Breaking the chains of poverty can be a difficult task. It requires hard work, dedication, and, most importantly, change. The ten poor habits outlined in this article are commonly seen in those struggling financially.
If you want to improve your financial situation, it is important to break these poor habits and replace them with positive ones!
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Table of Contents
1) You Don’t Have a Plan
How do you expect to achieve your financial goals if you don’t have a plan? Having a budget is one of the most important things you can do for your finances.
A budget allows you to track your income and expenses and adjust as needed.
2) You Live Paycheck to Paycheck
This is a common habit among those who are struggling financially. If you’re living paycheck to paycheck, you’re not saving money. It then becomes difficult to build an emergency fund or save for other financial goals.
To break this habit, you need to start budgeting and making a plan for your finances. Begin by setting aside money each month to save.
Even if it’s only a small amount, it can make a big difference in the long run.
3) You Have High Debt Levels
Another common habit among those who are struggling financially is high debt levels. This can make it difficult to manage your finances and make ends meet.
If you have high debt levels, it is important to create a plan to pay it off. Begin by making a list of all of your debts and their interest rates. You can focus on paying off the debt with the highest interest rate first or focus on paying off the smallest debt amount first with the Debt Snowball Method.
As you progress, you can start working on paying off the other debts.
4) You Don’t Invest
Investing is one of the most important things you can do for your finances. It allows you to grow your money over time and build wealth.
However, many people who are struggling financially don’t invest. This is usually because they don’t have the money to invest or don’t understand how it works.
If you’re not investing, it’s time to start. Begin by setting aside a small amount of money each month to invest.
You can then use this money to purchase stocks, bonds, or other investment products. As your investments grow, you’ll be on your way to building wealth.
5) You Don’t Have an Emergency Fund
An emergency fund is a savings account that you use to cover unexpected expenses. This could include medical bills, car repairs, or job loss.
Many people who are struggling financially don’t have an emergency fund. This can leave them in a tough situation if they experience an unexpected expense.
It would be best to start saving for an emergency fund to break this habit. Begin by setting aside a small amount of money each month. Doing this will help you build up enough savings to cover unexpected expenses.
My wife and I set up automatic transfers to a high-yield savings account, our Emergency Fund. It provides us with great peace of mind knowing we are prepared for the worst.
A great place to get started with your savings account is CIT Bank. They offer very competitive saving rates with no monthly maintenance fees.
With their Saving Connect Account, you can earn 12x the national average! There are no ATM fees, and you have the convenience of online banking.
Rest assured, CIT Bank is also FDIC insured!
6) You Don’t Have a Retirement Plan
If you don’t have a retirement plan, it’s time to start one. A retirement plan is a savings account used to save for retirement. Many people who are struggling financially don’t have a retirement plan. This can make it difficult to retire when you’re ready.
You must begin saving for retirement at the earliest possible age to break this bad habit. Start by setting aside a small amount of money each month.
By building up your retirement savings, you’ll be on your way to a comfortable retirement.
Related Content: Roth IRA vs Traditional IRA – Which One Should You Choose?
Related Content: How to Retire Early Using the FIRE Method
7) You Don’t Make Enough Money
Increasing your income is essential to your financial freedom. Many individuals who are struggling financially suffer from this issue. It often stems from a limited belief about their earning potential.
In this situation, looking for ways to increase your income is important. This could include getting a better-paying job or starting a side hustle.
Making more money is a great way to break the cycle of poverty. If you can find ways to increase your income, you’ll be on your way to financial success.
An excellent way to increase your PASSIVE income is by renting out extra space! With NEIGHBOR, you can easily rent out extra space, such as your garage, self-storage unit, rooms, etc.
8) You Don’t Have or Stick to a Budget
If you don’t have a budget, it can be not easy to manage your finances. A budget is a plan for your money that helps you track your spending and ensure you’re not overspending.
Many people who are struggling financially don’t have a budget. This can make it difficult to stay on track with your finances.
To break this habit, you need to create a budget. Begin by tracking your spending for one month. This will help you see where your money is going and how much you spend each month.
Once you understand your spending well, you can create a budget that will help you stay on track.
9) You Don’t Stay Disciplined
Discipline is essential for financial freedom. It can be not easy to manage your finances without out. This is a common problem for many people who are struggling financially.
In this situation, it’s important to find ways to stay disciplined. This could include things like setting up a budget or tracking your spending. Staying disciplined is a great way to break the cycle of poverty.
10) You Don’t Live Within Your Means
Making ends meet can be difficult if you don’t live within your means. Finding ways to cut back on your spending is important in this situation. This could include things like eating out less or downsizing your home.
Poor spending habits can often be caused by insecurity or not having delayed gratification.
For example, if you want something but can’t afford it, you may be tempted to put it on a credit card. This can lead to debt and further financial problems. If you’re struggling to live within your means, finding ways to curb spending is important.
There are some simple rules that you can follow to help live below your means. The 50/30/20 rule is one such rule.
The method states that you should allocate 50% of your income toward essentials, 30% towards wants, and 20% towards savings.
All in All
These are just a few of the common habits that keep you poor. If you want to improve your financial situation, it is important to break these poor habits and replace them with positive ones.
If you break these habits, you’ll be on your way to financial success!
A plan to achieve your financial goals, budgeting, investing, saving, living within your means, and paying off debt are great ways to start. Breaking the chains of poverty can be difficult, but it is possible.
With hard work and dedication, you can achieve your financial goals. So don’t give up and keep working towards your goals. You can achieve anything you set your mind to.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
