7 Things Keeping You Poor (That You Don't Realize)

There are multiple obstacles that can keep many people stuck in the mud and financially poor. Many of these obstacles, unfortunately though, go unnoticed and proceed to plague your finances. This wrecks havoc on you financial future and can affect your ability to see light at the end of the tunnel. Today we will get into common habits that are keeping you poor and what can be done to solve them.

1. Instant Gratification

One of the most common habits that are keeping people from achieving financial success is instant gratification. In modern society we live in a time where there is no waiting or patience to achieve financial goals. Attention spans are shorter than ever, and quick dopamine hits are king. Due to this common issue many people have, they are more likely to make risky financial decisions that typically result in the loss of capital instead of smartly and patiently investing and growing capital over time which is a proven recipe for success. A study by the Motley Fool showed historical data suggests that long-term investors generally outperform short-term traders: A study found that patient investors outperformed frequent traders by nearly 6% annually over a 23-year period.

When you compound poor or rushed investment decisions with the fact that many are willing to sacrifice their financial future on new cars, vacations, luxury brands, new tech, excessively financed weddings, homes, by now pay later (on everything), and many other things they cannot afford, one can see the obvious damage that can be caused to one's financial health and future.

2. Poor Money Management

Another consistent habit that functions as a widespread plague keeping many poor and impoverished is poor money management or the lack of money management skills. If you don't know where your money is going, saving and building your finances is similar to that of pouring water into a cup that has a hole at the bottom; pointless. Even worse though, is knowing you need to have a plan, making a plan, and not sticking to the plan; which seems to be the route the overwhelming majority of Americans are taking.

According to a new survey from NerdWallet, 84% of Americans with a monthly budget say they've sometimes exceeded their budget. The survey, conducted online by The Harris Poll on March 31-April 4, 2023, among more than 2,000 U.S. adults ages 18 and older, found that around three-quarters (74%) of Americans have a monthly budget. The irony. Financially planning just to not stick to the plan seems like a pretty pointless and counterproductive endeavor. If one cannot manage their money well, saving it, make it work for for them, they will lose it just as fast as they earn it. Being successful with finances requires planning, dedication, and intentionality.

3. Lack of Financial Literacy/Education

Managing your money is important, but to be able to manage it to the best of your ability you need to be equipped with the knowledge of how finances work. Financial literacy is directing tied to your knowledge about budgeting, investing, and debt (all critical subjects in personal finance. Unfortunately though, although several surveys have shown 85+% of Americans think financial education should be mandatory in schools K-12, 47 out of 50 states do not have a financial education program in place in their schools (Missouri, Utah, and Virginia do).

In a recent MarketWatch survey it was determined the average American scores a 46% on a basic financial literacy quiz and that only 29% of Americans reported having taken a personal finance course in school. Due to this unfortunate truth, the majority of people end up in bad financial situations and end up fighting financial battles they are not equipped to win. Talk about setting people up for failure. Of course though, i believe financial education should be accessible and affordable and if you want to be well equipped and knowledgeable about finances I recommend buying my course Financially Free: The Wealth Path, a course dedicated to the ins and outs of finances, financial planning, and general wealth building. Additionally, I will leave the link to a short 7 question financial literacy quiz from Finra so you can gauge you current financial competence compare to the rest of the U.S. (https://www.finra.org/financial_knowledge_quiz)

4. Income

One issue that many individuals also run into that holds them back from financial progress keeping them poor is their income. Sometimes you can plan everything well, stick to the plan, and make smart/strategic financial decisions but you still find yourself barely getting by. This is where it is probable that you may have an income problem.

Income problems can have several root causes: it can be the state you live in, the profession you chose, the lack of income streams, the list goes on. Maximizing your earning potential is critical to achieving financial success. If you have been stuck in a malaise with your earnings, you must weigh every possible avenue to increase your income. Common ways most individuals improve their income is through picking up a part-time job or finding a side hustle. Their are numerous side hustles that can be undertaken to increase earnings, but if you can take a passion or hobby of yours and monetize it, not only will you make more money, it won't necessary feel like work.

Another way to potentially increase your income outside of part-time jobs and side hustles is to switch jobs or careers. Some job fields will allow you to make or earn more money (typically science, technology, engineering, and math 'STEM' are the highest paying fields). Additionally, if you were to take a similar job at a different company, you will have the opportunity to negotiate your salary higher than what you were making at your prior company.

Lastly, what you can do is renegotiate your salary at your current job you take on increased responsibility with the goal of getting a raise. Regardless, there are many avenues for one to increase their income, but picking one or several allows you to make more and start building wealth.

5. Lack of a Network

The saying "it's not what you know it's who you know" does have some level of truth to it. When you have a weak network and are not well connected, you frequently miss out on opportunities that can bring increase to your life. These opportunities include jobs, information, resources, and people that can either help you make or even save more money.

For example, if you need a mechanic and someone in your network can recommend one that saves you hundreds of dollars, then you benefit from the strength of your network. Those who are well connected typically have an advantage when it comes to almost all aspects of life. You need someone that can save you the most money on your taxes without getting you locked up? Call your network. You need a new job or are moving to a new city? Reach out to recruiter or realtors in your network.

A widespread network of reliable individuals can save significant amounts of time and money while also having the added benefit of empowering your financial future in a plethora of ways.

6. Complacency

One of the things that keeps many people poor is a sense of complacency and comfortability. Sometimes we can get stuck in our habits and routines making us comfortable where we are at in life. There is nothing wrong with being content and grateful for the things you have, but at the same time, you should not want to be comfortable with struggle when you can seek to improve your life.

If you are working a simple job in fast food or a grocery store making $15 an hour or are comfortable crashing at your parent's house indefinitely, you need to strongly consider what inspires, drives, and motivates you. You can't build wealth being average or being afraid to try new things and fail. Building wealth requires strategy, inspiration, motivation and consistency.

Work to reinvent and amplify yourself and your finances. Spark the motivation for success intrinsic in all of us and break out of you comfort zone. Be smart, be strategic, try something new, take a calculated risk. Sometimes the one thing you change can change the trajectory of your financial future, and better yet your entire life.

7. Addiction

There's a ton of costly "hobbies" or addictions that can be quite costly and consume a significant amount of capital preventing one from achieving financial success. Many addictions seem small but if you continue down the rabbit hole, costs can definitely add up to be more than marginal costs.

Some examples of addictions or habits that add up over time include: smoking (cigarettes/weed), alcohol, food (eating out/overeating), shopping, etc. All of these can cost you hundreds to thousands of dollars over the course of a year and can stifle your financial future and success. As with anything, addictions can be overcome, but you must have a level of self awareness and self examination to be able to acknowledge, address, and resolve your vices to keep more money in your pocket.

*Bonus: You.

At the end of the day, every item on the list is a reason you may be stuck and financially poor, but there is only one common denominator: You. Take the time to reflect and assess whether or not you have equipped yourself with the knowledge, purpose, and motivation to achieve financial success. If the answer is no, you can learn how finances work and are managed, working to become more informed, knowledgeable, and disciplined when it comes to your finances. In doing so, you will be able to mitigate many if not all of the pitfalls preventing you from achieving financial success and a better, brighter financial future.

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