Is it true that those who spend extravagantly are actually broke?

How people dress on the outside is not directly related to how wealthy he/she is.
But
Wealth does determine the upper limit of what he/she dresses in. If your friend is dressed in luxury items and in different styles every day, he/she is probably really rich.

The notion that individuals who spend extravagantly are actually financially broke is a common perception, but spending habits and financial stability can vary significantly among individuals. I dont think there is a real trend towards either side of this idea or I have not come across any data that suggests so.

It depends on the individual mindset, it can be just self-indulgence for that moment, right after saving for months in actuality.

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That being said, having proper finance management will be a good step to take in any case.

Depends