There are thousands of question which basically comes in most of the people mind like “why do people earning good money become bankrupts?”, “Why does people come down to nil after few months pay in spite of working hard?” etc. Some of the reasons for the same & also for reversing the trend for themselves are mentioned below.

Inability of differentiating between Needs & Desires
Yes, everybody wants to live a good & healthy life but at the same one should have the ability of differentiating between needs & desires. Needs are the basic necessity of every human so one has to make sure that his/ her basic needs are met where as desires can never be fulfilled as if one is achieved the desire also increases. Desire always leaves individual with empty pockets, debts and desperation. Needs are without which one cannot have a good and healthy life.

Some of the examples of need are food, house, clothing, security etc whereas desire means latest car, latest cell phones, air conditioner, latest shoes etc. In short desires can never be fulfilled. Desires can end you with dry & empty pockets. One should always be able to differentiate between their needs & desires then only they can have a wonderful life ahead.

Lack in Investment
Investment is the first & foremost step of avoiding the bankruptcy that is people should try to invest some of the part of their income as investment. Investment should always be done for long term as then only you will get maximum return on your investment but most of the people wish to get the maximum return in short term, hence they suffer. One should try to invest some part of their income monthly so as to avoid bankruptcy. One should never lack in investing the funds.

Ignorance of Important of Savings
One should always work on their savings in order to avoid bankruptcy. Great deal of discipline is required for saving. Saving is a routine process it comes by practice. One should always save some part of their income as saving. It takes second in spending but years in saving. One should always try to cut their expense so that they can save more money for their bad time. Savings should always be kept separately. One should always save money to have more money in their bad time. Saving amount should not be touched until an emergency arises. Savings can be used in bad or ill times.

To stop from getting broke one should always practice these 3 steps on regular basis & gradually you will find that you have quite good amount of saving and investment. With those savings & investment one can lead a healthy & less stressful life ahead. By practicing these steps one can avoid bankruptcy. During their bad times one can have a pocket full of money available with them. Only those people broke who do not practice these steps in short those who don’t have their savings, investments & those who are unable of differentiating between the desire & wants.