Monday 24 June 2019

The 3 Common Habits That Keep 99% of People Poor

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I’ve been hit with some serious financial wake-up calls recently.
Because lately, I’ve been studying a lot on personal finance, money management, and wealth creation.
And through this eye-opening journey, I realized that there were 3 major habits that people are constantly doing (and not doing) that are keeping them stuck in a financial “rat wheel” and far from any chance of financial independence.

And it’s not necessarily their fault. Money is a very touchy subject for most people and it’s not a common topic for the dinner table in most households.
Not only that, the idea of wealth and becoming rich aren’t even at the front of peoples minds.
Why not?
Because most people don’t even believe that they’re capable of being wealthy or they have too many negative thoughts about it. Therefore, they don’t even make a solid plan or even an attempt.
Plus, most families, in general, wouldn’t be considered wealthy or in the 1%. So how can parents teach their children about how to do well financially when they themselves haven’t done it?
And that is where this because of a systemic issue.
The fundamentals of finance, money, investing, and wealth are NOT taught in schools and they’re not taught in the household.
So unless you’re part of the small percentage of people who are actually serious about becoming financially successful, you’re likely in for some unsettling and unnerving surprises ahead.
Here are my 3 observations for why most people will be stuck in financial quicksand for the rest of their life and never get ahead…

1. Focusing on only one income source

Most people will only have a single job that they rely on to pay for their entire life.
But think about how many expenses you have that pay for each month. It’s a lot, isn’t it?
You have rent/mortgage, car payments, insurance, food, gas, clothes, entertainment, and so on.
Yet, many have to fund all of those with just one single source of income.
Sure, you may be putting some money away into a retirement account for income down the road. But I’m talking about right now.
All of your life is tied to that one single income source and if something were to happen to you or that job, you may be in some serious trouble.
What I’ve learned is that you need multiple income streams just like you have multiple expenses.
You want to build a financial Parthenon so that if one source fails or stops, you’ll still be able to sustain your current lifestyle without much stress or strain.

2. Increasing expenses with increasing income from raises.

People who have jobs or businesses typically get some sort of increase in income through either through a raise or when their company is doing better.
But then, their expenses tend to increase accordingly.
When someone knows they’re about to get a raise, they likely already have a few things on their wish list that the money is going to.
Maybe it’s a bigger home, a nicer car, a new 75" TV, a high-end watch, or whatever it is.
It’s that “keeping up with the Joneses” mentality and the focus on consuming and spending versus saving and growing.
Now, I’m not saying that you shouldn’t treat yourself here and there and invest in some of the finer things in life.
But you shouldn’t do it if you have more important bills, loans, or other obligations to focus your money on. Which brings me to the next point…
You see, we’re a nation of debt. It’s normal for everyone to have it. Lots of it.
You’d almost think that people love debt because we have so much of it.
It’s “normal” for people to overextend themselves to where they can barely make their mortgage payment each month.
After all, that’s what our society teaches and that’s how the system is set up.
And this debt pattern and cycle are what keeps people and their families in financial shackles for eternity if they don’t take the time to understand money and finances.
If you can’t save money consistently to put towards ventures and investments, then you have a major issue. This rings true even for high-income individuals.
If you make $200K a year and spend nearly all of it to fund your lifestyle, then guess what?
If you lost that income source, you’re no further ahead than the person making $50K and spends the virtually all they earn as well.
Basically, you’d have to keep making that same income to fund all of your life’s expenses and when you get a raise, you typically raise your lifestyle to match. Therefore, there’s nothing left over to invest for the long-term or as a financial safety net.
And while you do want to think about your long-term financial goals, that leads to the next habit that keeps people stuck on the financial Ferris wheel…

3. Focusing only on saving money instead of increasing income

In my article, 5 Legit Reasons You Should be Abundantly Rich, I share reasons why I feel like it’s more important now than ever these days to strive for financial abundance.
I’ll be writing a follow-up to that article with some more reasons but in essence, everything around us continues to rise in price. Tuition, home prices, food prices — all major life expenses — continues to rise at faster rates than people’s incomes.
And as this trend continues, the middle and lower class will be in for a crap storm in the next several decades. We’ll have a major retirement crisis as government funds and social security continue to dwindle at alarming rates.
Yet, long-term financial security and retirement are the first area of someone’s life to throw on the backburner. It’s at the bottom of the to-do list until it’s too late.
Most people rely on “hope investing” where they put a small portion of their current income into a 401K and hope that all will work out for them in the later years of their life. That’s a terrible strategy.
Although most people spend their “disposable income” on a lot of stuff they 

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