Why Am I Always Broke? 7 Budgeting Mistakes to Avoid
Feeling broke all the time? You're not alone. Here are the 7 most common reasons Canadians feel broke and exactly how to fix each one.
You're Not Alone
paycheck to paycheck
If you feel broke all the time, it's usually not your income - it's your spending habits. The good news? Habits can be changed.
Let's be real: you make decent money. You're not extravagant. You don't buy designer clothes or take luxury vacations. So why does it feel like you're always broke?
Here's the truth: it's not your income, it's your habits. Small mistakes compound over time, and before you know it, you're wondering where all your money went.
I've been there. I used to make $75,000/year and still felt broke. Then I tracked my spending for one month and discovered I was hemorrhaging $800/month on things I didn't even value. Here are the 7 mistakes I was making - and chances are, you're making some of them too.
Mistake #1: Lifestyle Creep
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Notice how expenses catch up to (and eventually exceed) income over time
The problem: You get a raise, so you upgrade your apartment. Then you buy a nicer car. Then you start ordering UberEats instead of cooking. Your income goes up, but your expenses go up faster.
This is called lifestyle creep, and it's the #1 reason high earners still feel broke. You're not saving more money - you're just spending more.
Real Example:
Sarah made $60,000/year and saved $400/month. She got a raise to $75,000/year (+$15,000). But she also upgraded her apartment (+$300/month), bought a newer car (+$200/month), and started eating out more (+$300/month). Her new savings rate? $100/month. She made $15,000 more but saved $300 less.
How to Fix It:
- •Save raises first: When you get a raise, immediately increase your automatic savings by 50% of the raise amount before you adjust your lifestyle.
- •Wait 6 months: Before upgrading anything major (apartment, car), wait 6 months. If you still want it after living with the extra money, go ahead.
- •Track your "lifestyle inflation": For every $100/month you add to fixed expenses, you need $100/month more income forever. Is it worth it?
Mistake #2: Subscription Overload
The problem: Netflix. Spotify. Apple Music. Amazon Prime. Disney+. Gym membership you never use. Meal kit subscription. App subscriptions. Each one is "only $10-15/month" but together they're $200-400/month.
The Subscription Trap Calculator:
That's $444/month. Could you max out your TFSA with that money instead?
How to Fix It:
- •Audit your subscriptions: Go through your bank statements and list every recurring charge. Cancel anything you haven't used in 30 days.
- •Rotate streaming services: Don't pay for 4 services at once. Subscribe to Netflix for 2 months, cancel, switch to Disney+ for 2 months, repeat.
- •Share accounts: Split Netflix, Spotify Family, Amazon Prime with roommates or family. $17/month becomes $4/month.
- •Use free alternatives: Spotify free (with ads), YouTube instead of streaming services, home workouts instead of gym.
Mistake #3: No Emergency Fund
The problem: Your car breaks down. Your cat needs surgery. Your landlord raises rent. You don't have savings, so you put it on a credit card. Now you're paying 21% interest and your budget is destroyed.
Without an emergency fund, every unexpected expense becomes a financial crisis. You're one $500 problem away from spiraling into debt.
How to Fix It:
- •Start small: Your first goal is $500. Then $1,000. Then 3 months of expenses. Don't try to save $10,000 immediately - you'll give up.
- •Automate it: Set up automatic transfer of $50-100/paycheck to a separate high-interest savings account. You won't miss what you don't see.
- •Use windfalls: Tax refund? Birthday money? Put 100% toward your emergency fund until you hit your goal.
- •Keep it separate: Don't keep your emergency fund in your chequing account. Open a TFSA savings account at EQ Bank or Tangerine where it earns 5% interest.
Mistake #4: Invisible Spending (Death by 1,000 Coffees)
The problem: You don't think you spend much money. But then you check your bank statement and realize you spent $300 on UberEats, $200 on coffee, $150 on random Amazon purchases, and $100 on "I don't even remember."
Small purchases don't feel like "spending" because they're small. But $7 here and $15 there adds up to hundreds per month. This is invisible spending - the money that disappears without you noticing.
The $7 Coffee Trap:
$7 coffee × 5 days/week = $35/week
$35/week × 52 weeks = $1,820/year
That's enough to max out your TFSA contribution for the year. And that's just coffee.
How to Fix It:
- •Track EVERYTHING for 30 days: Use a budgeting app (like Waypoint Budget) or write down every single purchase. You'll be shocked.
- •Set a daily "fun money" limit: $10/day for coffee, snacks, impulse buys. When it's gone, it's gone.
- •Wait 24 hours: Before any non-essential purchase over $20, wait 24 hours. Most impulse buys don't survive the waiting period.
- •Batch your treats: Instead of daily $7 coffees, buy premium beans for $20 and make coffee at home. Save the coffee shop for Friday treat.
Mistake #5: Emotional Spending
The problem: Bad day at work? Buy something. Stressed about money? Buy something. Bored? Buy something. Happy? Buy something to celebrate. You're using shopping as therapy, and it's making you broke.
Emotional spending is when you buy things to change how you feel, not because you actually need them. The high lasts 10 minutes. The credit card bill lasts all month.
How to Fix It:
- •Identify your triggers: Do you shop when stressed? Bored? Lonely? Track your mood when you make purchases for 2 weeks. You'll see patterns.
- •Find free alternatives: Stressed? Go for a walk. Bored? Call a friend. Sad? Journal. You need coping mechanisms that aren't buying things.
- •Unsubscribe from marketing emails: Every "SALE! 50% OFF!" email is designed to trigger impulse purchases. Unsubscribe from all of them.
- •Delete shopping apps: Remove Amazon, Shein, Temu from your phone. Make it harder to impulse buy.
- •Budget for treats: Set aside $50-100/month for "whatever you want" purchases. When it's gone, you wait until next month.
Mistake #6: Forgetting Irregular Expenses
The problem: Your budget looks perfect on paper. $2,000 income, $1,800 expenses, $200 savings. Then your car insurance bill hits ($1,200). Christmas comes ($800). Your friend's wedding ($500). Suddenly you're in debt and your budget is destroyed.
Most people only budget for monthly expenses (rent, groceries, utilities). They forget about irregular expenses - the big bills that hit 1-2 times per year and blow up your budget.
Common Irregular Expenses Canadians Forget:
- •Car insurance (annual or semi-annual)
- •Property tax (if you own)
- •Car maintenance / repairs
- •Christmas and birthday gifts
- •Weddings / showers / bachelor parties
- •Annual Amazon Prime / Costco membership
- •Vet bills / pet care
- •Summer vacation
- •Back-to-school costs (if you have kids)
- •License / registration renewals
How to Fix It:
- •List all irregular expenses: Go through last year's bank statements. Find every expense that happens 1-3 times per year, not monthly.
- •Calculate the monthly cost: Car insurance is $1,200/year? That's $100/month. Budget $100/month for "car insurance" even though it's not due yet.
- •Create sinking funds: Set up separate savings categories for each irregular expense. Transfer money monthly so it's there when you need it.
- •Use a budgeting app: Apps like Waypoint Budget let you set up goal categories that automatically calculate monthly targets for irregular expenses.
Mistake #7: Not Paying Yourself First
The problem: You plan to save "whatever's left" at the end of the month. But there's never anything left. You intend to save, but spending always expands to fill your income.
Pay yourself first means you save before you spend, not after. Automate savings on payday. What's left is what you can spend. This is the single most effective savings strategy.
How to Fix It:
- •Automate savings on payday: Set up automatic transfer from chequing to savings the day after your paycheque deposits. You can't spend what you don't see.
- •Start with 10%: Can't save 20%? Start with 10%. Can't do 10%? Start with 5%. Something is better than nothing.
- •Use separate accounts: Keep savings in a different bank from your chequing account. Makes it harder to "borrow" from yourself.
- •Increase gradually: Saving 5% now? Increase to 7% in 3 months. Then 10%. Small increases are sustainable.
The Bottom Line: You're Not Broke, You're Leaking Money
Here's the good news: if you feel broke all the time, you probably have an income problem. You have a spending awareness problem.
Most people who fix these 7 mistakes find $300-800/month they didn't know they were wasting. That's enough to:
- Build a $1,000 emergency fund in 2-4 months
- Max out your TFSA ($7,000/year)
- Pay off credit card debt
- Save for a down payment
- Finally stop living paycheck to paycheck
The first step is awareness. Track your spending for 30 days. You'll find your leaks. Then plug them, one at a time, starting with the easiest wins (cancel unused subscriptions, stop daily coffee runs).
You don't need to earn more money to stop feeling broke. You just need to stop making these 7 mistakes.
Frequently Asked Questions
Why do I feel broke all the time?
You feel broke because of lifestyle creep (spending more as you earn more), subscription overload (small recurring charges add up), no emergency fund (unexpected expenses derail your budget), invisible spending (not tracking small purchases), emotional spending (buying things when stressed), underestimating irregular expenses (insurance, holidays), and not paying yourself first (saving leftover money instead of saving first).
How can I stop living paycheck to paycheck?
To stop living paycheck to paycheck: 1) Track every dollar you spend for one month, 2) Cut unnecessary subscriptions and recurring charges, 3) Build a small emergency fund ($500-$1,000), 4) Create a zero-based budget where every dollar has a job, 5) Pay yourself first by automating savings, 6) Find ways to increase income (side hustle, raise, new job), and 7) Stop emotional spending by waiting 24 hours before purchases.
What are the biggest money mistakes people make?
The biggest money mistakes are: lifestyle creep (increasing spending as income rises), not tracking spending (losing money to invisible purchases), skipping emergency funds (going into debt for unexpected expenses), subscription overload ($10-30/month services that add up), emotional spending (buying things to feel better), forgetting irregular expenses (insurance, gifts, holidays), and saving leftovers instead of paying yourself first.
How much money should I save each month in Canada?
Most Canadians should aim to save 20% of their after-tax income each month using the 50/30/20 rule (50% needs, 30% wants, 20% savings). If 20% feels impossible, start with 5-10% and gradually increase. Priority order: build a $500-$1,000 emergency fund first, then contribute to employer-matched RRSP, then max TFSA contributions, then increase emergency fund to 3-6 months of expenses.
How do I find money leaks in my budget?
To find money leaks: 1) Track every purchase for 30 days using a budgeting app or spreadsheet, 2) Review bank and credit card statements for recurring charges, 3) Calculate your daily coffee/lunch spending (small purchases add up), 4) Check for unused subscriptions (streaming, gym, apps), 5) Add up "just this once" purchases, and 6) Track emotional/impulse buys. Most people find $200-500/month in leaks.
Ready to Stop Feeling Broke?
Use Waypoint Budget to track every dollar, find your leaks, and finally take control of your money. Free forever, Canadian-built, with AI coaching to help you fix these mistakes.
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