When you see a fancy sports car drive by, you may think to yourself, “Hmm, that could be me”. In the same manner, when you see a person who barely has anything to eat, wears ragged clothes, and lives on the street, you might think to yourself, “Thank goodness I’m not like that guy”.
Well, guess what? There are habits that could put you into those nice cars, the same way there are habits that could put you on the street! You see, poverty is a state of total financial lack. A person living in poverty cannot afford the basic things of life, they live off scraps, and they are most likely nose-deep in debt. Not everyone was born poor, however, there are certain habits that can lead one into that state and if you ask me, the following 5 are the more consequential!
Habits #1: Procrastination
One of the surest ways to poverty is through procrastination. For you to be rich, you have to execute on your goals and ideas. This means you have to make both physical and mental moves. Procrastination, on the other hand, stops you from “doing”, and when you’re not doing, it means you’re not achieving.
A habit of always postponing those life-changing moves will not only pull you away from riches, but it will also drag you into poverty! The only people who win in this life are people who make moves when the moves are required to be made.
You may be the most creative graphics designer in the world, but if you do not take the necessary actions to grow your brand, or dedicate time to creating that best-selling digital product, then you will be staring down the barrel of poverty! One of the biggest dangers of procrastination is that it causes you to miss out on great opportunities. There are some opportunities that are scarce, and if you are not ready when that opportunity finally presents itself, then you will lose BIG!
Besides missing life changing opportunities, there are in fact many psychological factors that you can experience when being a procrastinator and by knowing what these signs you are, you will be more inclined to change your procrastinating ways.
Firstly, procrastination can cause anxiety. When you procrastinate, you will be faced with the stress of juggling deferred tasks. For susceptible people, this could lead to different mental health challenges, as the upcoming tasks weigh on you mentally. Second is fatigue. When you keep procrastinating, you will end up with a pile of undone tasks. For you to keep up with deadlines, you will most likely sacrifice a lot of sleep to catch up. This would lead to fatigue, and fatigue will lower your productivity in the short-term and potentially the long run.
The final emotional drawback to being a procrastinator is low self-esteem. The reason is that when you procrastinate, you will ultimately become an underperformer. Hence, feel like a loser when you find yourself delivering poorly all the time. While this feeling of low-self worth may be something you can overlook, it is dangerous in your quest to be financially free. Why you may ask? Because if you have low self-esteem, you will not be motivated to do things that will take you out of poverty. The thought of failing again may not even let you get out of bed in the morning.
Habit #2: Overspending
Overspending simply means spending more than you have to or spending more than you can actually afford. This is one of the most common habits that lead individuals into poverty. A lot of people overspend because they want to impress a person like aa new girl they just met, or a group of people like their old buddies from college. The case may be that they overspend simply because they lack self-control and are inclined to buy every nice thing they come across.
The reality is that you don’t need to spend tons of money at the bar, on the latest gadgets or even on a new car, especially if your old one is running fine. However, sadly, many people adopt the “I deserve it” mentality and this leads them to spending on a ton of things they simply could do without. In most cases, they feel this sensation because they need these rewards to improve the quality of their lives, even if it’s just for a moment, because other elements of their lives are lacking. Maybe they dislike their job or are in a toxic relationship. Turning to spending is a common quick fix but it certainly isn’t a permanent solution. And a common after-effect of overspending is accumulated debts.
When you form a habit of living above your means, you will naturally want to keep it up. This will lead you to using more credit than you are supposed to. Overspending also means you would not be able to save, and that can hurt your financial progress in so many ways.
You see, failure to save a percentage of your earnings means you will not have money for short or long term investments. How can one move forward financially if they don’t invest in their future? Moreover, owning a home would be an almost impossible task if you don’t save for it. This means you will have to keep paying rent for the rest of your days, even in your age of retirement. Speaking of rent, overspending would make it hard to even pay when the rent is due.
Think about it for a second. If you have no money in the bank, no home of your own and you have overdue rent then you are trending towards being broke and on the street.
Therefore, the wise thing to do is live within your means and save for investments and growth. A proven tactic that will help you live within your means is budgeting. When you go out with friends or plan your day, set a limit to the amount of money you will spend. I know, the fear of being seen as a stingy person haunts you. Well, it’s better to be seen as stingy and have money, than to be seen as overly generous and be broke! Spending wisely today can put you on a path to escaping poverty!
Habit #3: Borrowing More Than Necessary
This is an offspring of overspending, and being indebted all the time guarantees that you will remain poor. When one who overspends needs to keep up with a certain lifestyle, but has no more cash, the next best option for them is to take more credit and when you have multiple debts to offset, it means any money you make has to be channeled towards debt repayment.
According to statistics, American families who belong to the low-income group, spend over 40% of their income on debt repayment. Further studies have revealed that being in so much debt affects a person’s ability to make long term financial decisions. Think of all the interest you would have to pay on each loan, it would amount to a decent sum of money, which could have been invested in something more tangible.
Besides all the interest you would have to pay, being in a ton of debt also means your credit rating will be poor. There’s hardly an investor or loan company that will grant you funds knowing very well that you have many unpaid debts. A lack of investor interest or denied loan requests would mean you have no access to funds for your business ventures or in more dire situations to help you get out of poverty!
Habit #4: Seeking Instant Gratification
Instant gratification is when one seeks a reward or fulfilment in the shortest time-frame. It means they want it now, and not later.
This habit is known to keep individuals from chasing long term prospects. In case you don’t know, long term prospects make people rich, while short term prospects won’t let you move from the financial position you are currently in. People with this habit come up with all sorts of reasons not to indulge in activities that will be beneficial to their finances in the long term, just because they don’t want to face the short-term pain of the sacrifice required.
Instant gratification is a form of self-sabotage, it can also be linked to procrastination, where you choose short term pleasures over long term success. Being caught in this trap can leave one susceptible to anger, addictions, jealousy, and making impulsive decisions. This will result in stress, anxiety and feelings of being overwhelmed.
Those who are of this habit usually lack self-discipline and are unable to control their emotional urges. The consequences of this habit are very significant. It keeps you unhappy, leads to poor decision-making, and it causes you to plan poorly. A poorly planned life usually leads to poverty, more often than not.
My advice to those who suffer from the need for instant rewards is to start practicing “delayed gratification”. Delayed gratification is the opposite of instant gratification. This is where one sacrifices short term pleasures to achieve and enjoy the rewards of long-term goals. This usually comes with some pain or discomfort, but it’s only temporary.
Practicing delayed gratification habits come with a multitude of advantages. These include strong will-power, improved self-discipline, better focus, better planning abilities, better money-management skills, and better understanding of the value of patience. Luckily, if you are currently an instant gratification seeker, there are a few ways you can adjust your mindset to focus more on the long-term, larger payouts.
The first way to do this is to know what you want out of life. It is easy to get carried away by present temptations when you have no clue what you want out of your life. Knowing exactly where you want to be will help you plan better, and resist the temptation of instant rewards and pleasures. This is the very first step you should take to break the habit of instant gratification.
Next, you should identify potential temptations. This is the second step to take. Along the line, you will be encountered with temptations of all sorts. Knowing what these temptations are and how they will affect your long term goals is key to breaking the need for instant gratification.
Then, you must surround yourself with those who will support your long-term ambitions. We all know how people can be influenced by the group of people they spend time with. If you have a group of friends who also seek instant gratification, then it will be hard for you to break the habit. Build a strong support network of people who understand the importance of short-term sacrifices to achieve long term success.
Finally, create a reward system for yourself. When you commit to a long-term game plan and start to reach the milestones you’ve set out for yourself, you can encourage yourself with a small reward. Don’t confuse a reward with instant gratification, they are not the same thing. A reward is planned, and it comes only after you achieve a certain short-term goal. For instance, if you task yourself to save $250 a week, and after 4 weeks you have successfully saved $1,000, you can reward yourself with a $5 latte from Starbucks. These types of small rewards will keep your motivated on your journey.
Habit #5: Focusing On Too Many Ventures
Many people have the habit of being a “Jack of all trades”. The problem with this is that you will barely master any one of them. Developing a skill doesn’t happen overnight, it takes time, energy, and mentorship from those who are already established in that particular field. Overstretching yourself to learn many skills at once is a habit that will lead you to financial instability. This is because you will expend the little resources you have to finance multiple endeavors. You may even be inclined to take multiple loans to finance each venture. Businesses are like plants that need to be watered and pruned consistently before they bear fruit. Dedicating your time to mastering just one field will make you a master of that field and it will lead you to success. The danger of trying your hands at multiple endeavors, and failing, is that it could lead you into many debts and eventual frustration!