Have you ever asked yourself this question? How do I achieve financial freedom? And that leads me to ask why people are poor? Not just that, why do people who earn more than average income always struggle financially?
These are the things I saw when I was growing up. I hate to borrow. And that is why I feel so sad when I see people who borrow to the extent they have no limit at all.
The worst is you see them borrow when it is not necessary, which means they borrow at any given time. So I decided to research the reasons why most people remain poor.
Here are my findings: 7 Tips to achieve financial freedom
1. You Don’t Pay Yourself First
You see, the main reason why you are poor is that you don’t pay yourself first. I have found out that is why you remain poor. You struggle in debt. As a result, that is why you pay with credit.
Solution:
What I mean by paying yourself first is this: When you receive your salary for the month, you put a portion of it into a savings account before using the rest of the money for your expenses.
2. Make Savings A Priority and Do Automatic Transfer
In this particular aspect, I see most people make grievous mistakes by spending much on rent or a mortgage, which is the biggest reason they struggle financially. As a result, I see people who make above-average incomes but end up spending almost everything on rent.
Solution:
When you prioritise savings, you must do It automatically each pay period and stick with it.
Also, you should keep housing costs under 20 per cent of your income.
3. You put today’s happiness before future financial needs
People who should be in good financial shape may not be. Often because their decisions are not aligned with their future financial needs. As a result, choosing something that they perceive to have an immediate positive effect on happiness.
Solution:
You see, making conscious decisions that require some thought about the future is not satisfying. That we know. But will benefit you in the long run (future).
4. You Have a Bad Spending Habit
This is the biggest reason you stay poor. It is easy to hope that money is left over at the end of the month. But many times, your behaviour gets in the way, which is bad spending habits.
Solution:
As soon as you get paid, pay automating bills, save, and invest. This will cushion the blow when emergencies arise, and you will have something for your future or retirement.
Read also: 4 Ways You Can Get More Appreciation While Spending Less
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5. You don’t separate wants from needs
You see, generally, I see most people use the word ‘need’ for almost everything they purchase. As a result, it causes them to believe they ‘have’ to spend the money they are supposed to save. This mentality is what keeps you down financially.
Solution:
You should separate your wants from your needs to achieve financial freedom.
6. You Don’t Invest More In Long-Term Benefits
I found out that economic disadvantage plays a big role. And that is why some people are poor. But the truth is, that is not the only thing holding people back from achieving financial freedom.
Also, the other thing that holds people back is that they might find themselves in crises because they have repeatedly underinvested in areas of long-term benefits, such as education, investment, and savings, and overinvested in areas like luxury products, clothes, and shoes.
Solution:
Invest higher in long-term goals. For instance, real estate, stock, education, etcetera.
Read also: Top 10 Money Management Tips You Must Know To Build Financial Security
7. You Buy Depreciating Assets
You see, the main reason people become poor is that they focus their minds on buying depreciating assets, such as cars. Because of that, they have little resources to build wealth, which will now make them live from salary to salary.
Solution:
You should focus on buying appreciating assets like stocks, lands, and real estate. These would grow over time and eventually give you more resources so you no longer live in poverty.
In conclusion
In fact, the root cause of being broke is that people spend more than they make, and that is the only cause of bankruptcy.
But I have good news for you. You spend less to live within your means and work to earn more, so you achieve financial freedom.