Living paycheck-to-paycheck is not just about how much you earn; it's about how you manage. After years of building businesses and observing both successes and failures, I’ve noticed patterns that many people share when they stay broke, regardless of their income. These behaviors, while common, often go unnoticed because they are driven by emotions and habits rather than logic. Let’s break this down.
The 7 Behaviors Holding People Back
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Spending Future Income
Many convince themselves that they can afford today’s luxuries based on tomorrow’s earnings. "I’ll pay this off with my bonus" or "This raise will cover it" are classic justifications. But when the raise comes, the money is already allocated to other pressing expenses or, worse, new spending.Solution: Live on your current income and treat future earnings as a cushion or for investments. Apps like YNAB (You Need A Budget) can help you allocate money based on what you have, not what you expect.
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Avoiding Budgeting
Ignoring your finances feels easier than facing them. Some people feel paralyzed by fear of seeing how bad things are. This avoidance only builds stress over time and ensures the problem grows bigger.How to Start: Make budgeting a simple, non-intimidating task. Tools like Mint simplify tracking expenses and seeing where your money goes.
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Lifestyle Creep
When income increases, so do expenses. It isn’t inherently bad to spend more as you earn more, but the problem arises when every penny is used for unnecessary upgrades rather than for building a safety net or investing.Insight: Studies show people who save at least 20% of every pay raise accumulate significantly more wealth in the long term. Automating savings deposits makes this strategy effortless.
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Justifying Unnecessary Expenses
Rationalizing frivolous purchases as essentials is a common pitfall. "I need the latest phone because it’s faster for work" or "Signing up for this expensive streaming service helps me unwind" are examples. Before you know it, these "essentials" drain your savings.Action Tip: Apply the 24-hour rule: wait a day before making any non-essential purchase. This often curbs impulsive buying and leads to better decisions.
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Emotional Spending
Shopping often doubles as emotional therapy. When things go wrong, or right, spending becomes a coping mechanism. It’s temporary relief at a significant financial cost.Pro Tip: Use non-monetary rewards to handle emotional highs and lows. Activities like exercise or even journaling can redirect those moments of impulse.
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Keeping Up with Others
Social media has amplified the urge to compare. Seeing others' vacations, gadgets, or homes tricks you into thinking you’re falling behind. This drives spending on things to project a similar status, regardless of whether you need them.Perspective: Unfollow accounts that trigger comparison. Focus instead on your financial goals and celebrate progress toward them.
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Waiting for the "Right Time"
Many delay serious financial actions, like saving, investing, or creating a budget, until they feel things are more stable. This perfect time rarely arrives, leaving years of growth untapped.Quick Win: Start small. Set aside just 1% of your income, and build up from there. Momentum often follows.
Shocking Statistics about Financial Habits
- According to a Bankrate survey, approximately 50% of adults in the U.S. live paycheck-to-paycheck, even those earning over six figures.
- A study by the American Psychological Association found that financial stress impacts 72% of adults at least once a month, a cycle that worsens with avoidance.
- Credit Karma reports that 42% of millennials carry more than $10,000 in debt, but about half fail to track how much they owe monthly.
How to Break Free of These Patterns
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Track Every Penny
The number one habit of wealthy individuals I’ve worked with is knowing exactly where their money goes. Even if it feels tedious, start tracking every expense for one month. Awareness often brings clarity. -
Automate Financial Growth
Make savings and investments automatic. Whether it’s through employer retirement accounts or apps like Acorns that round up purchases and invest the difference, automation reduces reliance on willpower. -
Build a Realistic Emergency Fund
Start with a goal of $500 to $1,000 before reaching for 3-6 months of expenses. Having a financial buffer prevents high-interest debts when emergencies arise. -
Don’t Be Afraid to Educate Yourself
Begin with books designed for beginners, like The Total Money Makeover by Dave Ramsey or I Will Teach You to Be Rich by Ramit Sethi. Knowledge gives you the power to make informed decisions.
Common Mistakes to Avoid When Building Better Habits
- Rushing Into Investments: Many people skip foundational steps like an emergency fund to jump into stock trading. Avoid this. Secure short-term stability before focusing on higher-yield goals.
- Depending on Credit Cards for "Rewards": If you aren’t paying off your balance monthly, the interest cancels out any perks.
- Imitating Others' Financial Moves: What works for someone else may not suit your goals. Tailor your strategy to your immediate needs and long-term ambitions.
The Deeper Insight
What’s fascinating is that these behaviors are more psychological than arithmetic. They stem from childhood money mindsets, societal pressures, or misunderstandings of what "wealth" means. People rely on habits that feel natural or safe, even if they’re objectively harmful. And while self-awareness is step one, intentional action is what truly creates change.
Useful Takeaway
Fixing your financial path doesn’t require massive sacrifices. Start with small, deliberate improvements. Adjust one habit at a time to build confidence and momentum. Remember, wealth isn’t about how much you earn, it’s about how well you manage and grow what you have.
FAQ
1. What does "spending future income" mean and how can it keep you broke?
Spending future income refers to relying on expected bonuses, raises, or windfalls to justify today's expenses, creating a psychological debt cycle. This behavior often prevents building wealth as future income is already spent. Learn more about this behavior
2. Why is avoiding budgeting a common trap for staying broke?
Many avoid budgeting due to fear or ignorance of their actual financial situation. This avoidance grows problems over time, leading to more financial stress. Tools like Mint or YNAB can help break this pattern. Check out budgeting tips
3. What is lifestyle creep, and how does it affect financial stability?
Lifestyle creep occurs when people increase their expenses as their income rises, often undermining financial growth or savings. Adopting controlled spending habits and automating savings can counteract this. Learn more about lifestyle creep
4. Why do people justify unnecessary expenses, and how can it keep them broke?
People often rationalize spending on non-essentials, disguising them as needs rather than wants. This perpetuates financial instability and reduced savings. Using strategies like the 24-hour rule can help curb impulsive buying. Discover more about this behavior
5. What role does emotional spending play in financial struggles?
Emotional spending acts as a coping mechanism for stress, leading to temporary relief but long-term financial harm. Opting for non-monetary rewards like meditation or exercise can help counter this habit. See insights on emotional spending
6. How does comparison through social media influence financial behavior?
Comparison traps on platforms like social media lead people to spend more to match others' lifestyles, often exacerbating financial stress. Avoiding such accounts and focusing on personal goals can mitigate this effect. Learn more about financial comparisons
7. Why is waiting for the "perfect time" to start saving or budgeting a mistake?
Procrastinating financial actions for a better time often delays progress for years, leaving opportunities untapped. Starting with small steps builds momentum and sets you on track to financial stability. Explore steps to stop delaying
8. What are some shocking statistics about paycheck-to-paycheck living?
- Over 50% of U.S. adults live paycheck-to-paycheck, even among six-figure earners.
- 72% of adults experience financial stress regularly, often linked to avoidance of finances.
Discover related statistics
9. How can automation contribute to breaking poor financial habits?
Automating savings, investments, or debts removes willpower from financial decisions, ensuring consistent progress toward goals. Apps like Acorns can make this process effortless. Learn more about automation
10. What is "unhealed financial trauma," and how does it shape behavior?
Unhealed financial trauma, often stemming from childhood experiences, leads to fear-driven habits like hoarding, avoiding finances, or guilt about spending. Exploring root causes and adopting healthy money mindsets can address this. Read more on financial trauma
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
- Virtual Startup Building: Create or join startups and tackle real-world challenges
- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
- 100+ startup tools built
- 5,000+ pieces of articles and news written
- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.