A lot is said about wealth and luxuries in modern life, but the truth is that most people don’t enjoy that type of privilege due to lack of funds. While the middle class is the biggest income bracket in the US, many of those people want to improve their social and financial status but don’t know how. On the other hand, some lower-class people feel trapped in debt and overwhelming financial situations, and want to find a way to improve their lives.
If you find any of those descriptions relatable, or are simply looking to create better financial habits, here’s a helpful guide about the things that poor people do that you could change to achieve your desired lifestyle, while following the teachings of people who know what to do with their money. Just keep with us find out what they are!
Contents
Hopeful Gambling
One dangerous habit that poor people indulge in is gambling, dreaming of the ‘get-rich-quick’ syndrome. While most people start with simply trying their luck, there are not-so-rare occasions when the hobby becomes an addiction, and creates a chain of troubles in many ways, not only financially.
One of the worst consequences of gambling is how it casually causes dependency on people who are always hopeful to get some extra cash out of it. Even though this could work a couple of times, most people don’t get as much money out of it as they want to, sometimes incurring a net loss of funds from with which they initially gambled.
It’s not rare for people to lose thousands of dollars just for the sake or excitement of taking the risk, and in the worst instances, harmful gambling habits lead to not only losing money but also causing self-esteem issues, anxiety, and even triggering depressive episodes, according to the specialized site GamCare.
Though not everyone becomes addicted to gambling, and only indulge on rare occasions, it’s still a not-recommended habit for people who want to take care of their finances to throw away money just as a hobby. Even more, the time and funds spent on gambling could be employed in improving your life in better ways, whether that’s focusing on a new professional goal, or planning an investment strategy that doesn’t involve throwing a dice, sometimes literally.
Endless Debts
One of the easiest ways to trap oneself in a seemingly endless circle of debt is by acquiring high-interest credit cards. Though it’s a given that a positive credit record can provide bigger credit opportunities, which can be used in profitable investments, the truth is that many people don’t use their credit cards to build a better life but just to make ends meet month after month.
It’s a fact that rich people don’t need credit cards and loans to buy necessities and pay basic bills, but this doesn’t mean that their use of credit can’t be replicated to create better future opportunities for those whose income isn’t massive. Some of these positive habits include paying-off the card in full every month to avoid increasing the compound interest, looking for low-interest credit cards if necessary, and creating a side fund not to be dependent on bank credits.
While short-term loans work in a different way than credit cards, it’s not recommended to get into these. The main reason is that these types of loans open the door for long-lasting debts, as most people who acquire them aren’t financially prepared to pay off in full when the time comes, entering another cycle of payments in which the interest keeps adding up to make the debt rather larger than it was initially.
Overboard Spending
It’s no secret that rich people indulge in luxuries which most middle- and lower-class people can’t afford. However, in most cases, the spending habits of the rich are within their reach in financial terms, meaning that purchasing or renting a yacht or a posh apartment doesn’t make them poor.
It’s a different story for people who can barely pay their bills every month, because overboard spending can easily put them at financial risk, especially considering that most people don’t have the cash to pay for things right away, and use their credit cards over and over until all of it accumulates. So it’s a no-brainer that buying a new TV or a new car doesn’t mean the same for someone in the lower-middle and lower-class than for someone in the upper class of wealth.
Warren Buffet 🚨🚨
Berkshire currently holds its largest-ever cash reserve of $157B, which is also the largest among publicly traded companies globally.
Warren Buffett generating approx $9B annually through risk-free investments in US Treasury bills using this cash.$SPX $SPY https://t.co/u7EFUbLysp pic.twitter.com/SrRJgq0fKh
— BigBreakingWire (@BigBreakingWire) November 5, 2023
According to Warren Buffet, the famous investor and businessman who has made a massive fortune with his investments, while living a modest life, comparing the cost of living to the standard of living is recommended. Meaning that it’s more important to consider how much it costs to purchase the things we think we need, compared to the things we actually need to improve our livesr. This doesn’t apply only to expensive appliances, but to properties too.
Risky Investments
To understand whether an investment is risky or not, we should go beyond what’s obvious. In the case of aforementioned gambling, and other habits not recommended, such as buying lottery tickets, the risk is inherent, and could increase depending on how deeply someone is committed, even addicted.
However, there are other investments which aren’t recommended, to people not knowing well what they’re about, including those who freely let others invest for them. The risk of these types of investments lies in the potential harm which trusting others with our money could cause, such as the infamous Madoff Ponzi Scheme case, on top of losing control over our finances.
Many people let others make investment decisions for them because they don’t have time to research or educate themselves on the matter, but the most recommended choice would be to consciously put our money in an investment after gaining sufficient knowledge about it. It’s better to take time to understand a business than to regret the aftermath.
Failing To Save Money
One of the most important lessons to learn about money is that taking care of our savings is never a bad thing. While many people consider that their investments could act as a saving grace during unforeseen circumstances, there are other instances where we could act as the best friend of our finances.
Avoiding the aforementioned overboard spending habits is one important aspect, added to living within our means while working on expanding our financial situation more safely. Having a savings account or owning valuable, liquid assets could save us from indulging in more debt.
Even if there’s no option but to solve an inconvenience with our credit cards, having some savings could help us in many ways during difficult times. That said, people who are already struggling financially find it hard to save money, and are already well into the depths of debt, but this advice could also awaken some ideas on how to get back to the surface even in these cases.
All in all, there are many things that poor people do that the rich don’t, while in exchange, there are many things that rich people indulge in that the poor can’t because they can’t afford to. In the end, it’s all about how we sort out these differences to improve our lives, both (relatively) poor and rich.
