5. You do not pay yourself first (in other words, you do not save).
“The No. 1 reason people end up poor is because they don’t ‘pay themselves first,’” said personal finance expert Barbara Friedberg.
What does paying oneself means? Well, paying yourself first means putting a portion of each paycheck into a savings account before divvying the rest out to cover expenses. Some set-up automatic savings that when your salary comes, your bank automatically deducts a portion of it and transfer it to a savings account you’ve set up. It’s convenient.
And of course….
The No. 2 cause is “paying with credit,” Friedberg said.
6. You choose temporary pleasures than your future financial needs.
Poverty is often generational, according to Luke Landes, a speaker and personal finance writer at Consumerism Commentary. You might be poor simply because your family always has been, “which is one of the hardest environments for making progress,” Landes said.
“People who should be in good financial shape may not be, often because the decisions they make aren’t aligned with their future financial needs,” Landes said. “Making conscious decisions that require some thought about the future isn’t as satisfying in the moment as choosing something that they perceive to have an immediate positive effect on happiness.”
Above the trap of splurging today just to make yourself feel better and end up cash strapped tomorrow. A rule of the thumb is to always ask yourself: Do I really need this? Or do I simply want this? And also: Will the money I’ll spend today return to me two-folds tomorrow? In other words, is this an investment spending? If not, do not spend (if you don’t need to).