Breaking Free From Broke summary

Alright, so you’re ready to achieve your dreams – you’ve been working hard, doing everything right according to common financial wisdom. And yet you’re still in debt. What’s holding you back? Well, it could be the financial wisdom you thought was supposed to help. In fact, Kamel likens some of these widely held beliefs to myths, rather than hard truths.

The biggest myth to reconsider is the idea of credit scores. In case you need a refresher, a credit score is an indicator of the likelihood that you’ll pay back any money you borrow. Most people, at some point in their lives, have been told that it’s important to have a good credit score and that opening a credit card is necessary to build up that credit score.

Besides outdated and unhelpful financial beliefs, two other major things hold people back from taking control of their finances: marketing and consumerism. The world is largely built to encourage consumerism. Marketing is no longer just ads on TV or billboards – you see personalized ads on social media and the websites you visit and you don’t only watch those in your life but also celebrities and influencers to see what you should buy next.

Kamel is quick to say that marketing and selling items on their own aren’t bad or evil. Some products truly do help people improve their lives, and it’s important to get the word out about such things. But when consumers aren’t mindful and intentional in their purchases, their spending and financial states can get out of control.

You can probably guess which financial tool we’re going to cover first – that’s right, budgeting. It’s one of the key components to taking control of your finances. There are different methods, such as the 50/30/20 method in which you spend 50 percent of your monthly income on needs like housing and groceries, 30 percent on wants like going to the movies, and put the remaining 20 percent into savings. Make a point of researching the many types of budgets that are out there, pick a method, and start implementing it. You might be surprised by the sense of power and control you feel as you start planning where your money goes each month instead of looking back and wondering where it all went.

Contrary to popular belief, a budget isn’t about restricting spending, it’s about giving yourself permission to spend, just in a mindful manner. One way to help combat any restrictive feelings is to create a miscellaneous line item in your budget, a category for random expenses or wants that pop up each month. Just be sure it’s not a huge amount of the budget!