Well, a number of you may read the title of this post and think to yourselves "Why on Earth would I want to learn how to become poor?" or "Why don't you just tell me how to be rich?" or "I'm struggling with money enough already without your help, thanks very much!" And my answer would be along the lines of "You want to learn how to become poor in order to avoid it!" There are many things that a lot of us do each day without really thinking much about which actually cause us a lot of financial harm. This post is aimed at highlighting a few of them.
1) Spend more than you earn.
Well, this first one is something of a no-brainer really, but you'd be surprised how many people fall into this trap. In fact, looking at the state of the economy right now, many businesses seem to fall into this trap too! It doesn't matter if you earn minimum wage flipping burgers, or you are the CEO of a multinational conglomerate, if you follow this rule, sooner or later you're going to end up poor.
2) Buy what you can't afford.
Another somewhat obvious statement, but once again a trap that many people fall into. It's not a bad thing to want to have nice stuff, but it is important to have the discipline to wait until you have the means to pay for it. I could write a whole series of posts about the dangers of debt, but just look at the state of the economy right now! Think of all those people that bought property valued way higher their earning capacity. All the cars, big screen TVs, extended vacations. It's all nice stuff, but if you don't keep debt under control, sooner or later you'll be a slave to it.
3) Invest in things you don't understand.
A good way to become poor is to invest your hard-earned cash in things that quite frankly, you just don't understand. If you don't understand options trading, you'll probably lose your shirt. If you don't understand how a business operates, how can you truly know if they are any good at it? There are many excellent, easy to understand opportunities out there, why take the risk on something else? You'll be better off with a lottery ticket in most cases!
4) Sit back and dream.
Sit back and dream. Watch life pass you by without a care in the world. Don't put in any hard work or effort of any kind. Be lazy and carefree without any form of discipline. This is a good way to end up poor. There is no such thing as a free lunch, if you want something you need to be a doer, not a dreamer. Otherwise, you'll end up falling into a cycle of debt that will stop you from ever building wealth.
5) Don't plan for the future.
After all, Uncle Sam will take care of you, right? Er... maybe! Well, the pessimist in me says that Social Security and Medicare will probably not even be around by the time I make it to retirement, but even if they are that may not be enough. Another really good way to end up poor is through a lack of planning. Why think about retirement planning now? You're still young, right? Well, that's a good recipe for poverty! Living below your means now gives you the prospect of a much better future. It also gives compound interest a chance to work its magic. But hey, live for the moment, you want to be poor right?
6) Don't don't where your money goes.
Another good way to be poor is to have no idea where your money goes. Just spend it. Don't get receipts, don't budget, don't worry about it! After all, there's another paycheck coming next month... right? But what if there isn't...
55 minutes ago