PERSONAL FINANCE: What not to do when you’re broke

“I’m broke,” is a common statement. Very often, people use this statement casually, for example, when they don’t want to turn up somewhere or when they don’t want to give people money. People also say it a lot just before payday, but at least they know that in a few days, things will be sorted out. That’s the painless version of being broke.

There’s the other version, where most of your salary ends up servicing debt and you have very little left over for yourself. Maybe your business is going through challenges. Maybe you lost your job or all your savings. It’s like a brokenness cloud is constantly hanging over your head and you cannot see a way out. Here are a few tips on how we can handle this kind of ‘broke’ better.

Don’t spend more money unnecessarily. This may seem obvious, but when we are feeling bad, the temptation is to buy something that makes us feel good. We tend to spend money that we shouldn’t be spending or even worse, money that we do not have. Very often, the credit card will be swiped for that new phone, shoes, hairdo, etc. Post-dated cheques will be left at the shop to enable us to replace part of our wardrobe. We convince ourselves that what we are buying is part of the solution. Mary*, who was recently retrenched, bought herself  a new tablet the same day she got the letter. The logical thing to do was to stretch her resources as long as possible but there she was, in the shop, making this purchase. She told me she bought it to be more efficient at job hunting. Not only did Mary lose her job but she now has a fat bill on her credit card. Refrain from spending in this moment.

NO SELF-PITY

Secondly, don’t wallow in self-pity… at least not for too long. Allow yourself to feel bad, especially if the financial ‘disaster’ has just happened. Denying the grief doesn’t help. However, you must start doing something to alleviate the situation at some point. Feeling bad will not get you a new job or new clients. Most people get tempted to hang out with people who are suffering similar problems. I call this the ‘poverty support group’. Then you can feel sorry for each other and talk about how you have been victimised by the environment. Force yourself to do something different. If you hear about a real estate seminar, go for it. If you know somebody who has succeeded in a way that you admire, go have a conversation with him or her in order to learn a new skill. Albert Einstein said, “You can’t solve a problem with the same mind that created it.” Put yourself in an environment where you can think differently.

Thirdly, do not think and act at the level of your bank account. This is what we may have been doing our entire lives and that is why we are constantly broke. Tom’s* business has had its fair share of challenges this year. He has not been able to pay himself properly for several months. Despite that, he is diversifying and starting a new product line. He has made the decision to do so without more money in his bank account. He is recruiting someone to run this side of the business on the same lean bank account. Most wealthy people have, at some point, made moves that emphasise that what they do is not limited by what they have. You may be broke right now, but you are not broken. Your potential, skills, talents and mental ability exist whether you have millions or cents. Just start using them. Being a student does not stop you from starting to think and apply CEO-like habits. Being retrenched does not stop you from using this opportunity to make a big career move. Being in debt does not stop you from figuring out how to create additional income.