 No doubt, achieving financial freedom and living in our terms is what we visualize when we think about our future. Still, many people will never achieve this dream of being financially successful. The reason why some individuals will stay broke is not that they cannot be economically independent but because they have a wrong mindset and lousy attitude towards finance. In this video, I will share with you 9 common reasons why people stay broke. 1. Lack of financial goals If you don't want to be broke, one of the foremost things you need to do is to set financial goals. Anna Maria, Lucardi, a George Washington University professor and expert in debt management once said that the bottom line is everyone should do more to plan for their financial future. Setting financial goals is like saving your present and securing your future. It helps to coordinate your activities such as helping multiple income streams, expenditure, investments, getting off debt, etc. and also future events such as retirement, insurance and having an excellent financial house upon your death. When you do not have plans for your finance, you are bent to remain poor. 2. Spending more than they earn When your expenses are more than your means, then you might never break free from being broke. Ideally, your costs should not even equal your earning. Your expenditure ought to be less than your income. Have you heard of the famous saying, cut your coat according to your size? Do you know that it has been modified to cut your clothes according to your material? You may wonder what the difference is between the two. Well, cutting your coat according to your size means spending according to your wants. However, it's better to cut your coat according to your material because your capacity may be bigger than your material and you need to reserve some material for later use. Many people make expenses based on their wants and that amounts to them staying broke, even though they have a job. 3. Kipping up with the Joneses A lot of things that people, especially the poor, spend their money on are things that they do not need. The desire to meet up with people around you can drive you to waste money. This need to keep up with peers and get closer to those you perceive as superior is termed the Jones effect. While this need can be a driving force for brands, it harms the finance of individuals with a poor mindset. If you have the dream of leaving a bar being broke, then you must listen to this piece of advice from American radio host Dave Ramsey. You need to live as no one else would now, so in future you can leave as no one else can. Your biggest competition is not your next door neighbor who just acquired a new car, but yourself who finds it hard to save and invest because you want to compete with others. 4. Not Investing Investment is a medium through which you can build real wealth. However, many people give the excuse that investing is like gambling and is complicated. They settle for the belief that if their income increases, their life will be better. But no, that belief is fallacious. An increased income will not suffice for your being broke. You need to make your money multiply itself. Although investment is a risk, it is one that is worth taking because of its benefits in the long run. While broke people struggle to pay interest, the wealthy earn interest from the money they consistently put into investments. 5. Making Impulsive Purchases Have you ever been in a position where you had to wonder where all your money went? Well, here it is. The last time you went to the grocery store, you spent above what you budgeted on something that was not necessary. A new survey revealed that one out of five supermarket shoppers makes an impulse purchase at checkout. Although getting a pack of gum at a counter won't leave you broke, but incessantly purchasing items that are not on your budget will make you measurable sooner than you expect. The impact of impulse shopping on your bank balance is not immediate. However, at the end of the month, you will see how much money you have been throwing away on unnecessary items. Research shows that impulse spending is worse if you are the type of person who moves around with credit cards. So, unlike broke individuals, the smart ones understand the harmful effects of carrying their plastic cards around, so they prefer to go out with cash. 6. Playing the Lottery Statistically, the odds of winning a grand lottery prize is 1 in 292,201,338,000. However, many people buy these tickets every week with the hope to strike it rich someday. Amazingly, Corley stated in his book Rich Habits that 77% of people who buy lottery tickets are those struggling financially and only a small amount of 6% of wealthy people play it. He concluded that the reason for these records is that those who are wealthy do not count on luck for their wealth. They work hard and smart. But for the broke ones, they assumed that someday, luck would shine on them and they would have their big bang. Hence, even when they lose, they continue buying lottery tickets. If you have the opportunity of meeting a baker for the first time, do you ask him for bread or you seek to learn how to bake bread? A lot of people stay broke because they will choose the former option. A distinctive attitude between the poor and the rich is that while the poor are salary-minded, people with a rich mentality are experience-focused and network-oriented. Unless you go against the urge to always ask for something of immediate pleasure, you will remain broke. If you want to break free from misery, you must be open to learning from others. Network, build tangible connections and commit yourself to mentorship. Bear in mind that there are three things you can achieve from a job. Contact, experience and salary. Salary has the least value. 8. Staying around broke people Have you heard of the story of the little eagle in the chickens? I'll tell you. A newborn eagle found himself in the company of chickens and before long, this eagle began to act like the hens. He could not even fly. One day, it came in contact with another eagle and realized that this new creature was its kind. This new found eagle, which was mature, became the hero in this little eagle's soaring story. The moral of this story is simple. You soon become like those you stay around. The easiest way to stay broke is to hang around broke individuals. Likewise, if you want to be rich, be in the gathering of the rich. Their lifestyle will motivate you to be wealth-minded. It is hard to get ahead financially if you only associate with individuals who have bad money habits. 9. Borrow money to purchase depreciating assets Here is a scenario. Paul wants to buy a car to ease his transportation problems, but he does not have enough money. So, he takes a loan and purchases the car with the hopes of paying through a period of 8 months. A few months after getting the car, he loses his job. His only means of livelihood. Well, he still has to pay his debts, so he decides to sell off the car. Guess what? The car he bought for $3,500 now costs $1,500. Taking a loan is not a bad idea. In fact, most rich investors are debtors. However, when a loan is spent on liability or an asset that does not appreciate, it becomes a problem. Many people remain broke because they are stuck in paying debts for things that are not profiting. It is essential to understand that building wealth is not a game of luck. If you want to break free from the cycle of being broke, you must be aware of the behaviors that are holding you back in the first place and work towards breaking free from them.