The truth is that everyone has the potential to become rich, however, certain people have habits that are crippling their ability to build wealth. A big part of building wealth is simply your mindset. And, there may be habits keeping you broke if you have the wrong mindset. Luckily, if you can identify and correct these bad habits then you can change your ways and build true wealth.
You may be asking what is the difference between being broke and being poor. Dave Ramsey often says he has been broke, but he’s never been poor. “There’s a difference between being poor and being broke,” Ramsey said. “Poor is a state of mind; broke is I’m passing through.” Here are some of the habits that are likely making you poor.
1. Lack of Budget
The only way to know how much you are earning, spending and saving is through a budget. Without a budget, it is very difficult to accomplish your financial goals. A budget is all about knowing how much you earn so that you can set spending targets and hopefully save some money.
Just knowing how much you‘re spending can help you spend less because you become more conscious about it. And, you have to update your budget and make changes as you progress.
If you didn’t grow up in an environment where good financial habits were taught, a budget is the first step to becoming financially aware.
2. Taking Money Advice From Poor People
You’ve been lied to by many generations who have no idea what they’re talking about. Growing up you’ve been told that the key to wealth is to get a well paying job that pays you a good salary. Society has normalized putting hundreds of dollars’ worth of debt onto kids finishing university by perpetuating this old lie. The truth is, you can’t get rich working for someone else.
Stop taking advice from unsuccessful people. Talk to people who are where you want to go. Without your choice you end up surrounded by some people and they become your friends. You are the average of the 5 people you spend most of your time with. Hang out with broke people?! Guess who’s got be the 6th?. Your social circle determines the kind of a person you will become.
Figure out a way to escape the system through skills that have economic value. If all you know how to do is flip burgers, you won’t get very far. In the age of information, being ignorant is a choice! Sort through the bullshit money advice, find quality teachers and start learning.
3. Not Investing Extra Money but Spend More as Your Income Increase
There’s no harm in raising your standard of life when you can. However, if you are a person who is constantly looking for ways to spend your money, you will probably find yourself in a difficult situation soon enough. If you continuously raise your expenditure along with any increase in your income (or even without it), it would be hard to have any real savings.
4. Impulse buying
Mostly, those people in financial stress are those who often pick things every time they find them. In fact, impulse buying can lead to a series of different issues. First, many people will justify these unplanned purchases by saying that they earned this new gadget or that the item is not a “want” but a “need”. Second, these spur of the moment purchases, when put on a credit card may lead to the person paying for the item without actually having the funds to cover the cost. Finally, these random purchases make it much more challenging to adhere to your spending budget.
An impulse purchase from time to time will not derail your chance of ever becoming wealthy but as you can see, issues begin to compound when you spend outside of your financial plan. As a best practice, every day say the following affirmation to yourself, “I only buy what I need.” Before you know it, you will be a much more conscious spender and this restraint from making impulse purchases will have your bank balance growing in no time!
5. Thinking Negative About Money
One of the common habits keeping you poor is negative thinking about money. Such saying like ‘Money is evil’ are common to poor people. Unfortunately, people will definitely do evil things for money. But money is really just a tool for exchanging goods and a store of value.
6. Focusing on Luck (Gambling and Lottery)
Rich people always focus their effort on improving their probability of them making more money. Poor people leave this probability up to the universe and with it their future. The moment you’re not writing the future for yourself that’s when you get whatever is left or whatever crumbs others are willing to throw your way.
Life is about control. Get as much of it as possible.
Control yourself and your environment until the future becomes predictable. Once you have control, you don’t need luck. Rich people don’t believe in luck, they don’t need luck. Luck is for poor people. If you work hard you don’t need luck.
7. Spending more than your income
Why are you spending money you don’t have? Debt is modern day slavery. The moment you borrow money to buy anything, the corporation owns your time until the money is repaid with interest.
The first thing you need to do is to stop wanting things NOW! Instead, only buy it when you can actually afford it. Borrowing money is a horrible habit that is systematically keeping the general population poor. Be wary of lending other people your money; for while it’s with them, it ain’t earning money with you! Banks and loan sharks are the only ones who profit from lending money, everyone else is being bled dry.
8. Spending on Wants Than on the Needs
Everytime you buy something you don’t need, realise you’ve been marketed to. Someone convinced you to trade your hard-earned money for a feeling.
Poor people are quite profitable!
Companies and marketing people understand this very clearly!
That’s why you see all those broke people trying to flex on the gram.
Poor people think rich people wear Gucci, because Gucci is paying celebrities to wear the brand so they can sell more to poor people. You are being marketed to all the time, because poor people are bad with money due to bad advice.
That’s the paradox of growing up broke: You stay broke by trying to fill the whole growing up broke left inside of you!
Please remember that: If it’s on sale but you don’t need it, it’s still expensive and you shouldn’t buy it.
9. Trying to Impress People
People will sacrifice their own future just to impress people they don’t like. The more you think about it, the more you realize just how foolish that sounds.
Why should you use your money trying to please your friends?
We are proud people and don’t want to be perceived as inferior; and that’s exactly how you end up poor long term, because the things that get you out of poverty are in the exact opposite direction. There’s a hidden rule that poor people don’t know: The appearance game cannot be won!
The second you get up to date, that’s when the goal post moves. What you end up with is called the RED QUEEN’s RACE.Concept from Alice in Wonderland where you have to run as hard as you can just to stay in place.
That’s why you can never win this game. You need to keep spending your money just to stay in the same place.
10. You Don’t Value Your Time
Your time is the one of the most valuable commodities that you have in life. When everybody has the same number of hours in a day the difference in long term results comes from how many of those hours we use to better ourselves. Its advisable that you spend time on creating more than consuming.
This creates a value-added surplus in your life. Pay attention to what you’re creating. Understand the fundamentals mentioned earlier about earning while you sleep and it’s just a matter of time until the residual income becomes decent.
If you want to start your wealth building process, replace the dead-times in your day with productive activities. Follow up by cutting entertainment. It will be a pain in the butt for a while, but you’ll see things get better fairly quickly.
11. Ignoring Your Debts
For a lot of people in today’s world, interest eats up a huge portion of their finances. It’s a painful fact. Still, they don’t know how to get out of this vicious cycle, leaving them with little to no savings.
First of all, make paying your debt a top-of-the-list item on your agenda. Work out a plan for this and stick to it, no matter what. You don’t want to believe that you’re poor, do you?
Avoid keeping your credit card balances since the interest on them is keeping you broke. The high interest rates on credit cards can significantly damage your finances, causing you to spend extra money on interest each month. If you can, you should be paying off your credit card balance each month.
12. Going YOLO: Thinking Short Term and not Long Term
According to YOLO, you live in the moment. Stop sacrificing the future for the present when the present isn’t that good. Screw living rich and dying broke! The entire flex culture and this attitude of living in the moment does nothing but harm on the poor part of society. It keeps them poor by selling them the dream.
Fundamentally, poor people will buy things that do not hold any value. They pay interest when they borrow money to buy things that depreciate in value over time.
13. Unhealthy Lifestyle
Most of your unhealthy habit are likely the ones making you poor and broke. Things like alcohol and cigarettes takes much of your money making you broke. Not only do these create financial addiction taking money directly out of your pocket, they also serve as a domino effect connected to everything else in your life. If you’re fat, you’re likely to have complicated heart problems which result in an enormous health-care bill.
14. Negative Mindset
Staying poor is a choice. If you think of yourself being poor, as someone who will never be wealthy, as someone who’s not smart enough, good enough, educated enough is what’s actually keeping you poor.
Life may be hard but you must do something.
Drown yourself in the misery of it all or pick yourself up and start walking?! As long as you keep going, keep learning and improvise along the way, you’ll end up where you want. At the end of the day, you can’t choose where you’re born, who your parents are and the environment you grow up in, but at some point it all switches to you. You can choose what your life will be like, how much you’re willing to work and what the future holds for you.
Bill put it well when he said: If you were born poor, it isn’t your fault, but if you die poor, that’s on you!
Procrastination is an enemy to success. it prevents even the most talented individuals from realizing success in life,” Corley writes. This goes hand-in-hand with author Napoleon Hill’s assertion that the wealthiest people are also the most decisive people.
“Whether you realize it or not, procrastination is a big reason why you are struggling financially in life. It damages your credibility with employers and fellow colleagues at work. It also affects the quality of your work and this affects the business you or your employer receives from customers, clients, and business relationships.”