Here's What It Means to Be Broke in America -- and How to Avoid It

We all have periods in life when our personal cash flow is hardly stellar. Maybe you're deep in the throes of paying off your student loans. Maybe you just bought a house, and your maintenance and repair costs are through the roof (no pun intended). No matter the specifics, there may come a point when you start to consider yourself downright broke. But in case you're wondering what that means on a broader level, the answer boils down to having just $878 on average in the bank. That figure comes out of a new CreditLoan study, which also found that 86% of those surveyed were either broke at the time of the study or had been broke in the past.

Clearly, the term "broke" is open to a fair degree of interpretation. For some, it could mean having absolutely no money in the bank, which is far worse than having a mere $878. Still, the fact that so many of those surveyed were broke at the time or in the past means that it's a fairly universal problem, and one that we, as individuals, need to address immediately.

Don't let yourself go broke

In the aforementioned survey, recipients cited a host of reasons for winding up broke, such as overspending on food, travel, and alcohol, to name a few. But the greater problem boiled down to folks having expenses that exceeded their income. And that's something we're all in a reasonable position to address.

If you're tired of being broke, or don't want to risk going broke in the future, one of the most important steps you can take is creating a budget. Without one, you won't have a good sense of where your money is going, and you'll be more likely to keep overspending in the wrong places. Thankfully, mapping out a budget is simple. All you need to do is list your recurring monthly expenses, factor in one-time expenses that pop up throughout the year, and compare that total to what you bring home in your paychecks. If you find that there's no room left over for savings, you'll need to start cutting corners, whether that means ceasing to dine out at restaurants or unloading the car you enjoy having but technically don't need to get around town.

Another way to avoid being or going broke is to take on a side hustle. The benefit of having a second gig is that the money you earn from it won't already be earmarked for other bills, in which case you should have no problem sticking it directly into the bank. And once you boost that balance out of "broke" territory, you'll be more content on a whole.

Finally, if your earnings don't allow you to live the lifestyle you want, try finding a better-paying job. Of course, this is easier said than done, but if you devote some time to boosting your skills, you may come to find that you're able to increase your earnings if not immediately, then at least over time. You might also try negotiating a raise at your current job if you do your research and find that you're earning less than the average person in your role. The point, either way, is to not remain complacent with your lackluster compensation and instead take steps to change it.

No matter what being broke means to you, it's clearly not the sort of status you want to reach. So don't let that happen. Build some savings and lower your expenses so you're not maxing out each paycheck. With any luck, that'll do the trick in keeping you from landing in a bad place financially.

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