Here are a few of the ways how broke people stay broke!
12 - Impulse Shopping You know the easiest way to get rich?
The answer is to build a business to generate income.
However, the other side of the equation is to keep that money!
Rich people don’t spend money on silly impulse buys.
We've all been there, you're up a little too late on social media and you scroll past an
ad for something that you gotta have.
Well the truth is, you probably don't need that throw pillow that says, Live Laugh Love
for 30 bucks.
Or a designer t-shirt that costs 200-300 bucks that you randomly walked by.
All these things quickly add up.
But the real truth is this.
If you've ever wondered how rich people managed to build their fortunes, it’s because they’re
too busy to buy anything!
We can guarantee you Jeff Bezos was way too focused on building up Amazon to go out and
try to spend the money he had at the time.
In 2017 the Americans spent 17.8 billion dollars on impulse purchases.That's an average of
$5,400 per person! over a lifetime that's $324,000.
But it’s all relative.
To someone who doesn’t have too much money, it’s a lot of money.
But to multi-millionaires, it doesn’t matter.
Whether that number is actually correct is besides the point.
The main point is that unless we’re rich, the impulse buys DO matter, and keeping what
we earn goes a long way.
11 - Credit Cards Here's another investment tip from the wealthy.
Don't spend money that you don't have.
When you think of the average billionaire, maybe you picture a wallet full of credit
cards.
But they don’t.
But it’s not true.
Why is this?
It’s to streamline finances and prevent unnecessary spending.
Rich people use credit cards as a tool and not as a crutch.
They’ll use it to their advantage and play the points game so they can get free stuff.
Broke people put things on credit because they can’t afford it.
Every credit card comes with its fees and interest rates that add up quickly if you
don’t pay off the balance.
And before these guys know it, they’re in major debt.
While we do understand that sometimes emergency expenses come up, it’s still best to have
saved up an emergency fund.
If you don’t have the money in cash to buy something that’s not necessary, then the
cost is too high for whatever it is!
Financial peace of mind is worth way more than the stress that comes from buying unnecessary
things that add little value to our life.
10 - Too Much Home You've heard it before - live within your
means.
But most people just don't.
A lot of people live in houses that cost way too much or in apartments with rent that they
can’t afford.
And most of the time it's because they live in a place that is just way too big for their
needs.
A rent or mortgage is typically the biggest monthly expense.
The question is - how much do you really need to live?
Take for example Warren Buffett.
It might sound crazy, but one of the richest men in the world still lives in a $31,000
house that he bought in 1958!
He still lives and a house he bought 60 years ago that’s way less than 1% of his net worth!
The average American spends nearly 30% of their income on housing.
Yes, housing does appreciate, but that’s still just paper money until it’s sold.
Plus, there’s the expenses associated with a big house.
Former Heavyweight champion Evander Holyfield famously blew his millions on a 44 THOUSAND
square foot, 109 room mansion in Atlanta.
Actor Nicolas Cage depleted his 150 million dollar net worth by owning over 15 different
residences across the country.
Yes, real estate done right can make people a lot of money.
But many Americans are doing real estate wrong by draining their money with too much house!
9 - Screen Time If there's one thing rich people don't do,
it’s waste time.
While 12 hours of Fortnite might be fun, it doesn’t help the vast majority of people
make money.
In 2015 one study showed that most rich people spent little to no time playing video games
OR watching TV.
On the other hand, people who make less than $25,000 a year tend to spend much more time
on these activities.
Instead of playing video games or watching TV, most wealthy people will find themselves
reading books instead.
Basically they’re developing a talent stack that can either make them money or it makes
their lives better overall.
There’s nothing wrong of course with taking some time off to relax by watching a movie
or TV show once in a while.
But consistently using time to consume mindless entertainment for hours and never working
on themselves is a big reason why broke people stay broke.
8 - Useless Fees Having to pay a late fee for say, a credit
card bill, sucks for anyone.
Once in a while it’s understandable.
Somehow it slipped our mind or something unusual happened.
But if someone is consistently paying useless fees, such as a late fee, parking tickets,
or overdraft fees, then there’s something wrong.
These fees are an indication of a deeper issue.
It’s basically the lack of planning!
Rich people don’t pay a penalty fee for something that they can control.
Why pay fees when you don’t have to?
Credit card companies collect BILLIONS of dollars in late fees.
These companies essentially have a business model because they know that people can't
pay bills on time!
There are a few fixes here.
For payments, just set it on autopay.
For something like a free trial to some service, set an alert a few days before the free trials
expire.
7 - The Latest Technology Rich people definitely use technology, but
most of them aren't the ones spending thousands of dollars a year on the newest gadgets.
Every year Apple puts out a new iPhone that costs somewhere around $1,000 for the top
of the line model.
But how much different is that phone than the previous year's model?
Is the phone that much faster?
Did those three lenses on the back significantly improve your quality of life?
Did that thousand dollars help your business make money?
Probably not.
While it's important to stay up-to-date on technology, broke people stay broke by buying
new updates to electronics just because.
The reality is that the new and improved version is not something that’s essential.
6 - Making it rain Contrary to what rappers might have you believe,
rich people don't go blowing their money in the club every weekend!
Overspending is one big reason why rappers go broke!
Find out more here!
One common theme you see with rich people is a lack of extravagance in their day-to-day
life.
They don’t NEED that validation.
They don’t need to try to convince people that they’re rich.
They simply are.
Wealthy people are always trying to consistently improve personally and professionally, and
drinking until you can't remember the last three nights of the week isn't exactly how
someone betters themselves.
The way broke people spend their money is going out 3-4 times a week.
Each night out adds up to thousands of dollars in the long run.
There’s the uber cost, let’s say it’s 20 bucks each way so 40 bucks.
Then there’s the cover charge if you didn’t get a table, and let’s say it’s 40 bucks.
Then there’s the 20-25 dollar drinks in the club.
We’ll keep it conservative and say 4 drinks.
Right there that’s almost 200 bucks minimum for a night out!
But really, what’s the most troubling thing here isn’t the money spent, but rather the
mentality that’s keeping broke people broke.
5 - Lottery Tickets You've probably bought a lottery ticket at
some point in your life.
In fact, we all probably have!
Odds are, you didn't hit it big.
That's because when playing the lottery the odds are NEVER in your favor, even if the
math on the expected value is right.
But the allure of making millions from the small investment of a lottery ticket is what
gets people.
However, winning the lottery really is a curse.
Why?
It’s because of the mentality of the winners.
As sad as it is, most of them don’t have what it takes to keep the money.
That’s why lottery winners consistently lose all their winnings.
One study showed that poor people buy a disproportionate amount of lottery tickets compared to high-income
earners.
Nearly a third of Americans who earn less than $30,000 play the lottery consistently
and spend hundreds of dollars on lottery tickets every year.
But why do these people keep playing if they aren't winning?
It’s basically getting the dopamine every time they have a chance to win.
And, they get a tiny taste now and then with a small win.
4 - Gambling Speaking of the lottery, gambling is a losing
proposition in the long run too.
It’s another form of mindless entertainment, just like drinking at a bar.
The odds are never in our favor.
Play enough and in the long run, whatever money we gamble the casino is going to take
all of it.
Casinos are built on people gambling away their disposable income.
Rich people DON’T get rich from gambling.
Some of them though, got rich because of OTHER people gambling.
Gambling is something that broke people love to spend money on.
And that’s one reason why Vegas thrives.
Vegas gets Americans to dump their disposable income at the tables, at the restaurants,
and at the clubs and bars.
Then they’ll call it “entertainment”.
In order to teach his kids the lesson about the pitfalls of gambling, Warren Buffett put
a slot machine in his house.
He then gave his kids any allowance they wanted in dimes.
Because of the terrible payout ratio he had set up, he’d always have all their allowance
back!
3 - Cheap Products That Don’t Last The wealthiest people in the world shop for
quality not quantity.
Rich people don't buy high-quality products because they love spending money, it's actually
because they don't want to spend money on that item again.
Why buy a cheap product that you have to replace often when you could buy a high-quality version
that can last you a lifetime?
This can come in a wide range of things, from fast fashion all the way to cheap furniture.
A lot of times, we get exactly what we paid for.
Sometimes it’s more expensive buying cheap things!
In general, we should be looking long term whenever we buy something.
Instead of just looking at the price tag, we have to do calculations on whether it makes
sense to buy something slightly more expensive but will last longer.
Broke people unfortunately don’t think long term and think only of right now.
2 - Luxury Brands Social media and music may make you think
the way to look like you have money is to have on a pair of Yeezys and a Versace shirt.
The only reason to wear clothes like that is because you like it, and not to make people
think you have money.
Broke people will spend a lot of money to look like they’re not broke.
The type of people that care more about the brand of clothing that you wear rather than
your personality are the type of people you don’t want to be around.
If you look at some of the world's richest people you’ll notice that their choice of
clothing is pretty minimal.
Steve Jobs wore the same dad jeans, turtleneck, and New Balances for decades.
Mark Zuckerberg might only own gray shirts and blue jeans!
The point is that some of the richest people in history don't wear thousand-dollar sneakers
and 500 dollar shirts to prove their success or have it as an extension of their self-worth.
Just like in many other aspects of their lives, they choose simplicity over extravagance.
It’s this mentality that allows them to stack cash.
And of course, it saves them money and it eliminates the distractions.
1 - New Cars Most Americans buy too much car.
Something that’s supposed to be a utility has become pretty much an expected luxury.
The second biggest expense for Americans is transportation.
Once again, living above their means is how broke people stay broke.
Flashy cars are a huge reason broke people never get ahead!
They keep on trading in cars for a newer one, and those car payments continue.
Experts recommend that we spend roughly 10% of our yearly income on a car.
The majority of the US population spends almost twice that amount on transportation.
Yes, a car is something we all need, but there’s no reason to go overboard on spending money
for a depreciating asset.
If we can afford it, it’s fine.
But if not, just buy something that gets the job done.
Just as a point, Jeff Bezos drives a Honda Accord to get around!