Why Most People Are Broke (And How to Break the Cycle)
If you look around right now, most Americans are financially struggling, and it’s getting worse. Not because they don’t make enough money- and not because of some secret conspiracy holding them down.
It’s because they’re trapped in a money cycle they don’t even see.
And right now- thanks to inflation and rising interest rates- the cycle is speeding up. If you don’t wake up and break it, it’ll swallow you too.
The Cycle That Keeps People Broke
Here’s the pattern I see on almost every client I meet with:
You turn your time into money. That’s your income.
You turn your money into stuff. That’s your spending.
The stuff you buy loses value the moment you own it. Now your time is gone.. You worked hours, sometimes days, for things that are now worth less or worthless.
That’s the broke cycle.
Most people repeat it year after year. Paycheck → spending → more stuff → no Margin of Living → no net worth.
The Singular Answer To the Question: “How Can I Get Ahead?”
Focus all your energy on increasing your “Margin of Living”
Margin of Living is the gap between what you earn and what you spend, and it’s the most important number in your budget. If your Margin of Living is zero, you can’t pay off debt, invest, or build wealth. Most people spend every dollar they make (or more) and call that normal. It’s not.
At Align Money Mastery, we teach this: Margin of Living should not sit idle or go toward lifestyle creep. It has one job- go toward your #1 money goal until that goal is complete.
Build Margin of Living on purpose, guard it fiercely, and assign it with discipline. That’s how you break the broke cycle.
Here’s another way to illustrate Margin of Living:
Financial Gravity Is Dragging Them Down
Now layer this on top: almost everything they buy is financed.
The car in the driveway? Financed.
The phone in their hand? Financed.
The vacation they went on? Sitting on a credit card..
They’ve got financial gravity pulling on them every single month. It drags on their ability to build wealth and most people don’t even realize it’s there.
Most people never stop to calculate how much financial gravity is dragging on their net worth. Until you measure it, you can’t fix it.
Inflation Has Made It Worse
Since January 2020, cumulative inflation in the U.S. is 23.6% (US Inflation Calculator).
That means every $100 you had in 2020 buys about $76 worth of goods and services today.
In other words: if your income didn’t rise by 24% in the last five years, you’re moving backward. Period.
And most people have zero Margin of Living. They spend exactly what they make-or more. And they call that normal.
So when inflation eats into their buying power, they just finance more of their life. More credit cards. More debt. More gravity.
Why Most People Stay Trapped
There are some very specific reasons why people stay stuck in this cycle. This is what I see every week when I work with our clients::
1. They Never Define Financial Progress
You can’t hit a target you didn’t define. Most people’s version of financial progress is “I hope I’ll have more money someday.” That is not a plan.
If you don’t know what financial progress looks like: net worth going up, debts being paid off, brokerage account balances rising, then you will not build wealth. You’ll drift. And when you drift, you default back into the broke cycle.
2. They Have No Margin of Living
Most people have no Margin of Living. They run their finances like this: paycheck comes in → bills go out → whatever is left gets spent.
Zero dollars of intentional Margin of Living.
Here’s what I teach my clients: Margin of Living should not sit idle or go toward lifestyle creep. It has one job: to go toward your #1 money goal. Without Margin of Living, there’s no capacity to pay down debt, build assets, or handle inflation.
You can’t invest if you have no Margin of Living. You can’t save. You can’t build net worth. Without Margin of Living, you will stay broke.
3. They Finance Their Life
When inflation eats into their income, most people don’t cut spending. They add debt.
They’ll justify it: “It’s just a small payment.” “Zero interest for 12 months.” “Everyone does it.”
The result: now they’ve traded their future income for stuff that is depreciating (going down in value) today.
Here’s the truth: when you finance your life, you guarantee that your net worth will shrink. You’re handing your future to the bank in exchange for stuff that’s worth less the moment you own it.
4. They Play the Victim
This one’s harsh, but it’s true:
If you believe your money problems are someone else’s fault, you’ll never fix them.
I hear it all the time:
“It’s inflation.”
“It’s the government.”
“It’s my employer.”
“It’s just the way it is.”
No. Inflation is real, but it’s the same for everyone. Some people still build wealth through it. You know why? Because they take ownership. They control what they can control: Margin of Living, debt, investments.
If you’re going to break the broke cycle, you have to kill victim thinking.
How to Break the Cycle
If you want to get out of this loop-and I teach this every single day-here’s the playbook:
1. Audit Everything
You can’t fix what you won’t face.
Most people think they know where their money is going. They don’t. Until you audit every dollar coming in and going out, you can’t build a real plan.
In Align Money Mastery, this is the first thing we do: financial audit first. Always.
2. Define Progress
Set real, measurable goals.
Net worth should be going up. Debt should be going down.
If you can’t point to those numbers and show progress, you don’t have a financial plan- you have more of the same in your future..
3. Build Margin of Living on Purpose
Margin of Living isn’t an accident. It’s a choice.
You have to cut spending on things that don’t move you forward. You have to avoid lifestyle creep.
Every dollar of Margin of Living you build is a dollar you can assign to debt payoff or investing.
Without Margin of Living, nothing else works.
4. Assign Margin of Living to a Single Target
Most people scatter their efforts. Pay a little extra on a credit card. Throw a little into savings. Dabble in a brokerage account.
It doesn’t work.
Margin of Living should be laser-focused on one target at a time. Kill one debt first. Then build an emergency fund. Then aggressively fund your brokerage account.
Focus wins. Scattered efforts lose.
5. Kill Victim Thinking
No one is coming to save you.
The sooner you own 100% of your financial story, the sooner you can change it.
If you blame the government, your boss, or inflation- you will stay broke. If you take ownership, you will become free.
Proof That It Works
At Align Money Mastery, we coach clients through this every day.
Here’s a quick story:
One client came to me with over $50,000 in debt, no savings, no investments. They audited their finances, built Margin of Living, and hammered down debt.
Today, they’re fully out of consumer debt and have $25,000 invested in a taxable brokerage account. They’re on track to build passive income and retire early.
Here’s what they told me after their Free Financial audit:
"I just never thought about where my money was going. I was just spending and hoping it worked out."
That’s what keeps people broke, and it’s exactly what you must fix to get free.
Final Word
The cycle is real. Inflation is real. Financial gravity is real.
But staying trapped? That’s optional.
If you want to break out, start today:
Audit your finances.
Define your progress.
Build and assign Margin of Living.
Kill the excuses.
Nobody is coming to save you. But if you follow this path, you won’t need saving. You’ll be building wealth while everyone else is stuck in the broke cycle.
One last thing: breaking the broke cycle and building wealth ALWAYS requires sacrifice. You have to sacrifice your current relationship with money to get a better one. You have to sacrifice going on that trip now because you can’t afford it. You have to not upgrade your car, your technology, or your wardrobe when you get bored with it.
I wrote an article that addresses this very topic called You can do the Hard Thing now, or the Hard Thing later, and if you enjoyed this read, you should read that one.