11 Obvious Traits Of People Who Stay Broke No Matter How Much Money They Make
Kmpzzz | Shutterstock When people don't have to worry about money and are able to quickly adapt to sudden changes, that's where financial security becomes financial freedom. But having access to money doesn't always mean having wealth, especially for people who haven't figured out their relationship to money from an emotional and psychological standpoint. Even if someone has a great job and a budget, that doesn't mean they aren't making mistakes along the way.
The traits of the people who stay broke even when they make decent money may not be evident at first, but over time, when money dwindles and worry becomes the norm, it can feel like a shock. Having unhealed financial wounds will inevitably impact how people manage their money.
Here are 11 painfully obvious traits of people who stay broke even when they make good money
1. They don't establish financial goals
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Not planning for financial goals is sure to make a person broke despite having a lot of money and stability of some kind. 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.
According to experts from the University of Chicago, putting 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. It's suggested that people organize their 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.
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, and it holds them back from accumulating wealth. They 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 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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While generosity is something to strive for in life, giving beyond your means strains your wallet and leads to resentment towards those benefiting from for your generosity. People stay broke, even when they make tons of money, because they don't have those financial boundaries in place. But setting boundaries around money is a protective measure that fosters financial responsibility and keeps your relationships in tact.
According to 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 knowing your limits lets you spend your hard-earned money in alignment with your values.
4. They're overwhelmed by financial anxiety
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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 continued. "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."
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 Kristen Fuller 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.
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. But when someone has a fear of what they don't know when it comes to money, they tend to overlook financial literacy in exchange for comfort.
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."
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 leads to small 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 use external validation to make themselves feel worthy. Over time, they begin to equate material things with self-worth, whether it's fancy cars, designer clothes, or cutting-edge tech gadgets. But eventually, they all lose their luster. That hollow, empty feeling will return, stronger than before, and it will take even more to satisfy its hunger.
Materialistic people tend to think that spending money will make them happy or at least distract them from their inner turmoil. But the opposite is true. According to a study published in the Journal of Research in Personality, people who spend money on items over experiences tend to be less happy.
8. They compare themselves to others
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Despite having tons of money, it's painfully obvious that certain people stay broke because they're comparing their lives to someone else's. 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 people will stay broke when they spend money in indiscriminate ways. They don't save for the future or make sure they have an emergency fund because 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 in their bank account than their relationships or experiences. Equating wealth with success doesn't bode well for the long-term. At some point, their money will disappear, 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 painfully obvious reason some people stay broke even when they make a lot of money. 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, "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.
11. They prioritize convenience over thoughtful control
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Even when someone has a high salary and saves their money each paycheck, that doesn't mean they won't spend on things they don't actually need. Whether it's ordering food instead of cooking or taking Uber instead of public transportation, these seemingly small expenses add up over time. And it's all because they want convenience.
As time passes, that urge to spend money becomes automatic instead of deliberate and planned. And because they're making tons of money, they aren't realizing the impact at first, which makes these even harder to notice. Eventually, it feels almost impossible to deal with any inconvenience, and they fall into a cycle where money is always required just to keep things easy.
Alexandra Blogier, MFA, is a writer based in Boston, Massachusetts who covers psychology, social issues, relationships, self-help topics, and human interest stories.
