Hundreds of people monthly search the internet for an answer to this question: Why am I broke? The search trend suggests that many are not in command of their finances. They make may a decent salary, live a normal lifestyle, and still find the bank account empty between paychecks.
In this scenario, the usual advice about budgeting probably isn’t helpful. If you’re asking the why-am-I-broke question, you don’t need a lecture about income and expenses. You need help identifying the money habits working against you.
We talked with Jamie Wall, personal finance strategist at Gamblizard, to identify the most common and destructive money habits that could be sapping your wealth. The top five are outlined below, along with tips for overcoming them to regain control of your bank account.
1. Retail therapy addiction
Retail therapy is the practice of shopping to alleviate stress, boredom, or emotional pain. It’s that urge to click “add to cart” or wander through store aisles when you’re feeling down, even if you don’t need anything.
Nearly 40% of Americans say they identify as emotional shoppers, according to a 2023 report by Qualtrics on behalf of Credit Karma. Nearly 25% of shoppers admitted their emotional shopping habits were out of control, driving some into debt.
Fortunately, there are other — free — methods of managing stress. The solution here is to find a free mood booster that works for you. Here are some ideas:
- Meditation and yoga can improve mental and physical focus.
- A walk outside can be a calming respite from stress.
- Arts and crafts like drawing, coloring, or playing an instrument can also leave you feeling productive without draining your purse.
- Don’t forget good, old social bonding. Enjoying good times with people you love can be as mood-enhancing as a spending spree — maybe more so.
The challenge here is committing to a solution. The Qualtrics report notes that 54% of shoppers said they’d rather shop than deal with their emotions. If you’re in this majority, yoga will seem far less interesting than shopping. In this scenario, try the delay-and-limit method: You can go shopping, but you’re going to enforce a budget — something small, like $15. And you are not heading to the mall unless you do 30 minutes of yoga first.
Money and investing advice from Catherine Brock:
2. Debt dependency
Most Americans live on credit, but this habit easily gets out of control. In February 2025, the Federal Reserve Bank of New York reported that U.S. household debt rose $93 billion to $18.04 trillion in the fourth quarter of 2024. More than $1.2 trillion of that sum is credit card debt, which typically carries a double-digit interest rate. The cycle is simple: You buy something you can’t afford, the interest charges rack up, and your monthly budget tightens. Repeat this too many times and interest becomes a sizable and restrictive monthly expense.
You can liberate yourself from debt dependency over time with three money moves:
- Avoid buying stuff unless you have the cash on hand.
- Make minimum payments on all revolving credit cards except for the one with the highest rate. Pay as much as you can afford on that one until it’s paid off.
- Use pay raises or unexpected windfalls to make higher debt payments. Do not expand your lifestyle.
Be patient with this process. It takes time, but it works. Stick with it and you will reduce your financial stress and improve your net worth over time.
3. Short-term living aka YOLO
I get the YOLO philosophy. I’ve been guilty of rationalizing a splurge or two this way. But spending every dollar you have on hand is risky. When your paycheck routinely disappears the moment it arrives, you have no cushion for unexpected expenses. You also have limited opportunity to work towards long-term financial goals.
One way of breaking this pattern is to experiment with saving in small doses. Challenge yourself to build up an emergency fund by saving $10 or $15 monthly to a high-yield cash account. Then, let the balance grow. You’ll start earning interest, which can motivate you to save more — interest can feel like free money, after all.
The goal is to transition away from a paycheck-to-paycheck reality. If you can do that, you can use the same skills to accomplish nearly any financial goal.
4. Believing money is happiness
Longing for more money as the answer to your problems is a poverty consciousness, says Wall. And poverty consciousness can prevent you from taking advantage of money opportunities. Also, data doesn’t fully support this belief anyway. Emotional well being increases at low income levels, but this trend levels out at $75,000 a year, according to 2010 research by Kahneman and Deaton. In 2025 dollars, that equates to annual income of $109,262. If you’re already making that much, earning more may not feel as good as you expect.
To break free from money thinking, find one rewarding path of life to focus on. Wall writes, “Successful entrepreneurs pour their lives into their businesses. If that’s your dream, go for it, but if it’s not, focus on what truly fuels you, like meaningful relationships or prioritizing mental well-being.”
5. Buying “affordable luxury”
Splurging on fancy coffee or designer bags could be a well-deserved treat. Or, this can be a habit that undermines your financial security. If your credit card statement has too many of these indulgences, it’s time for a change.
Step one is becoming aware of your splurgy habits. Try keeping a spending journal where you record your discretionary spending — that is, everything that’s not a household expense. You will probably see a few patterns develop.
Take one splurge at a time — maybe the morning latte — and cut back. You can either give it up entirely or lessen the frequency, whichever method suits your personality. See if you can stick to a planned frequency. Maybe you allot yourself one latte monthly, for example. If you break, think about why you couldn’t wait it out. You may be using these splurges in response to something else like stress or fatigue. Identify that motive, then strategize and implement free remedies.
Daily habits break you or make you
If you keep asking “Why am I broke?,” look at your daily habits — not just your pay. Start small: track your spending, pay off one debt, or stash $10 a week. Remember the words of personal finance author Robert Kiyosaki: “Financial freedom is available to those who learn about it and work for it.”
