Are you one of those people who is constantly asking themselves, "Why am I always broke?"
Or, do you have a good job with a nice paycheck,
but your bank account is always overdrawn? Well, in this video, I will share with you
eight reasons why most people will always be poor regardless of how much they make. So,
make sure you watch this video to the end to find out what you can do to change the situation.
However, before we get to the video, please remember to subscribe to this
channel if you haven’t. And if you are a returning subscriber,
I would like to thank you for your continuous support. With that said, let’s dive into it!
Do you ever wonder why some people are so poor while others appear to have so much?
Well, In a study by the National Public Radio, the Kaiser Family Foundation and Harvard University’s
Kennedy School on the cause of poverty, 48% of the respondents blamed the continuous cycle
of poverty on “people not doing enough to help themselves” while 45% blamed it on circumstances.
Furthermore, about half of the more affluent survey participants believed that the poor
were not doing enough to help themselves, but so did about 39 percent of the poor.
Regardless of the statistics, many Americans today face a number of financial hardships,
ranging from high living and healthcare costs to taxes and college tuition. And for some,
these numerous burdens make them feel as if they will always be poor. While some people
are trapped in poverty due to a series of poor financial decisions they make every day,
and unfair circumstances, such as; unequal opportunities compared to those the wealthy have.
Fortunately, there are strategies you can use to build your wealth over time. However,
before you can start creating wealth, you must first identify the habits that
are straining your finances. And that’s what I will be discussing in this video.
Here are the 8 reasons why you could be stuck in an endless cycle of poverty.
Number 1: You Do Not Save
According to Bank rate data from 2022, 56% of Americans would not be able to cover a $1,000
unexpected bill with savings. In other words, Americans are generally under-saved. Therefore,
they are prone to debt which results into an endless cycle of poverty.
Contrary to what many people think, you do not need to earn a certain amount before you
can start saving. It is very important to prioritize saving regardless of your age,
stage in life or how little income you earn.
When it comes to saving, it is the habit that matters, not the amount.
It all comes down to priorities, and if you don’t prioritize saving,
it will be difficult to save no matter the amount you make. Whether you're saving for a new car,
a house, or your retirement, you won't get there unless you make saving a priority.
Many people assume that setting small amounts aside will never add up, but it does. Putting a
little bit aside each paycheck will eventually add up to the larger amount you'd hoped for.
Obviously, making saving a habit is obviously not easy. It needs practice. If you start doing
it automatically each pay period, you are most likely to stick with it. And remember,
the earlier you start, the better the chances of a financially secure future!
Number 2: You do not set financial goals
Do you have a financial plan for the future? Or do you just go with the flow?
The harsh reality is that there is a significant difference between someone who works with a plan
and someone who lives life as it comes. Poor planning may not be the cause of your poverty,
but it can keep you there. You can have all the conviction in the world, but if you do not have
a firm plan outlining how much you intend to earn and save, or how you plan to achieve your
financial goals, you are most likely relying on luck to move from poverty to prosperity.
To get out of economic hardship, one must have a detailed financial plan for the
future. You have to create and stick to realistic short-term and long-term
financial goals. Identify and jot down what you hope to accomplish in a day,
week, month or even in 5 years. You need to visualize your future and work out a realistic
path to get there. Doing this will motivate you to do better when it comes to your finances.
So how do you come up with a financial plan? Begin by making a list of your financial goals,
both those you're working toward and those you haven't begun working on yet. After that,
prioritize these goals based on the weight of their significance. Then
write down the exact details of each goal, such as the timeline,
the amount of money needed and the amount you’ve already saved. This
will help you figure out what it takes to accomplish each goal and create a plan.
If you need help designing a financial plan, you can hire a financial planner. However,
if you are interested in learning how to do it, there are several YouTube
videos and online articles that could be of help. So make great use of such resources.
Number 3: You always spend more than you earn
So often, we are advised not to live beyond our means. A statement that sounds like a
very practical way to avoid financial stress. But in reality, it’s easier said than done.
Do you ever find yourself looking forward to the next payday from the middle of the
month? Not because you've made an investment but because you are on the verge of running
out of cash? If yes, then this should tell you that you are living beyond your means.
Today, the internet has made everything very accessible to us. It is so easy to purchase
an item from the comfort of your home. What more, social media does not make the situation any easy.
In a recent survey, 57% of millennials reported making unplanned purchases because of what they
saw on social media. This goes to show how much impact social media has on our spending habits.
More than ever, it is easier to get swayed by the flashy lives online. You see people
flaunting expensive cars, new iPhones, and idyllic vacations and you want to be like them. So you
spend the little you have or get loans just to enjoy the same experiences. As a result,
you are stuck in debt because you're trying to sustain a lifestyle you can't
afford. If this describes you, then it's time to reconsider your spending habits.
Eliminate any unnecessary items from your budget and begin saving.
Number 4: You spend too much on housing
One of the reasons most people are always broke is that they spend too much money on housing. If
a huge portion of your salary goes to housing, you are definitely hurting your bank account.
The ideal cost of housing is set at about 30% which represents the highest amount you can spend
on a house and still live a reasonable lifestyle given your level of income. For instance, if you
earn $3200 monthly before taxes, you should not live in a house whose rent exceeds $960 per month.
The 30% rule is a good guideline, but it is not a universal rule. Circumstances vary so you might
have to adjust accordingly. For instance, let’s say you live in a low-income area;
you should not pass up a $575 per-month apartment because it is only 18% of your monthly income.
On the other hand, sticking to a 30% rent budget isn't always possible in places like New York City
or San Francisco, where average rental rates for a one-bedroom apartment exceed $2,000 per month.
So, if your rent expenses are overwhelming, you need to consider other options otherwise
you will be stuck living paycheck to paycheck. You could move to a
less expensive house or neighborhood. Or, you could simply find a roommate and split costs.
If you are enjoying this video,
please give it a thumbs up and make sure you share it with your family and friends. Also,
please remember to subscribe to this channel for more related content. Thank you very much!
Number 5: You do not budget
A budget is literally the foundation of your personal finances. Without a budget,
you are most definitely destined to remain broke. People who do not have a budget usually have no
idea where their money goes each month. And this is a very dangerous way to handle your income.
A budget gives you an understanding of; how you spend your income each month,
allowing you to know where to cut back, where to allocate more, keep a record of your goals,
and have reasonable estimates of when your goals are likely to be achieved.
If you are aware of your bad spending habits but do not want to be accountable,
you will always avoid a budget because it reminds you of your bad decisions.
As a result, you will not be able to improve your financial situation.
Though a budget can help you control your spending and avoid debt, only a small
percentage of Americans follow a regularly updated budget. A recent survey by OppLoans,
a loan servicing company revealed that 73% of American do not regularly follow a budget.
Additionally, 1 in 10 participants revealed that they do not keep any sort of budget at all.
Another survey found that 65% of Americans had no idea how much money they had spent the
previous month. Additionally, Generation Z is the least likely to know how much they spend.
To have an effective budget, you need to track your expenses on a regular basis.
This helps you to understand your spending habits, allowing you to make better plans in
the future. So, make sure you record every expense down to the last coin.
Luckily, there are numerous apps available for your phone or computer that can assist
you in keeping track of your expenses. So, make use of them!
Number 6: You are waiting for someone to save you
Having the right connections can open up doors to new opportunities. However, believing that
you can only succeed with the help of another person is a sure way to keep yourself poor.
A number of people believe that the key to their success is someone who
is better or more intelligent than them. Some are hoping to run into an old friend
or a family member who will reveal money-making secrets to them. While
others follow those who make them believe they can attract wealth through their imagination.
In today's world, you don't always need others to tell you what to do
to be successful. There are several free videos and courses available to
help you identify opportunities and develop skills on your own.
As Buddha once said, “No one saves us but ourselves. No one can,
and no one may. We must walk the path.”
Thinking someone has to help you prosper will only keep you stagnant in life. So,
stop waiting for that one person or moment to change your life. That’s not how life works.
You must be willing to step out of your comfort zone, work hard,
and take risks. You have to endure the discomfort and tiresome work of
learning a skill rather than waiting to discover what you can easily succeed at.
Number 7: You don’t have an emergency fund
Before you start saving for retirement or paying down debt,
you should work on building an emergency fund. An emergency
fund is a good way to protect yourself from unexpected financial circumstances.
There's always the possibility that you'll lose your job and have to cope for a while without a
regular paycheck. Or you may need to make a house repair or take a trip you had not planned for. An
emergency fund will help you through that tough situation by covering some or all of the costs.
This way, you are not forced to use your savings or take out a loan. Additionally,
you will be at ease because you have a backup plan in place.
People will sometimes forego an emergency fund in order to save for retirement. Which is not bad.
However, when a large expense comes up, they have to withdraw funds from their retirement account to
cover it. Withdrawing funds from your retirement account should only be done as a last resort. It
depletes your retirement savings and will almost certainly result in penalties. For example,
if you take an early withdrawal from a 401(k), you must pay a 10% penalty.
Number 8: You rely on one stream of income
Having one source of income can be convenient for a time,
but what happens if you lose that job? What happens if that business fails or
your salary is reduced? Relying on one source of income not only puts you in
a difficult financial situation if something unexpected occurs, but it also keeps you broke.
The more income streams you have, the quicker your money can grow. It's much easier for you
to reach your financial goals when you have multiple streams of income because it enables
you to make more money and get closer to your financial goals faster than if you only had one.
If your current salary is not cutting it for you, you should consider pursuing other
money-making opportunities. For instance, you could; start up a side hustle like blogging or
vlogging. You could invest in stocks or real estate. Or become a freelancer and
look for well-paying jobs on websites such as Upwork, Behance, Fiverr, and so many others.
You’ve probably heard the saying “don’t put all your eggs in one basket.” The idea is that
you should broaden your sources of income to ensure that if anything goes wrong with one,
you don't lose everything. So, if you only have one stream of income and something happens,
it will be disastrous for your financial well-being, and recovering might take you a while.
Well guys, thank you so much for watching. Do any of the points
mentioned in this video resonate with you? Please share your thoughts and
experiences in the comment section below. I am looking forward to hearing from you.
Otherwise, thank you for watching, and remember to like and share this video.
Until next time, have a great day.