Looking back on my personal finance journey, there were a handful of things that kept me poor. To be honest, I wasn’t even aware of them at the time, so I didn’t do anything about it for many years. As a result, my situation remained the same for too many years.
What is Poor?
There are endless definitions of poor. Mine relates specifically to mindset and the way we think.
Poor is a mindset that keeps you from advancing and moving forward. Whether it’s business, personal relationships, money, or anything else–poor is a state of mind. Financially speaking, it also comes with consequences like money struggles.
Broke Versus Poor
Poor is a state of mind, while broke is a temporary situation, usually involving a lack of money. Someone who endlessly complains, has overwhelming negative beliefs, and doesn’t believe they can move forward is poor.
While the person who is struggling, but actively trying to improve their situation is broke. The struggle for this person is temporary, and they will eventually figure it out. For example, someone who fails in a business endeavor, but learned from their mistakes, is broke.
They gave it a shot, tried their best, and things didn’t work out. They are going to learn, get better, and give something else a try. While a poor person would either never try in the first place or give up at the first sign of defeat.
10 Things That Kept Me Poor
Before we get too much into the 10 things that kept me poor, I want to write about whether I was poor or broke. I could make an argument that I was broke, but I think I have a bigger argument that I was poor because of a few factors.
Most of what was keeping me down was due to my mindset and subsequent actions resulting from my mindset. Which goes back to poor being a state of mind.
Without major changes and some luck along the way, I would have stayed that way indefinitely, which is a very scary thought. I also really wasn’t taking actions to improve my situation.
So these are the top 10 thing that kept me poor. I’m convinced that avoiding these things will greatly improve anyone’s situation.
Number 1: Negative Mindset
Since poor is a state of mind, it’s only natural to lead off the list of things that kept me poor with a negative mindset. A negative mindset keeps you stuck where you are, and doesn’t allow you to grow. It’s almost like giving up before you even start.
Some of the ways in which I used to have a negative mindset:
- Thinking I couldn’t get ahead because I had a teacher’s salary
- Believing that investing was only for the wealthy
- The false belief that I couldn’t buy real estate because it was too expensive
As soon as I dispelled these myths and eliminated the negative beliefs, things began to change. I went from poor, to average, to above average financially speaking. It all starts with mindset.
Number 2: Lack of Financial Literacy
Lack of financial literacy is bound to keep almost anyone poor, or at least broke. If you don’t understand the inflow and outflow of money, debt, investing, and other basics–it’s very hard to get ahead.
For example, someone making $450,000 per year, but spends $451,000 in that same year is a thousand dollars per year in the red. They have no way to save or invest. It’s trading time for money with no financial progress.
Contrast that with someone who makes $30,000 per year but only spends $25,000 per year. This person is actually in a better position financially than someone who makes 10 times as much as them because they are keeping part of what they earn.
It may not be as much money as they want to keep (and they likely will improve), but there is consistent progress being made.
Number 3: Not Investing
Not investing earlier was a huge mistake on my part and something that kept me poor for way too many years. I had the false belief that investing was only for the rich, and you needed to have a bunch of money to begin investing.
I didn’t realize that anyone can get started investing, no matter how much money you have. I also didn’t put it together that the rich were rich because they invested. I had it backwards, I thought you had to be rich or wealthy first.
Warren Buffett has a quote: “If you don’t find a way to make money while you sleep, you will work until you die.” Investing is what gives you the ability to make money while you sleep, and eventually work only if you want to.
Number 4: Living Paycheck to Paycheck
One of the biggest things that kept me poor was living paycheck to paycheck. Not only did I live paycheck to paycheck, but I thought it was the normal thing to do.
I was under the impression that you make money from a job, use that money to live, end the month around zero, and repeat the process. What I didn’t realize at the time is that this pattern left me running in quicksand.
Of course I was working hard and getting things done, but I wasn’t advancing my personal finances at all. I was no better off when I was 28 than I was when I was 23 or 24. And even at age 30, I was no better off. Staying in the paycheck to paycheck trap will keep anyone poor, no matter how much they make.
Number 5: Not Automating
Getting out of the paycheck to paycheck and building investments requires a system. One of the best systems I can think of is automation. And not following this system is something that kept me poor for a long time.
Automation is exactly what it sounds like. Set up automatic payments to your investments every single month. After a while, the money really starts to add up, especially as you begin contributing more.
For more on automation, see these posts:
- How to Automate Your Money
- How to Become an Investor: 10 Ways
- Stack the Money Odds in Your Favor: 7 Strategies
Number 6: Paying Myself Last
Number six of the things that kept me poor is paying myself last. I mistakenly thought for many years that if I was going to invest, it would be done at the end of the month if I had any money left over.
As you can imagine, that turned out to be a very bad plan. Saving and investing is not a luxury. It’s just as important as paying rent/mortgage and the bills, and needs to be prioritized.
When investing is viewed as an afterthought or “if I have enough”, it’s not going to get done. But when you pay yourself first, it will get done.
Number 7: Spending All I Made
This is a natural follow up to the mistake of paying myself last. I fell into a trap that many others do, and that’s spending all I made. “I worked hard and earned it, so I’m going to spend it” was my thought process.
I hadn’t quite grasped the concept that every month needs to be a financial win, and you have to have something to show investment wise for your hard work. If you don’t, you’re just treading water and will be in the same poor financial position year after year.
Number 8: Stopping My Education
When I was in high school and college, things were structured. As a result, I read whatever was assigned. That worked for me and I learned a lot.
After college though I didn’t have a professor to assign nightly reading. So I flat out didn’t read. If I had to guess, I would say I went over five years without reading a single book. Bad idea.
Once I began reading again and engaging in self-education through podcasts, videos, seminars, and masterminds–things greatly changed for the better. The reality is if people want to learn and grow, they have to continue their education.
Number 9: Staying in My Comfort Zone
It’s easy to reach a certain point that’s “good enough.” I call this the comfort zone. It’s “good enough” and comfortable, so there’s not a lot of motivation to make any changes.
The problem with the comfort zone is that it stunts growth. And when there’s no growth, eventually things begin to stall out and people go backwards. I stayed in my comfort zone way too long and it was keeping me poor.
Even worse, I didn’t have the tools to get out of my comfort zone because I had been in it for so long. With a surge of hard work, I was able to finally get out of it but it took a lot longer than it should have.
Number 10: Lack of Accountability
Last on the list of things that kept me poor was a lack of accountability. I had no accountability partners and nobody questioning what I was doing. Even worse, I was not accountable to myself.
As a result, I spent years just cruising by, doing just enough to stay above water financially. Those were dead years financially speaking because I was breaking even for the most part.
Now, I have accountability through both myself and other people. Which ensures I won’t fall back into some of my old personal finance traps.
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Conclusion
There were lots of things that kept me poor, it wasn’t just one thing. My hope with this post is you see some of the mistakes I made, and stop yourself from making the same ones. Or catch yourself in the process of making those mistakes, and stop them before they get too out of control.
Every mistake I listed in this post is fixable. It might take longer than you like, but anyone can do it.
What is keeping you poor, or what used to keep you poor?
