12 Bad Habits That Are Keeping You Poor - Life's Little Pleasures and Struggles

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Many Americans clearly lack expertise and wisdom in managing their own finances and end up broke for month after month. That leaves many people poor, even if their income puts them well above the poverty line. Yes, even if you’re earning a good salary or making decent money, you might still be living paycheck to paycheck. According to a recent survey from SunTrust Banks, Inc,- a third of higher-income households — those that bring in $75,000 or more a year — live paycheck to paycheck. There are certain bad habits that are keeping you broke and poor year after year, and in this article we will talk about that.

When you’re poor, it means that the chances of you living the life you want are extremely slim. Even worse, poverty lasts for generations in most cases. That means if you’re poor, you will not have the opportunity to leave wealth and a legacy to your children.

Habits that are keeping you poor and always will:

People can be poor or financially broke for many different reasons. Some people are born poor whereas some people develop some habits that keep them poor and not let them break the cycle of poverty. Yes, the most common reason behind their long-lasting poverty is nurturing some bad, unhealthy financial habits that need to be changed.

1. You buy things you don’t need

One of the bad habits that are keeping you poor is you spend your hard-earned money on stuff that you really don’t need or use. You don’t separate wants from needs. You might ‘need’ a good, reliable car for transport, but you ‘want’ the luxury model. This mentality alone keeps many of us poor financially.

You’re an impulse buyer, and make many unplanned, last-minute purchases without planning or giving it much thought. Shopping is a kind of entertainment for you. And you’re now paying for it with your financial freedom.

2. You don’t look for sales or discounts while shopping

Maybe you don’t buy things on sale or on clearance, and pay full retail price for most of the things you purchase. You decide to go to the mall to window shop, see something you like, and immediately purchase it without looking around for a more affordable alternative, or for a discount.

If that’s what you are doing, you are wasting thousands of dollars each year – slowly dragging yourself into debt and poverty.

3. You spend more money than you make

This is one of the main reasons why you might be poor. You’re spending more money than you earn. Most people who are in debt have gotten into financial trouble because they have spent too much money. This is normally due to not setting up a sustainable budget or sticking to it.

If you’re spending more than you earn and don’t know where your money is going, you first need to track your spending and figure out how to cut or trim your expenses.

4. You use high-interest credit cards to buy things you can’t afford to buy in cash

While shopping you charge credit cards to buy things instead of paying in cash. You think you have time to pay it off later at your convenience, and you don’t consider the amount of extra money you have to pay in interest.

Most credit card accounts today have interest rates of twenty percent or higher.

5. You want to impress others

You might be poor because you want to keep up a so-called good or polished appearance. You want to impress other people and be like them who you think have it all. For that you love to have nicer car, bigger house, latest gadgets, name-brand clothes, or shoes, or handbags, or wrist-watch. And you fail to differentiate between your wants and needs, and end up wasting tons of money on stuff that you really didn’t need in the first place. In the end, you find yourself drowning in debt – not being able to pay your bills.

Nowadays, you see so many people living an extravagant lifestyle, and you desire the same luxuries for yourself. However, that doesn’t mean you should live like you’re rich before you actually have the money to back it up.

6. You don’t stick to a budget

Another great reason for your poverty is you don’t have a proper budget. Yes, having a budget is that important! No matter where you stand financially, a sustainable budget is almost always a necessity because it can help you figure out where your money is going, where you’re overspending, and what you can do to improve your financial situation.

Without a budget, even if you have a very good monthly income, instead of saving money, you will most likely overspend and end up being broke. Because saving money has very little to do with the amount of money you earn. It needs you to develop some healthy financial habits. Creating a budget is one of them.

When you create a realistic budget, you can track your expenses, live within your means, and don’t tend to overspend. Then, you only buy things you can afford, and won’t add more to your debt.

7. You don’t pay yourself first

Another one of the bad habits that are keeping you poor is trying to save what remains after all the expenses. It doesn’t really work that way. You have to make savings a priority if you want to build wealth.

“The No. 1 reason people end up poor is because they don’t ‘pay themselves first,'” said personal finance expert Barbara Friedberg. You need to pay yourself first. When you pay yourself first, it means you’re prioritizing your long-term financial well-being. Rather than focusing only on immediate needs, such as regular bills or entertainment, you pay your future self by saving before you do any other spending.

“Pay yourself first” is a personal finance strategy of increased and consistent savings and investment while also promoting frugality. The goal is to make sure that enough money is first saved or invested for future needs before regular monthly expenses or discretionary purchases are made.

8. You lack an emergency fund

You might be dealing with poverty because you didn’t have (and still don’t) an emergency fund or savings. You spend more than you earn and don’t save any money for rainy days which is one of the bad financial habits that are keeping you poor.

An emergency fund works as a safety cushion. Without having one in place, things can get very stressful and difficult when some kind of emergency happens. Life happens, and when that happens, even the smallest unexpected expense can lead you to debt.

Without some money saved up for your rainy days, you could simply wind up borrowing and adding more debt to your plate in order to pay your essential bills or any unexpected expenses.

Related post: An Emergency Fund and Your Peace of Mind

9. You don’t enjoy life’s little pleasures

Maybe you are someone who spends almost a fortune on second-rate entertainment. When your money is tight, you need to look for free or low-cost entertainment or fun. Life’s best things are free. Take time to notice and enjoy all the simple pleasures around you.

Take advantage of your local public library. They have plenty of books and movies you can check out — without paying a cent. Spend more time in nature. Have fun with your family and friends doing things that won’t cost money.

10. You have bad, money-sucking habits

Maybe you gamble, or drink, or smoke. These are all unhealthy, harmful, money-sucking habits that can suck your money and life – both. If you continue with these habits, you will end up wasting lots of money on these habits that can eventually lead you to debt and poverty.

11. You buy depreciating assets

Buying big ticket items that depreciate over time is one of the bad habits that are keeping you poor. Depreciating assets can become liabilities easily such as luxury cars or boats. A reliable vehicle is essential in order for most people to produce an income in this country. But is the luxury component of an automobile worth the investment dollars? No, it isn’t.

A real asset is something that, in the future or whenever you need, can generate cash flow for you. Assets make money. Anything that takes money out of your pocket or loses its value over time is a liability. And when you have many liabilities, you’re bound to be financially broke or poor.

“One of the main reasons that people can become poor is that they focus their time on buying depreciating assets like cars, ATVs, boats, etc.,” said Deacon Hayes, personal finance blogger at Well Kept Wallet. “Because of this, they have little resources to build wealth and, therefore, they continue to live paycheck to paycheck.”

How can people fix this problem and build some wealth? “Focus on buying appreciating assets like stocks and real estate, which would grow over time and eventually give them more resources so that they are no longer living in poverty,” Hayes said.

12. You put today’s happiness before future financial needs

You don’t prioritize your future financial needs. Today’s happiness is more important to you than tomorrow’s freedom. You are after instant gratification and you want to have it all now! This gets particularly dangerous when you start using credit to fund all those purchases, which can cripple your future financial life.

People who should be in good financial shape often end up being financially broke and poor because the decisions they make aren’t aligned with their future financial needs and priorities.

Final words

There are many reasons for your poverty, but these are the main ones that may contribute to your impoverished state. Now that you’re aware of the bad habits that are keeping you poor and broke, try your best to break through these unhealthy habits in order to attain financial freedom.

Maybe all of these apply to you, or maybe just one or two. Whatever the case, it’s important for you to recognize the habits that are holding you back from getting financially stable and secure.