why am i always broke


A couple of years ago I was talking to a dear friend who had recently started working after being a stay at home mom for several years. She more than doubled her family’s income when she started working. She asked me something one day that blew my mind. She said, “Now that I’m working we make over six figures, so why am I always broke?” They were spending more money than they made each month and putting none of it towards savings.

They aren’t alone. I recently read a highlight from a Nielsen research study that found that 1 in 4 families who make more than $150,000 per year couldn’t make ends meet each month! This is otherwise known as lifestyle creep. I found it really interesting that business owners were especially prone to this phenomenon.

One of my favorite pieces of money advice came from the book Rich Dad Poor Dad. “You must know the difference between an asset and a liability, and buy assets. . . rich people acquire assets. Poor and middle class people acquire liabilities, but they think they are assets.”

So what’s an example of an asset? Something that makes you money like a rental income property, a course or book that teaches you a way to make money. What’s an example of a liability? A nice new car. A watch. An iPhone. Literally anything that depreciates in value and that doesn’t earn you any money.

I’m not saying that you shouldn’t buy any liabilities. Liabilities are fun. But if you’re trying to increase your wealth, you have to focus on acquiring assets more than you focus on acquiring liabilities. Basically, if you make good money but are always broke it is because you are acquiring more liabilities than assets. Aka spending more than you are earning. Sounds silly and simple but it’s true. So the real question is, how can I stop spending more than I’m earning? Here are some ideas.


Pay yourself first.

In our book Phased, we spend quite a bit of time talking about how the first person you should pay after you get your paycheck should be you. You should save at least 10% of your paycheck, and ideally, much more. Depending on your debt load and other financial circumstances, this may not be possible, but it is something you should strive for. If you are deeply in debt (like us!) you should still try to save a small percent of your income first, and then direct what you otherwise would save towards paying off debt. Currently, well over 50% of our income goes to aggressive debt payments and savings.

Pay taxes and tithes. 

After you’ve paid yourself, then you can focus on paying taxes and tithing (or other charitable giving). Obviously you can’t get off the hook for paying taxes. You might have them automatically withdrawn from your paycheck or you might have to save up for your tax bill each year. Charitable giving on the other hand is 100% optional. It’s something that I strongly believe you should strive for even if you are buried in debt or barely scraping by paycheck to paycheck. We were really surprised by the reaction we received when we shared that we pay tithing to our church even though we had more than $600k of student loan debt. This isn’t some faux-y, hocus pocus magical principle. This is actually supported by good research. Giving makes you richer. It’s not that rich people give more– obviously if you have more you can give more. It’s that the act of giving can actually make you more prosperous.

Then, pay your bills.

After you’ve paid yourself, Uncle Sam, and charity, THEN you pay your bills. This will include things like your mortgage or rent payments, groceries, phone bill, etc.

If you can’t pay your bills, cut expenses (if you’re wondering why am I always broke??)

If you aren’t able to pay your bills after you’ve paid yourself, taxes, and tithing, then you need to cut expenses and or increase your income– probably both if you are wondering “why am I always broke?” Increasing your income won’t help at all if you continue to succumb to lifestyle creep. As your income goes up, so do your expenses. You have to get a hold on your expenses first. Take inventory of all of your expenses. Make a list of expenses, in hierarchical order of most important expenses (like food and housing) to lease important (like trips to the nail salon). Where can expenses be cut or reduced? Maybe you have cable, Netflix, and Hulu. Cut out one or two or all of these expenses. Maybe you have a gym membership that you never use, or you are spending too much money on clothing. Whatever it is, start looking for ways to cut your expenses. One of my personal favorite ways to cut expenses, because it is so impactful, is by cutting big expenses like housing and car payments. By simply choosing to live in a smaller space, we save hundreds (maybe thousands) of dollars each month on not only our mortgage payment but also our utility bills since we have a much smaller space to heat/cool.

If you still can’t pay your bills, increase income. 

If you’ve cut out all the extra expenses and you still can’t quite pay your bills, you’ll need to increase your income. There are plenty of ways you can do this, from taking a part time job in the evenings, asking for a raise at work, to starting your own blog. Blogging has been one of my favorite ways to increase my income since it is something I can do from home in the evenings while my son is asleep, but there are many ways you can increase your income. Please feel free to browse some of our ideas here.

While feeling like you are always broke is a terrible feeling, the good news is that you can apply these principles and break the cycle.

What are some things that have helped you from feeling like you are always broke? Comment below! 

P.S. Have you subscribed to our newsletter? Gain access to all of the tips and tricks we’re using to pay off $650k of student loan debt!

why am i always broke


1 thought on “WHY AM I ALWAYS BROKE?

  1. Hi Amber! This article has been super helpful. I’ve been working on getting out of debt and I’ve come up with a great tool that has helped me get halfway through my goal. I would love to share some information with you, please contact me when you have some time.

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