Why People Are Broke

Are you one of those people who complain about always being broke?  Corey Blake with New Horizons Credit Union joined us on Studio10 to talk about how you can solve this problem.

Below is a look at some of the questions that were discussed on the program.

What do we need to understand about money so we aren’t broke all the time?
The fact is that most people don’t really understand money. The number one reason people are broke is because they think money equals wealth and it doesn’t. Let me explain: If you have a million dollars in the bank, but you’re a million and one dollars in debt, then you’re still broke.  Just because you have have money doesn’t necessarily mean you are rich.

What about the person that has a lot of nice expensive toys but are always broke?
Here we are talking about assets versus investments.  Owning a fancy new car is great, but it’s not an investment.  It’s a liability and a debt. It depreciates in value and ends up costing you more money over time.  The key here is most millionaires spend their money on investments, things that pay you back over time, not assets.

So which is better, saving or investing?
Having a relatively large savings account, checking account or money market account is not an investment.  It’s important to have cash on hand, but you must find a balance between your savings and investment portfolio to ensure wealth building.

Living paycheck to paycheck and obsessing over money is another common reason for being broke, any tips here?
Don’t look at your income as the next paycheck. Rather than thinking about the next two weeks or the next month, think about the next six months or the next year of income.
Focus on making year over year increases in your income. For example, you may start a small side business.  The key is making a plan to end the cycle of being broke.

New Horizons Credit Union
www.newhcu.org

Sponsored by New Horizons Credit Union