More specifically, the word derives from the old sense of impoverished, which signifies helplessness, shame, or embarrassment. People are not born broke, but they make decisions based on their actions, not as a result of circumstances.
To put it another way, it’s a thing that happens to you. You go broke, busted, or even bankrupt — the ‘rupt’ comes from an Italian word for broken. In the Victorian era, you were said to be ruined.
This is why I’m broke has been used in everyday speech and writing for hundreds of years, but it became a meme in the late 1990s and early 2000s on online forums. Today, the phrase is used humorously when describing the reasons why people are in debt.
However, being broke is not synonymous with being poor, nor does it mean you don’t have any money. Should you go broke or poor? Going broke means you lost money you had, while being poor means you never had money to begin with.
Being “broke” is a familiar feeling for many people. You look at your bank account and wince. Your paycheck vanishes before you even get it. You put groceries on a credit card and hope you can pay it off later.
Everyone knows what it’s like to be broke, but what does it really mean? When can you say “I’m broke” instead of “I’m a little short on cash right now”?
In this comprehensive guide we’ll explore the ins and outs of what it means to be broke including
- The dictionary definition of “broke”
- Differences between broke, poor, and bankrupt
- 11 common signs you might be broke
- Reasons why people end up broke
- What happens when you’re broke
- How to tell if you’re really broke or just short on cash temporarily
So if you’ve ever wondered if you can officially say “I’m broke” or if you’re just being dramatic, read on.
The Dictionary Definition: What Does “Broke” Mean?
Let’s start with the textbook definition. According to Merriam-Webster dictionary, the adjective “broke” means:
- Having completely run out of money
- Bankrupt
In the strictest sense, being broke means that you have no money in your bank account, no cash, and no way to get money until your next paycheck or other source of income comes in.
It refers to a temporary situation where you don’t have enough money to cover your needs or pay your bills at the moment.
This is different from being “poor” which implies an ongoing state of not having enough money or resources.
It’s also distinct from being “bankrupt” which is a legal state meaning you can’t pay your debts and your liabilities exceed your assets.
So you can summarize the definition as:
Broke = A short-term lack of money
Poor = An ongoing lack of money
Bankrupt = Legally insolvent, unable to pay debts
With that textbook definition in mind, let’s look at real-life signs of being broke.
11 Common Signs You Might Be Broke
Looking at your bank account balance isn’t the only way to tell if you’re broke. Here are 11 scenarios that can indicate a temporary lack of money:
1. Living Paycheck to Paycheck
When all of your money goes to bills and you have little to nothing left over for savings or unplanned costs, this is one of the clearest signs that you are broke. If you live from paycheck to paycheck, you depend on the next payment and might not be able to pay your bills if your income stops.
2. Having Credit Card Debt and Minimum Payments
Credit card balances that are too high for you to make the minimum payments on are a sign that you are broke. When you can’t pay off your credit card debt quickly, it’s because you don’t have enough cash on hand.
3. Having Past Due Bills
When essential expenses like rent, utilities, or car payments become overdue because you lack money, it’s a clear signal you’re currently broke and struggling to keep up.
4. Borrowing Money from Friends & Family
If you frequently need to turn to friends or relatives for financial help to cover basics like groceries or gas, you likely don’t have enough income or cash flow to meet your needs – a state of being broke.
5. Putting Essentials on a Credit Card
Having to charge basic necessities like food or medication because you can’t afford them otherwise is a red flag you may currently be broke. These aren’t optional purchases you can cut back on. Using credit instead of cash for essentials reflects having no cash.
6. Not Being Able to Afford Minor Unexpected Costs
When a small financial hiccup like a parking ticket or needing a car repair destroys your budget, it shows you’re barely getting by without savings or room in your budget. Hence, you’re likely broke.
7. Lacking Emergency Savings
Emergency funds are key, since life brings many financial surprises. If you don’t have accessible savings to cover 3-6 months of expenses if needed, you’re in a precarious financial state. Insufficient emergency savings is a sign of being broke.
8. Frequently Overdrafting Accounts
If you’re regularly overdrawing your checking account, it signals your income and cash flow are inadequate to cover your outflows. Overdrafting is essentially a short-term loan from the bank and reflects being broke.
9. Having Accounts Closed for Nonpayment
When essential accounts like utilities get closed because you can’t afford payments, it’s a clear indication you don’t have enough income or cash to meet obligations – ie being broke.
10. Delaying Medical Care Due to Cost
Putting off necessary health expenses because of lack of funds is a sign you’re currently broke. These aren’t frivolous costs; delayed medical care means you can’t afford care vital to your well-being.
11. Struggling to Afford Basic Transportation
If buying gas or maintaining your vehicle is a financial stretch, you’re likely broke. Transportation is critical for earning income and meeting basic needs, so not being able to afford it reflects lacking cash.
Reasons Why People End Up Broke
There are a few key reasons people often end up tapped out and lacking cash temporarily:
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Overspending: Spending more than your income consistently can lead to running out of cash rapidly.
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Lack of budgeting: Not tracking expenses or planning spending makes it easy to overspend.
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Sudden loss of income: Losing a job, having work hours cut back, or an unexpected expense can diminish available cash quickly.
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Failure to save: Not saving money makes it hard to handle financial surprises or lulls in income.
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Reliance on credit: Depending heavily on credit cards without the means to repay can result in growing debt and no cash.
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Underemployment: When income is too low to cover basic needs, depleted cash flow and being broke results.
The path to being broke is often paved with unhealthy money habits over time. But the good news is making changes to spending and budgeting habits can help create financial stability and prevent future cash crises.
What Happens When You’re Broke?
Being completely out of cash, even temporarily, can result in significant financial and personal consequences:
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Missed bill payments leading to late fees or service disruptions
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Credit damage from missed payments
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High-interest debt from relying on credit cards or payday loans
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Legal consequences like eviction or lawsuits over unpaid debt
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Relationship stress from borrowing from family or friends
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Health struggles from delaying medical care or affording medication
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Poor nutrition from inability to afford healthy food
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Mental health effects like stress, anxiety, or depression
In essence, being broke creates a domino effect where almost every area of life is impacted by the financial struggle. It becomes hard to work, go to school, care for your health, or maintain relationships while broke.
This is why it’s important to take steps to restore financial stability instead of remaining broke long-term. No one should have to choose between eating or filling a prescription.
Am I Really Broke or Just Short on Cash Temporarily?
Sometimes it’s hard to decipher if you’re really broke or just experiencing a temporary cash flow issue:
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You’re likely just short on cash if: You have some emergency savings to fallback on. Your cash crunch is caused by one-off expenses or events like medical bills, car repairs, or a vacation. Your income exceeds expenses overall.
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You’re likely broke if: You have $0 emergency savings. Persistent income and expense imbalance leaves you without cash monthly. Missed bill payments or debt accumulation are mounting. Cash flow issues disrupt your ability to work and run your household.
Assessing the severity and persistence of your cash shortfall can clarify if it’s a fleeting issue or more entrenched financial broke-ness.
Either way, the solutions involve:
- Making a realistic budget aligning expenses with income
- Increasing income where possible
- Building emergency savings
- Cutting unnecessary costs
- Avoiding reliance on credit to supplement income
With some strategic money management, you can bounce back from broke. But the longer you remain broke, the harder it is to restore financial health.
Being “broke” refers to a temporary cash flow situation where you lack sufficient funds to afford necessities or cover obligations.
Common signs like accumulating debt, missing payments, lacking savings, and relying on others for money indicate you may be broke. This creates significant financial, professional, and personal consequences.
While an occasional cash crunch can happen to anyone, ongoing struggles meeting expenses demonstrate a state of being broke requiring budget changes and money management.
Carefully examining your cash inflows, outflows, expenses, and debt levels clarifies whether you’re experiencing a blip of tight cash or a deeper issue of inadequate income and exhausted finances.
With the right focus, you can build back financial stability, cash flow, and savings – even after a period of being broke. The important thing is to commit to sustainable money habits, so you have resources available when you need them most.
In America, what does it mean to be broke?
In a survey conducted in 2019, 86% of Americans said that they were either broke or had been in the past. According to 28% of millennials, overspending on food led them to that point.
In general, people considered having only $878 available either in cash or a bank account to mean they were bankrupt. Although it might not seem like much, it represents 71. 3% of the national average rent. Since 28% of your income should not be spent on housing, many people’s $878 quickly disappears.
In terms of being broke, there’s a gender issue as well. There are actually different reasons why men and women go broke. It may be due to a change in jobs or too much drinking on the part of men. Women, on the other hand, are in debt because they spent too much on food or had to wait for their partner to get paid.
It is also important to consider the generational differences. Gen Xers are the most likely to be dependent on their partners’ salaries, while Millennials spend too much on food. However, Baby Boomers are too generous, and they went broke mostly by spending on others.
Your finances are in disarray.
Another common problem is disorganized finances, which can be expensive. For instance, if you don’t keep track of your bank account balances, it’s easy to get overdraft and bounced check fees. Missed payments or late fees can result from mixing up due dates for bills. Your checking account might even be charged monthly fees if you forget about it or don’t use it.
The good news? You can get your financial house in order without too much difficulty.
To begin with, organize and manage all your accounts and bills. Set up your bank’s mobile app for easier money management so you can access it wherever you are. It might also be a good idea to use a budget app such as Mint.
If you want to avoid tracking due dates for bills and debts, you can set up autopay. Adding low-balance alerts to your checking account would also be helpful so you will know when your balance starts to fall.
The Secret to NOT Being BROKE! – Dave Ramsey Rant
FAQ
What does it mean If You’re Broke?
Being “broke” means having little or no funds available to meet financial obligations or cover expenses. It’s a state of financial hardship that can affect anyone, regardless of income level. While there’s no single definition of “broke,” there are certain signs that may indicate you’re struggling financially. Here are 11 signs you might be broke:
What is the difference between being poor and going broke?
Being poor implies that you were never wealthy in the first place, whereas going broke means that you lost money that you once had. Being “broke” means having little or no funds available to meet financial obligations or cover expenses. It’s a state of financial hardship that can affect anyone, regardless of income level.
Are You broke if you are in debt?
You are broke if you are in debt because you spend more than your income. Maybe it is time you sit down and realize that you need to stop acting like you have money in the bank when you don’t. It is time for you to start thinking about your finances and take control of your money.
How do you know if someone is broke?
We will discuss the seven most common signs that someone is broke and what to do about it. You are broke if you are in debt because you spend more than your income. Maybe it is time you sit down and realize that you need to stop acting like you have money in the bank when you don’t.
How much money do you need to go broke?
On average, people considered having only $878 available either in cash or a bank account to mean they’ve gone broke. It may not seem like a small sum, but it’s 71. 3% of the national average rent. Seeing as the classic rule is not to spend more than 28% of your income on housing costs, many people end up seeing their $878 dwindle away quickly.
What does it mean if a person is born broke?
It’s more similar to an idea of action, rather than circumstance — no one is born broke. It’s something that happens you you. You get wiped out, busted, or go bankrupt (the ‘rupt’ from an Italian word for broken). The Victorians used to say you were ruined.
What classifies you as broke?
adjective. without money; penniless. bankrupt.
How do you define being broke?
Broke typically refers to a temporary state of lacking money or being unable to afford certain expenses. It suggests a short-term financial situation, often due to specific circumstances (like unexpected expenses or a lack of income at a given time).
What considers you broke?
You’re living paycheck to paycheck.
If you’re spending every dollar you take home, you are, by definition, broke.
How do you know you are broke?
You have too much debt relative to your income. You don’t know how much debt you owe. You pay only the minimum on your credit cards. Your credit cards are maxed out.