Although people do not choose the financial situation that they were born into, their decisions and habits do vastly affect the financial situation that they grow into. Rich people have habits that help create a more positive future in their finances and other aspects of life. Poor people, on the other hand, often have negative habits that prevent them from breaking out of the cycle of poverty. Below are ten things that poor people do that rich people do not.
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1. They avoid goals
A destructive habit that poor people often have is the failure to set goals for themselves. According to a Harvard Business study, over 80% of the population is reported to not set personal goals. By failing to create goals for themselves, these people have a harder time improving their lives and their finances. Not creating goals means that these individuals have nothing to aim for. Furthermore, not being focused on goals makes one more likely to indulge in momentary pleasures that can be harmful to prosperity such as binge drinking or drug use. Having goals keeps one focused on the future and other more important matters. On the other hand, rich people understand the importance of thinking of a better future. Dave Ramsey, who is a well known financial advisor and radio host, included good habits when he defined the twenty things that rich people do every single day. He said that “84% of wealthy believe good habits create opportunity luck vs. 4% of poor.” In other words, rich individuals know that their repeated behaviors make or break their success. Poor people, conversely, are more likely to chalk it up to chance. The good habit of goal setting helps rich people envision a future that they know they would enjoy. This ideal vision of the future helps motivate them to try and achieve their goals. Even if they do not achieve their goals, they still will be better off than those that avoided this habit. Having a concise plan to achieve these set goals helps rich people create a life full of success that poor people envy.
2. They only have 1 income stream
Poor people limit themselves to only one source of income. Their one source of income often comes from their 9-5 job. By limiting themselves to only one source of income, poor people are not able to be self sufficient. They have to rely upon their employer to make ends meet. Furthermore, if their employer were to fire them, these individuals do not have a safety net which can lead to a lot of debt. One source of income also means that these individuals do not have extra money in case of emergencies while keeping them trapped in their job. Rich people, however, think differently. As opposed to relying on one source of income, they build multiple streams of incomes to ensure that their finances are secured. Rich people diversify their incomes by investing in the stock market, investing in real estate, or having a side business creates financial stability on top of their career. Therefore, if one of their sources of incomes turns sour such as a downturn in the real estate market or a boss replacing them with a better candidate, they are still making money. These multiple sources of incomes help to avoid disasters such as those while also creating enough money to put some off to the side in case there are other emergencies. Multiple streams of income also open up the opportunity for the individual to not be tied down to their employer which gives them freedom that cannot be experienced by poor people.
3. They are afraid of taking risks
One of the reasons that poor people stay poor is that they are afraid of taking risks. Many are afraid of investments because they have heard stories of people losing all of their money or they simply fear it because they have never taken part in it. They do not try to find a new job with a more competitive pay to either encourage their current boss to pay them more or start working for a new company with a higher paycheck. They are also afraid of trying to find a new career that is more fulfilling and more fitting to their lifestyle. Instead, they stay at their same job even if it is not paying the bills or is making them unhappy because they fear the unknown. By avoiding these risks, poor people lose out on the opportunity to make a meaningful change in their life. Rich people, on the other hand, see risk as just that, an opportunity for growth and an opportunity for challenge. Rich people know that in order to become successful that one has to take calculated risks. Instead of being fearful of risks, they see them as a way to learn new skills if the risk is not profitable and as a way to reap the rewards if the risk is indeed profitable. Rich people also know that the more risks they take, the more likely one of their risks will pay off. Avoiding risks means avoiding opportunity.
4. Poor people save their money
A penny saved is a penny made goes the old adage. Poor people are often told this saying or similar ones about saving their money. The truth is that no one has ever gotten rich from saving their money. Saving money allows inflation to eat away at the value of your money. As the value of the dollar decreases, the price of goods goes up. Saved money, however, does not, which means that the longer that you save, the more value you will lose. Furthermore, saving money does not provide any opportunity for growth like assets or investments do. Rich people understand that they cannot save themselves into prosperity due to inflation and the simple fact that they are not able to save enough money for it to make a large difference. Therefore, rich people put their extra money into assets or investments which helps increase the value of their savings and helps to avoid the effects of inflation.
5. They have a negative mindset
Due to evolution, the brain is more impacted by negative events than it is by positive events. Moreover, negative events are more likely to be remembered than positive ones. Poor people are more likely than rich people to eat into this instinct and gain a negative mindset. Since they are poor, they often blame their poor finances on unfairness or misfortune. They become too busy blaming the world that they forget to look inward. A negative mindset leads these individuals to not take the initiative to change their life for the better. They think that there is no use trying to better themselves since their financial situation will never improve with the world pitted against them. Having a victim mindset such as this creates self limiting beliefs that will often lead to failure instead of fruition. By never taking the chance to improve their situation, their situation will stay the same which will only add to their negative mindset. Furthermore, even if someone with a negative mindset does take action, they will be more likely to give up especially when they reach setbacks. Conversely, rich people are aware that a negative mindset and self victimization are detrimental to their success. They know that these beliefs can hold them back from reaching their ambitions. Therefore, they avoid seeing the world as unfair and instead see negative situations or setbacks as opportunities to work harder and achieve personal growth. Rich people even see rejection as a positive thing by thinking of it as a way to find a better opportunity.
6. Poor people are to agreeable
Another pitfall of poor people’s mentality is that they are too agreeable and can often be “pushovers.” Poor people are less likely to ask for raises or fight to ensure that their value in the workplace is being fully appreciated. By failing to be more assertive, poor people unintentionally harm their financial outlook. They are less likely to move up in their job or career because they simply do not have the nerve to ask. An individual who does have the confidence to ask for a raise will be more likely to get a raise. Being too agreeable also allows other people such as their coworkers, bosses, or other life acquaintances to use them or walk over them. Poor people are too agreeable to demand respect or to say no which leads to other people using them for personal gain. For example, a poor person will likely lend money to a friend who asks and will also be more likely to not go after the friend if they fail to repay them. Rich people, however, understand that being too agreeable is not always a positive thing. By being more closed minded, rich people are more likely to ask for raises and are more likely to insist on being respected. By being more aggressive instead of being too nice, rich people are able to make more money while also being perceived as more valuable.
7. They fall for get rich schemes
Poor people waste their money and time on get rich quick schemes. Since no one obviously wants to be poor, poor people do try and take opportunities that seem beneficial on the surface to improve their situation. Get rich schemes, however, are usually scams or are very hard to win which leads to lost money, lost time, and lost hope. Popular get rich schemes that poor people fall for include the lottery, gurus promising a special secret to getting rich, payday loans, and more. All of these alleged ways to get rich never end up actually making these individuals rich. By focusing on unrealistic ways to improve their financial situation, poor people perpetuate their poverty by wasting valuable time that could be spent on more prosperous methods. Rich people, on the other hand, know that building wealth does not come quickly. Building wealth takes time and a lot of effort and dedication. They are aware that get rich quick schemes are schemes and not viable ways to improve their financial status. Rich people realize that they can only become successful financially by working smarter and harder.
8. They have liabilities
Poor people have liabilities. Liabilities are financial obligations that an individual has to pay. Liabilities can include debt, mortgage debt, taxes, and bonds. Buying a new vehicle that requires a loan, for example, is a liability until it is paid off. Poor people often have these liabilities which can consume most of their paychecks. Although a new car or a new house may seem beneficial, these individuals are doing themselves a disservice because they spend each month using their money to pay off their liabilities. Rich people, however, use their money to grow more money instead of paying off liabilities. They avoid debt and other liabilities as much as possible because they understand that bills that gobble up their paycheck will only harm them financially. Instead, they only buy cars or houses that they can afford so that they are not detrimental to their finances. Moreover, instead of having liabilities, rich people have assets. Assets are property that is owned by the individual that has value and sometimes has increasing value. A paid off house or a rental property with cash flow is an example of an asset as it adds wealth to your finances. Cash flow is the amount of money that after bills an asset creates. For a rental property for example, after the mortgage payment, taxes, and other expenses are paid off, the remaining money from the rent payment is the cash flow from the property. Rich individuals use assets like this to retain and grow their wealth instead of losing their wealth to liabilities.
9. Poor people make bad friends
Poor people associate with friends and acquaintances that keep them in the cycle of being poor. The average individual does not think of using friends as a way to help motivate them to achieve their goals. Instead, poor people have friends that they like to have fun with, usually by blowing all of their money on partying or vacations that they cannot afford. These types of friends may peer pressure you into joining them even if you have more important matters to attend to. Furthermore, they also may make you experience a fear of missing out on their fun. Since you know that they will talk about the fun time they had and that they will likely post pictures of it on social media, you may feel inclined to participate so that you can feel included. Poor people’s friends may also be jealous of their success or of their goals to better themselves. They see your success and your plans as their failures which may cause them to say negative things regarding it. Bad friends hope that by saying negative things towards you that you will not continue to grow. The rich, however, see their friends and acquaintances as spheres of influence. Rich individuals like to hang around with fellow goal oriented people who would rather talk about their future aspirations than the party last weekend. Although they may like to have fun, they realize that having fun is not the main purpose in life. Rich people also do not associate with those that like to drag them down because they know it may harm their willpower to succeed. Lastly, rich people see friends as a way to gain connections for business purposes which enables them to grow their network and influence.
10. Poor people avoid taking care of their health
A common habit of poor people is to not take care of their health. They give into instant gratification such as eating junk and not exercising. These individuals may use the excuse that eating junk food is cheaper than eating healthy food, and, therefore, they are saving money. The detrimental effects of unhealthy foods, however, create detrimental effects not only in the future but also in the present. In the long run, unhealthy foods can lead to conditions such as diabetes, obesity, and can also increase the risk of serious conditions such as cancer or heart disease. Furthermore, in the present healthy food creates brain fog and may make people more tired. Likewise, poor people may use the excuse that working out takes too much of their time or that gym memberships are expensive. The long term effects of working out, however, will buy people more time by warding off harmful diseases while also helping them live a more happy life. Exercise also increases the amount of oxygen in the brain which helps the brain age slower and enables one to concentrate easier. Rich people do not avoid the responsibility to take care of their physical health because they are aware of the consequences of not doing so. Instead of using food as a way to gain pleasure, rich people see food as a way to gain energy. They also perceive working out as a way to channel their focus on improving for the future. By taking precaution in the present, rich people create a more healthy lifestyle that helps them to succeed and helps them succeed longer.
