More specifically, the word derives from the old sense of impoverished, which signifies helplessness, shame, or embarrassment. Individuals don’t start out impoverished, but rather, they make choices based on their behavior rather than external factors.
To put it another way, it’s a thing that happens to you. You go broke, busted, or even bankrupt — the ‘rupt’ comes from an Italian word for broken. In the Victorian era, you were said to be ruined.
The expression “this is why I’m broke” has been used in writing and informal speech for centuries, but it didn’t become popular until the late 1990s and early 2000s when it appeared in internet forums. Today, the phrase is used humorously when describing the reasons why people are in debt.
However, being broke is not synonymous with being poor, nor does it mean you don’t have any money. Being poor implies that you were never wealthy in the first place, whereas going broke means that you lost money that you once had.
Being “broke” means having little or no funds available to meet financial obligations or cover expenses. It’s a state of financial hardship that can affect anyone, regardless of income level. While there’s no single definition of “broke,” there are certain signs that may indicate you’re struggling financially.
Here are 11 signs you might be broke:
1. You’re living paycheck to paycheck.
If you’re spending every dollar you take home, you’re technically broke. This means you have no savings or financial cushion to fall back on in case of an emergency. According to a 2023 report by the Federal Reserve, over 75% of Americans live paycheck to paycheck, highlighting the prevalence of this financial situation.
2 You have credit card debt.
Credit card debt can be a major financial burden, as it often comes with high interest rates. If you’re struggling to keep up with your credit card payments, it’s a sign that you’re likely overspending and living beyond your means.
3, You have student loan debt
Student loan debt is another common form of debt that can weigh heavily on individuals’ finances. If you’re struggling to make your student loan payments, it’s important to seek out options for managing your debt, such as income-driven repayment plans or loan forgiveness programs.
4 You have a monthly car payment
While a car can be a necessity for many people, it can also be a significant financial drain. If you’re struggling to afford your car payment, it might be time to consider downsizing to a more affordable vehicle or exploring alternative transportation options.
5. Your income dictates your lifestyle.
Ideally, your lifestyle should be determined by your income, not the other way around. If you’re constantly trying to keep up with the Joneses and spending more than you earn, you’re setting yourself up for financial trouble.
6. You’re not saving for the future.
Saving for the future is essential for financial security. If you’re not saving any money, you’re putting yourself at risk of financial hardship in the event of an emergency or unexpected expense.
7. You’re not healthy.
Being unhealthy can lead to a number of financial problems, such as medical expenses and lost wages. If you’re not taking care of your health, you’re not only putting your physical well-being at risk, but also your financial well-being.
8. Your relationships are suffering.
Financial stress can take a toll on relationships. If you’re constantly arguing about money with your partner or family, it’s a sign that your finances are causing problems in your personal life.
9. You’re not growing.
Financial growth is essential for long-term financial security. If you’re not growing your income or assets, you’re likely falling behind financially.
10. You don’t contribute as much as you’d like.
Financial contributions can take many forms, from donating to charity to volunteering your time. If you’re not able to contribute as much as you’d like, it’s a sign that your finances are limiting your ability to give back to your community.
11. You’re constantly feeling stressed about money.
If you’re constantly feeling stressed about money, it’s a sign that your finances are causing you significant anxiety. This can lead to a number of negative consequences, such as poor decision-making and unhealthy coping mechanisms.
If you’re experiencing any of these signs, it’s important to take steps to address your financial situation. There are many resources available to help you get back on track, such as financial counseling, budgeting tools, and debt management programs.
You’re living beyond your means.
It’s also possible to end up broke simply because of math. In other words, you spend more than you earn.
You could find yourself in this position for any number of reasons. Perhaps you are spending too much to keep up with friends or buying unnecessary things. You may also be prone to impulsive purchases instead of planning and saving ahead.
Get a better understanding of your monthly cash flow and what is coming in and going out to see what you can do to fix this. After taxes, figure out how much you net from each paycheck. Assess your expenses and find out where you can cut back if you’re overspending.
It is necessary for you to earn more money.
You might not be broke because of what you spend, but because of what you earn. Reducing costs is important, but there are limits to how much you can cut. You may also find that your living costs rise faster than your income.
Living paycheck to paycheck can ultimately make it challenging to accumulate wealth and improve your financial situation, particularly if you’re underpaid.
To improve this situation, brainstorm ways to boost your income. In some cases, hourly employees may request to work overtime or cover extra shifts. You can work part-time, launch a side business, or look for other ways to generate passive income in addition to your regular employment.
A pay raise is also an option. If you want a raise or promotion, be open with your manager. By applying for a higher-paying job, you can also significantly increase your income quickly as well.
Reasons Why Most People Are Broke (Must Watch)
FAQ
At what point are you considered broke?
What defines someone as broke?
What amount of money is considered being broke?
What is the difference between being poor and being broke?
What does being broke mean in America?
Being broke doesn’t necessarily mean you have zero dollars to your name, and it’s not synonymous with poor. Poor means you never had money to begin with, whereas going broke means you lost money you once had. So what does being broke look like in America?
What does “broke” mean?
Chances are, “broke” means something different to everyone reading this. Put simply, it was a terrible feeling. But only one in three Americans can afford an emergency if it costs $400 or more. And more than half of those who make six figures live paycheck to paycheck. For those people, “broke” might mean something completely different.
What happens if a person is broke?
People who are broke may face temporary financial hardship. However, quick solutions can help them overcome the problem. How do people become broke? The majority of people are broke because they borrow money to make large purchases they cannot afford, in addition to credit card debt.
Are You broke if you are in debt?
You are broke if you are in debt because you spend more than your income. Maybe it is time you sit down and realize that you need to stop acting like you have money in the bank when you don’t. It is time for you to start thinking about your finances and take control of your money.