People that start at the same economic level in life but end up at very different economic levels as time goes by can have fifteen common habits that contrast the two groups. These bad habits can compound over time and lead to a lack of money.
While real poverty exists in the world at large, in the United States and many western countries being poor can be mindset when all the opportunities that exist are not seen or taken. People that are mentally and physically able can become rich in the U.S. if they seize the opportunities within their individual grasp.
Here are 15 things that people with a poor mindset tend to do that the rich mostly avoid:
1. Victim mentality
A victim mentality can be the most destructive mindset as people place responsibility for their life on other people, places, politicians, or businesses. This creates a hopeless mindset and removes the power of self-determination. This mindset depletes motivation, energy, and the desire to try to create change in life. If someone believes what they do doesn’t matter then they are unlikely to do much to try to change their life trajectory.
2. Lack of savings
The trap of living hand to mouth with no savings or cushion paycheck to paycheck can lead to bad decisions like payday loans or in some cases even theft. Emergencies can be disasters and can lead people to do whatever it takes to survive. This is not an optimal situation for wealth building. This is a formula for a cycle of staying poor.
3. Selling their time for money is their only cash flow
People can never be truly rich until they can disconnect how they earn money from their time. Selling your time for money can keep you poor if you can’t convert that earned income into investments, businesses, or cash flowing assets.
4. Watch too much television
Television can be a source of entertainment or news but watching several hours a day can consume too much of peoples most valuable asset: time. The more television people watch the greater the odds of being low income.
A study conducted by the General Social Surveys of NORAC at the University of Chicago found that 34.1% of U.S. families making less than $9,000 per year averaged watching more than five hours of television per day. For families making over $150,000 per year, only 1.1% watched over five hours of TV a day.
Someone not working has more time to watch TV, but the findings show a correlation between declining television viewing as income levels rise. Working people making $30,000 a year watch more than twice as much television as those making $75,000. [1]
5. Fixed Mindset
A fixed mindset is the belief that current abilities along with intelligence and talent are fixed now just the way they will always be for a person. It’s the belief that people are born and destined to be at a certain level of intelligence and ability. A fixed mindset accepts their current level of performance and intelligence as fixed and do not try to improve and grow.
Fixed mindsets believe people are born with talent that enables success not really effort. They believe performance is inherently fixed and static. It’s a fatalistic mindset that believes in predestination in life at birth for the most part. Fixed mindsets credit success to natural born talent or luck which they believe they lack if they’re not successful.[2]
6. Irregular sleeping patterns
The average person sleeps 229,961 hours in their lifetime, equivalent to almost one-third of their life. For the poor, this number is estimated to be much smaller. In fact, 33.6% of those below the poverty line reported sleeping less than the recommended seven hours per night. Recently released Center for Disease Control (CDC) data shows just how much lack of sleep may be affecting their health and wealth, and the results of this data are especially significant for those who are low income.[3]
Sleep deprivation for those in poverty works in a vicious cycle to keep them poor. This is how it works: people are in poverty, and sleep less than they should. This lack of sleep causes many health issues, which inhibit their ability to earn a good income and be a productive worker. This reduces their earning ability and keeps them from getting above the poverty line.
7. Sports is an outsized priority
Watching sports and being a fan can be great hobby, but putting too much time, energy, and money into sports can cause other priorities to suffer. Sports can become a problem when too much money is spent on going to games not leaving enough money for retirement accounts or savings.
When an obsession with sports causes the area of personal finance to be neglected it can make you or keep you poor. It should be low on the priority list if you want to be financially successful in life. It should be a hobby not the core of your life or identity.
8. Don’t prioritize how they look
Showing up at interviews dressed poorly can keep you from getting a better job. Having social intelligence means understanding expectations from others and it’s crucial to know the acceptable dress code and appearance for an employer or boss before going to an interview and creating a bad first impression.
People must look the part to rise up the socioeconomic ladder.
9. Live beyond their means
Spending all the money you make will eventually make you “poor” no matter what your income level is. To become rich you must use your earned income to buy or build assets that create both cash flow and a high net worth. You will stay poor and never get rich spending all your income on depreciating consumer goods.
10. Switch jobs often
The rich have careers, passions, missions, and build businesses, the poor just look for a job. To create earning power people must establish monetizable skills and experience in one industry. Switching jobs a lot between industries, creating a bad work record, and not establishing an upward trajectory for a career path can keep people poor. It’s crucial to work to learn not just for a paycheck, and stay in one industry long enough to create value in the job market through experience and repeatable skills.
11. Dysfunctional relationships
Staying in toxic romantic relationships and marriages can lead to being poor as people can’t overcome the negativity or effects of being with someone bad for them. Rich people tend to be in relationships with romantic partners that are assets in their life or at least not liabilities. Life is hard enough, it can become impossible with the wrong life partner.
12. Paychecks are already spent before they are received
The poor already have their whole paychecks spent on bills and debt before they even receive them. It’s impossible to build wealth without positive cash flow after bills are paid. To escape being poor bills and debt must be decreased and income increased or both. Frugality and establishing a real career or the first two steps of escape.
13. Hang out with broke people
“You are the average of the five people you spend the most time with.” – Jim Rohn
People don’t realize how much the people they hang around with effect their belief system and mental model for how they see the world. If you want to escape being broke change the people you are influenced by. Start reading books written by rich people, listen to the talks given by rich people, and start to study how they think and act. Change the people that influence you, and change your life.
14. Shamelessly ask others for money
Entitlement is a poor mindset as it makes people believe they are owed something for nothing from people that did the work. Instead of focusing on doing the work and creating things a poor mindset will focus on seeking what others have, this is a way to stay poor. Living off others whether it’s parents, friends, or the government is a trap to never being rich.
15. Lack of follow through with ideas
Someone with a poor mindset will have great ideas for products, businesses, or careers but never do the work to create them. The rich take action to bring their ideas, goals, and dreams into reality.
Each decision we make can come from a poor mindset or a rich mindset, these decisions compound into our financial destiny over time.
