Oh, you need bigger shoes. Because they’re not the right size for you, your toes don’t have enough room to do pointe properly, and you’re forced to curl your toes. If your family can’t afford new ones there is always a second hand store, or maybe ask some of the other dancers if they have shoes in your size that they don’t use anymore. There are plenty of things that cause knuckling, but since you said your shows are a little small that’s probably the main issue.
Don’t worry about it :) The dancers there are probably worried that you’ll show them up! If you were invited to competition dances, your skill level is probably just where it needs to be :)