Many individuals struggle when it comes to managing their own finances and end up living from paycheque to paycheque. The consistent habit of overspending leaves them broke, even if their income is well above the poverty line.
Not everyone, but there are those who are poor simply because they have a lifestyle that allows them to remain that way.
Here are eight reasons why it’s so difficult for individuals to break the poverty cycle.
1. They Feel Helpless.
· When you’re dealing with financial hardships often times you feel powerless to do anything that requires change. Many give into those feelings of helplessness instead of taking steps to make their financial future better such has finding ways to reduce their expense.
2. Not knowing where your money is going
· If you’re not sure where your money is going it’s difficult to take it in the direction you would like it to go in. Knowing where your money goes will prevent financial leaks. Start asking yourself a few questions to get started such as ; how much do you pay for groceries, how often do you buy lunch, do you eat out more than you cook.
3. Not separating wants from needs
· Most of the things that we buy tend to be impulse items. We use the word need for just about everything we purchase and we believe we actually have to spend the money. You might need to take a vacation, but you want a luxury vacation. This type of mindset tends to keep one financially broke.
4. You don’t have a budget
· Many struggle with their finances because they don’t have a budget or they think they don’t need one. No matter if you are rich or poor, having a budget is important because it helps to determine where your money problems are and what you can do to improve your overall financial picture.
5. Buying assets that depreciate in value
· Buying items that depreciate in value such as cars, flat screen TVs, boats etc are just some of the reasons folks stay poor. Buying these items tend to reduce their resources and prevent them from building wealth. Buying a house is a great investment that increases in value over time.
6. Carrying High Credit Balances.
· A lot of folks have high balances on their credit cards and are only making the minimum payment instead of working to pay it off or make more than the minimum payment. Carrying credit card debt can cost you a fortune because of the high interest rate.
7. No future plans in place.
Individuals tend to focus on their present needs or their current happiness. They tend not to think about their future needs simply because it seems so far away. Making plans for the future is not as rewarding in the moment as choosing something that they perceive to be an immediate gratification.
8. No Savings in place.
· Often times we don’t make savings a priority in our lives. We don’t take the time to pay ourselves first even when we get a promotion or a nice paying job. One of the ways to get financially further in life is to make savings a priority. Pay yourself first.