Five Habits That Are Keeping You Poor

 

Do you ever wonder how you somehow end up spending all your money in a very short time without notice? Does the empty state of your bank account give you worry as each month comes to an end ?  If so, it's time to check your habits and improve some of them. As Warren Buffett wisely stated, cultivating the right habits at any age is very important and crucial for financial success. Today, I'll be sharing with you five habits that are preventing you from attaining financial prosperity.

#. Number one: Wrong Priorities

The first habit that keeps people trapped in poverty is having priorities not in order. Many prioritize making money without fully understanding money's role in their lives. While money is undoubtedly important, it's crucial to consider its costs. Other assets in life hold greater significance, such as time.

Unlike money, time is finite. While you can always find ways to generate more income, you cannot create more time. If you truly want to escape poverty, you must start valuing your time. According to Warren Buffett, "to truly be satisfied in life, you must invest your time into doing what you were born to do". 

Time is your most valuable asset and must be treated with wisdom and care. No matter how you manage your money, it will not be fruitful if you neglect the value of your time. Let's approach this from a financial perspective.

It's important to adopt a financial mindset that factors in the value of your time. This means considering whether certain activities or chores can be outsourced to others who can do them at a lower cost while you focus on higher-value endeavors. For example, instead of spending hours cutting the grass or playing video games all day, evaluate how much money you may be forfeiting by not allocating that time to more productive pursuits.

Another aspect to consider is maximizing your time efficiency since we all have only 24 hours in a day and cannot work continuously. Understanding how to extract the greatest value from your time attracts the most money. This is where the distinction between active and passive money comes into play. Active money refers to income earned through physical efforts, such as working at a job. However, there is a limit to how many hours you can work due to essential activities like sleep, personal needs, and family commitments. On the other hand, there is no limit to the amount of passive money you can earn.

Passive money is not directly earned through physical work but is generated as a result of smart financial decisions and investments. When you earn active money, allocating a portion of that income is important to attract passive money. This involves using your active income to invest in opportunities or assets that generate ongoing income without requiring continuous physical effort from you. Doing so creates a stream of passive income that supplements your active earnings. This approach allows you to make the best use of your time—using it to attract active money while also benefiting from passive money without the need for constant physical investment.

However, to effectively attract passive money, you must earn what is yours.  It may sound intriguing, but it refers to prioritizing your financial well-being. 

In other words, rather than solely focusing on expenses and financial obligations, you should allocate a portion of your income to savings, investments, and personal development. Paying yourself first ensures you have resources for future growth, wealth accumulation, and financial security.

#. Number Two: Flex Mindset

Flex mindset is one habit that gives birth to poverty in the life of so many people. Imagine you just received your paycheck and the next thought that comes to your mind is to get the latest iPhone, the trending clothes or going out for a drink with friends and then after you have exhausted all your money you suddenly realize that there are more important things that you could have done. There are bills you haven't paid, children fees haven't been paid and then to meet up with these important needs you go into debt and that goes on like that. Now tell me, how would you be able to save, invest or even come out of debt with that kind of mindset? When you have a flex mindset, it doesn't matter your actions or how much money you earn. Even if you accumulate wealth on paper, you are still mentally impoverished. Therefore, if you aspire to wealth, the first step is to break free from these flex mindsets.

To accomplish this, you must start working on your habits. Just like Warren Buffett always says, "the biggest investment you can make is in yourself". That way you will start recognizing opportunities which will help you want to utilize your money wisely. 

Facing problems is an inevitable part of life. We cannot control the problems that arise, but we can control how we respond to them. The way we react to challenges ultimately shapes our lives. We will either live a wealthy life financially and emotionally, or succumb to poverty. This is the reality we face. We can't change what happens externally but we can change our mindset and actions.

If we constantly beat ourselves up and blame others for every problem we encounter, we won't make any progress. It's crucial to ask ourselves, what can we do about it when something goes wrong? Complaining and pointing fingers won't lead us anywhere, but taking action can open new opportunities and improve our lives.

Therefore, when faced with adversity, remember that you have three choices: complain, blame others, or take action. I urge you to focus on what you can do to better yourself. Instead of dwelling on the negatives, channel your energy into finding solutions and seizing opportunities that will lead to a better life.

#. Number Three: Earn What Is Yours

I've recently started emphasizing the importance of earning what is yours or in other words,  paying yourself first. When people receive their income, they immediately have to allocate funds for taxes, as the IRS requires their share. After this, they must budget for rent or mortgage payments, car payments, student loans, utilities, phone bills, laptop costs, and furniture financing plans. Additionally, they may need to set aside money for social activities and repay past debts, like the vacation they took last year. If there happens to be any money left over, that's when they can consider saving.

This prevailing mindset is why we find ourselves in the minority. If we wish to escape poverty, we must learn how to handle our money wisely. It involves earning what is yours before enriching others around us. For instance, let's consider housing payments. Who benefits from those payments? It's not us; it's the banks or landlords. The same goes for car payments—we benefit the car company or the bank instead of enriching ourselves. Even when we make phone payments, it's not us who profits, but the phone company. And when we dine out, the restaurant owners reap the benefits, not us.

To break free from this cycle, we need to change our perspective and use our money to build our wealth. That begins by paying ourselves first before allocating funds to others.

When discussing earning what is yours, I don't mean indulging in immediate rewards or heading to the mall to purchase luxury items from Gucci or other high-end stores. When you buy that brand new scarf, it's not you who benefits financially, but the Gucci store. Earning what is yours means ensuring that you are the one who ultimately benefits and becomes wealthy.

So, when I say earn what is yours, the crucial question is, "Who is getting rich when I do so?" The answer should be you. To achieve this, set aside a portion for your savings every time you receive income. This way, you'll have cash available in emergencies, eliminating the need to go into debt. Additionally, allocate funds towards investments. The goal is to acquire assets that generate income for you. Examples of assets include investing in the stock market, energy, real estate properties, or small businesses. By owning these assets, you become the one who receives payment.

When you invest in an asset, you're directing your money toward something you own. This ownership allows you to generate continuous income. It's a crucial aspect of achieving financial wealth. Regardless of how much money you earn, even a million dollars a year, you will remain poor if you do not prioritize earning what is yours. Even if you have luxurious possessions, a large house, a fancy car, expensive clothes, or go on extravagant vacations, you'll have nothing left for yourself. In the event that your income suddenly disappears, you'll be left with nothing but a collection of liabilities that offer no financial return.

For instance, let's consider buying the latest iPhone. If you sell it three years later, you'll likely receive only a fraction of what you initially paid. Wealthy individuals accumulate and maintain their riches by living within their means. They consistently prioritize setting money aside to pay themselves first, regardless of their income level. If you desire wealth and wish to avoid poverty, it's imperative to prioritize your financial well-being over enriching others.

Before you pay Apple for their products, Lululemon for their athletic wear, Chipotle for that extra guacamole, or Gucci for their luxury items, you must allocate that money to your wallet. Invest it in assets that will contribute to building your wealth. It's essential to understand that you are the one driving your financial future rather than letting your possessions drive you.

Number Four: Run Away From Toxic Environment

The internet is a remarkable tool that has opened up opportunities and knowledge to people worldwide. However, one of its drawbacks is that it becomes challenging to break free if you become entangled in a negative or toxic online environment. You find yourself immersed in a deep rabbit hole surrounded by individuals who focus on gambling, reckless spending, and activities that hinder wealth accumulation. These people, both in your real life and digital life, do not provide the support you need to achieve financial prosperity.

It is natural to seek a sense of community, not just in our physical lives but also in our digital interactions. Many individuals are drawn into these online communities, whether it's related to investing or sports betting. Unfortunately, the communities that garner the most attention and popularity often involve high levels of risk. For instance, numerous people enter the energy market expecting a high return of investment even if they have never invested their money before. 

It's crucial to recognize that the odds are always stacked against you in gambling, and the owners of the betting companies ultimately win. If the people surrounding you, whether digitally or in real life, are all struggling financially, drowning in debt, and making poor financial choices, you will likely follow suit. When you are immersed in a toxic environment, such behaviors become normalized. Living paycheck to paycheck becomes the norm while saving and investing money become viewed as abnormal.

To break free from this cycle; Consider removing yourself from this toxic environment and transplanting yourself into a different one. Seek out communities where individuals discuss smart financial practices and investing. Surround yourself with people who prioritize financial responsibility and understand the value of saving and investing.

By changing your environment and surrounding yourself with individuals with a positive mindset towards wealth accumulation, you increase your chances of breaking free from the cycle of financial struggle and complaining about your circumstances.

If you find yourself immersed in discussions about gambling and living paycheck to paycheck, you won't fit into this growth-oriented community. The environment you surround yourself with plays a significant role in shaping your life. To transition from a toxic environment to one that fosters personal growth, you need to embark on a journey of learning. When you connect with new individuals, showcasing your knowledge and growth mindset is important. This requires learning, reading books, and seeking valuable resources online. 

Instead of consuming content that perpetuates a toxic mindset, watch educational YouTube videos to develop a wealth-building mindset. By immersing yourself in such content, your thought patterns will start to shift.

Number Five: Loving Debt

The final habit that perpetuates poverty for many individuals is loving debt. I vividly recall an incident at the mall a few years ago that left a lasting impression on me. I stood in line at the checkout counter behind two girls purchasing clothes. The cashier offered them a brand new store credit card, emphasizing that if they were approved and opened the card that day, they could save 15% on their purchase. One of the girls eagerly accepted the offer, expressing her desire to be approved for the credit card. She even began praying before me, asking for divine intervention to secure approval. To their delight, the cashier returned with the news that they had been approved, prompting the girls to jump up and down in excitement over the 15% discount they had just received.

Credit cards can be useful tools—I use them for my purchases. However, if you're obtaining a credit card solely to save a small percentage on a single order, chances are you're not utilizing credit cards for the right reasons. If you fall into this category, there's a high likelihood that you'll accumulate credit card debt. For you, a credit card may seem like a limitless source of free money, allowing you to buy whatever you desire and pay for it later. Unfortunately, this is the reality of the society we live in, and it's only going to become more challenging.

An increasing number of companies are emerging to support the concept of "buy now, pay later." Essentially, this means you can be financially strapped both in the present and future. You've probably encountered this option while shopping online, where the checkout page features a button asking if you'd like to pay for your order in installments. What does this entail? Instead of paying the full amount upfront, you can spread the payments over six months, with a bit of interest added on top.

In the past, people would discuss taking out substantial mortgages, financing cars, and perhaps utilizing a home equity line of credit to purchase a boat. However, nowadays, things have changed. It's not just about financing homes, cars, and boats anymore. People finance their clothing, furniture, electronics, cell phones, laptops, etc. And let's not even get started on student loans. 

Breaking away from this habit will prove to be challenging because our society is sinking deeper and deeper into debt. It has become entirely normal to be overwhelmed by financial obligations. Everyone seems to be drowning in debt, and that's just how things are. Now, if you want to go on a nice vacation, you don't have to wait until you can afford it. You simply put it on your credit card or finance it, paying it off gradually. After all, that's what everyone else is doing, right? So, here is what many people do: they indulge in that luxurious trip to any part of the world even if it means spending the rest of their life paying off the debt, along with interest. I am certain that if they don't break away from such habits they will be heading for lifelong poverty.