You always get tips on how to save money, how to invest money and how to stay afloat during every financial season.
But what’s the flip side like? What exactly will make you go broke in a matter of months?
Maybe you’re currently under the control of SAPA and you don’t even know. Or you’re just about to enter into a season filled with financial worries because of your poor financial decisions.
Maybe you’re still blaming other people for your current situation— poor governance, your employer, the economy, your family— everyone else apart from you.
So we want to make it clear— here’s exactly how to go broke in under a year— tested and trusted:
1. Incurring too much debt
The fastest way to stay broke is to go from debt to debt, to debt.
Not paying off your small debts for an extended period of time, borrowing more money from friends and financial institutions for stuff you don’t need or for gambling, can all be very hazardous for you and even for your whole family.
Even though debt is very common and almost everyone faces it at some point in their lives, it can quickly become a menace, especially if you are repaying a high-interest debt.
Of course, there are times when it is inevitable to incur debt— it may even be the best thing to do at that point.
That is what is called “good debt”— getting money for things that can help you increase your income and then potentially create wealth in the future, just like a business loan.
But just know, accumulating bad debt will run your finances down in no time.
2. Taking very risky investment decisions
You’ve probably heard of the common saying that money is the best servant but the worst master.
Investment can be an amazing tool to increase income but you should be careful not let its drive overwhelm you.
Investing is not always only about spending hours looking at charts. There are bonds, shares and stocks that you can study and invest a part of your income in.
Having no plan while going into investment is a very easy way to go broke easily. It’s best to always take a safer and more rational approach to investment.
It is important to note that you should only invest how much you can afford to lose.
3. Disregarding your current financial situation
Bad bad idea if you’re used to living in the moment, ignoring your financial state. You only make things worse by doing this.
If you’re not doing well financially, it is important to take quick steps to improve the situation and learn from the mistakes you’ve made.
This can include creating extra income streams, finding ways to pay off debts, and being cautious of your spending. Basically all the steps needed to avoid ever going broke again.
Another way to avoid this situation is to always have a budget for a particular period of time that guides your spendings for that time.
4. Buying expensive/luxurious presents
It’s very funny that people that are under the close monitoring of SAPA are the ones that are buying the most expensive presents for their friends or their families.
Do you think that friend really needed that designer dress or does your sister really need a new iPad?
You may want to appear to be generous or prove that you’re doing well, but the only thing this shows is how incredibly poor you are at managing your money.
The way things are going, you’re about to enter the shop of bankruptcy and about to purchase the latest debt in town.
5. Receiving advice from friends or family who have no idea about money
It’s very easy to go broke when your financial advisers, treasurers and accountants are those who do not have a clue about money.
When you are surrounded by people who make bad financial decisions themselves and you’re always listening to them about how to spend your money, you will definitely become broke soon enough.
Because your friends make a certain amount of money, or work in banks or other financial institutions, does not mean they are good with managing money.
Learn proper actionable financial strategies from trusted sources— even from free channels or courses online. Just see it as an investment in your future.
Conclusion
There’s no need to be too troubled if you’re already in debt, you’ll be able to better your financial situation at any point in the future,
…if you retrace your steps, work hard enough and start making the right decisions, of course.
No matter how bad your situation is, you still need to be open to change and always avoid making these quick mistakes that can make you go broke in a year.
You might not not become rich overnight, especially if you’re still in the rut right now, but being persistent and consistently investing your time and energy in the right direction might help you change your status as soon as possible.
