I Pulled Myself Out of Poverty By Losing These 5 Financial Bad Habits
Ever heard the phrase “poverty is a choice?” Chances are, you may have discounted it as something coming from another rich a**hole. What if I said there might be some truth to it?
Most people stay poor not because they aren’t lucky or unmotivated. It is mostly due to poor money management and lousy financial habits.
People make a variety of financial blunders every day, from buying stuff solely to show off to making lousy or no investments.
Remember that your money habits are critical to your financial health, and having bad ones can only lead to a negative life. You can always turn your life around by following some healthy financial habits. But for now, let’s focus on the mistakes to avoid.
While there is a lot to talk about on this issue, I have opted to keep the article brief by focusing just on the main points.
1. I spent more than I earned
People with bad spending habits frequently spend more than they make. I did the same mistake as well. This eventually led to a debt spiral and a slew of additional financial issues. Did you know that 93% of poor individuals have revealed that their expenditure is not budgeted? The problem lies here.
If you want to take control of your spending, you must first create a budget. Always keep to your budget and don’t go above it unless absolutely necessary. Subscriptions you don’t use, unnecessary internet purchases, dining out every day, pricey nightlife, and so on all mount up and come back to bite you.
To get out of this poverty trap, you must be more frugal with your spending. To make a difference, develop the following positive spending habits:
Make a budget for your purchases and stick to it. Pay yourself first, then your living expenditures. Using a budgeting tool, keep track of your spending.
2. I did not save any money
Closely related to the first point, we have poor saving habits. I did not save any money in the past. Be it emergency expenses or some future needs, it always came out of my paycheck. That’s a terrible way to live.
You won’t be able to increase your fortune until you start saving money. Not saving money on time might have long-term effects, and you may wind up with nothing. According to Warren Buffet, you should save/invest first and then spend the balance of your money.
Truth be told, it is not that hard. When it came to impulse purchases, I did the “delay your purchase” method. For any major purchases over $500, I delayed it by a week. If I felt the same about this expense even after a week, I would go ahead and do it.
This method saved me from spending too much on frivolous things. All this excess money went into my high-yield savings account. That’s an easy way to get out of poverty.
3. I used credit cards excessively
Using credit cards is essentially encouraging additional debt. It is one of the most costly and risky financial decisions made by Americans.
Don’t get me wrong here. Credit cards have their own advantages if you use them wisely. Unfortunately, just like most people, I did not. For someone with bad financial habits, credit cards help them make spontaneous purchases and accumulate debt.
Credit cards, when used appropriately, may help you improve your credit score while also saving money through numerous offers and discounts. However, utilizing credit cards for every single transaction is a no-no, especially if you intend to spend more than you make.
4. I did not start investing
The moment you start earning money, you need to start investing. It doesn’t have to be a huge investment. Just a little something consistently will help you build a massive wealth over time.
Even beginners can invest with just $100 per month. Do not wait till you start making the big bucks to invest. Something as simple as mutual funds or ETFs will do for most people.
If you want to minimize danger, you can invest in secure investments like treasury bonds or government bonds. High-risk investments, on the other hand, will provide large returns. So, based on your risk tolerance, select an investing plan.
5. I did not learn new skills
When most people finish college, they just stop learning anything new and settle for a comfortable monthly paying job. I was one of them. The world around us is going at a break-neck speed, and not learning any new skills will cost you dearly.
You need to periodically update your skills. Besides improving your knowledge, this helps you earn more by leveraging your new skills.
At this age, getting educated is not a difficult thing. Anyone can do it with simply their smartphones and a decent internet connection. Make sure you learn something you are interested in. At the same time, try your best to use this new skill to make money.
It will surely get you out of all kinds of financial troubles.
It’s never too late to drop these habits
Just so you know, it is never too late to ditch these habits and get ahead in your financial life. The key thing here is to recognize your bad financial habits first. Only then you can make a change and turn around your life.
