3 Indicators That You Are Rich Broke

I just finished reading The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and once again, my perspective on money and wealth have expanded. Similar to Rich Dad, Poor Dad, both books compare the mindset and habits of the poor and wealthy. What I like about The Millionaire Next door is that it highlights the wise and POOR habits of millionaires. Yes, you can be a millionaire and still have the mentality of a poor person. Just watch the episodes of 30 for 30 on ESPN. Many athletes’ bank accounts go from 0-100 and back to 0 real quick because of their poor or financial habits. #Truestory

Here’s what it means to be “Rich Broke”…..

“You got a problem with spending before you get it.” – Kanye West

This is the definition of being rich broke in a nutshell. Basically, you’re a rich broke person if you have the appearance of someone who’s financially successful but in reality you’re broke. You got your own house, your own car, work hard, two jobs; You’re a bad..…person. (You’ll catch this insider later) Behind closed doors you’re struggling. You don’t see any of the money you bring in because it’s going straight through your pockets.

Here are 3 indicators that you might be rich broke.

#1. You don’t budget.

If at the end of every month, you feel like you don’t know where your money went, you’re rich broke. Budgeting creates discipline. It prevents you from creating bad spending habits. It helps you prioritize your money and shows you where it’s going every month. You are in control of your money. Give your money feet and tell it where to go.

Tip: Stop tracking expenses in your head. Write your budget down by using excel spreadsheets or downloading money managing apps. I LOVE using mint.com website. It tracks all of my expenses, it notifies me whenever I go over budget, and it tracks my fico score. I back everything up on an excel spreadsheet as well. #ThankMeLater

#2. You live above your means.

You’re not bad and bougie. You’re bad and broke. If you don’t budget, then 10 times out of 10 you’re living above your means. You probably live pay check-to-pay check and buy things you can’t afford. You are not a frugal spender and probably wasteful with your money.

Tip: Creating a budget can break this bad habit. If you know how much you’re bringing in every month, then you can make adjustments to your expenses accordingly. Some expenses are fixed cost meaning that they don’t change month-to-month (i.e. rent, car note, insurance, utility bills, food, etc.) Other expenses are adjustable (or luxury )expenses (i.e. cable, club memberships, shopping, dining out, etc.) When you know how much overhead you have left over after paying bills you can spend save or invest any extra funds.

#3. You got a problem with spending before you get it…

As Thomas J. Stanley states it, you love “Spending tomorrow’s cash today.” If you spend money before you actually have it in your bank account or live on credit cards, you are rich broke. This is probably the main reason why many of us get into credit card debt. It’s that deceiving “I’ll pay it off later” mentality that keeps us in the red zone for years. #DeathtoDebt

Tip: Just stop. If it’s not an emergency, don’t spend it. If you don’t it have now, you don’t have it at all. If you know you’ll miss the money when you loan it out, you don’t have it. Stop loaning your rich broke family members money. Just stop it. Stick to your budget!

But I’m not finished…..

There’s so much more that I want to add to this list AND I WILL. Stay tune for my follow-up post where I’ll provide keys for breaking these habits above.

Now y’all know I stay recommending a book to read. If you have a desire to gain financial freedom, this is are great read that’ll shift your thinking about wealth. GET WOKE.