than their relationships or the experiences they've had.
Equating wealth with success doesn't bode well for the long-term, since their drive to keep spending won't ever slow down. At some point, their money will disappear into the ether, leaving them alone, with only their misguided view of success to keep them company.
10. They can't separate their emotions from their spending
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Being unable to separate their emotions from how they spend money is a trait of people who stay broke no matter how much money they make. On some level, every financial decision that people make is guided by their emotions.
The way people relate to money isn't practical, so much as psychological. Stepping back and finding some separation between their actions and their emotions can help people reign in their spending.
Financial coach Pegi Burdick touched on the harsh reasons why people are so bad with money, noting that "How we spend money and why is not random. It comes from issues in our childhood. Some of these are visible, such as never having received an allowance. Others are more subtle like messages about feeling unworthy."
"Feeling undeserving is one of the biggest distorted belief systems we inherit," she revealed. "The underlying, age-old scars that push you to buy things you don't need are tough to sort out, let alone heal." Healing is rarely ever linear, but embarking on the process is a way of showing up for yourself in a very real way.
Alexandra Blogier, MFA, is a staff writer who covers psychology, social issues, relationships, self-help topics, and human interest stories.