What’s the difference between rich people and poor people? A lot of it comes down to having good ideas, being a hard worker, and getting lucky. But, I would say that even more of it comes down to one single fact: poor people just don’t do the right things with their money and their time.
So, before you start trying to come up with your million-dollar get-rich-quick scheme, maybe take a look at the habits you have, and see if there’s anywhere that you could improve and get yourself started down a path out of poverty and into success.
In this article, I’m going to tell you about 5 silly mistakes that poor people make, and end up keeping themselves poor their entire lives. Let’s go!
#1: Watch TV
Believe me, I like watching TV as much as the next guy. I mean, have you seen Stranger Things? WandaVision? It’s Always Sunny In Philadelphia? All incredible shows! But, at the end of the day, the time you spend watching TV is time that you could be putting towards setting yourself up for the future. Rich people understand how valuable that time is, while poor people seem not to.
Even if you don’t want to spend your typical TV time hard at work, there are other alternatives that are far better than watching TV. Try reading a book! Yes, books still exist. Reading is relaxing and stimulating for the mind, and you can better yourself by reading certain books. Try reading It Didn’t Start With You by Mark Wolynn, it could better your understanding of how your mind works while also making you generally happier. Or read Rich Dad Poor Dad by Robert Kiyosaki, and learn those all-important keys to success!
I know that after you get home from a long shift at your day job, all you want to do is kick off your shoes and hear that little Netflix sound, but try to keep it to under an hour a day. Spend the rest of that free time doing something to better yourself.
Want to know another great way to better yourself? Get richer! And the biggest difference between getting rich and staying in your current tax bracket is whether you’re investing or not.
#2: Saving Rather Than Investing
I’m not here to tell you that saving your money is bad. You’re absolutely never going to get rich if you’re consistently spending your entire paycheck and never putting any money away. But, saving is just the first step. Once you have that money saved up, it’s time to start investing it and making it work for you.
Let’s do a little example. If you had $5,000 that you put into a typical savings account with an annual interest rate of 0.5% (which is typical for a high-interest savings accounts) back in 2010 and let it sit there until 2020, that $5,000 would have gone up with compound interest to $5,255.
Now, to compare, the average annual return from the S&P 500 from 2010 to 2020 was 13.6%. If you had invested that same $5,000 in an S&P 500 index back in 2010, it would’ve grown to $17,895 with compound interest! That’s over $12,000 you just missed out on! That’s no small amount of money! And an S&P index is just about the safest investment you can make. They’re basically giving you money to do nothing!
So, you see what I mean? If you’re just letting money sit around in your savings account, first of all, good for you for making that money and saving it, but start investing it right now! Rich people make their money work for them. Poor people just work for their money.
If you haven’t invested any of your savings yet, it’s not too late. And maybe you’re kicking yourself for not investing it sooner and missing out on all that cash. Well, you know whose fault that is? I hate to break it to you, but it’s yours! And that mindset is another fundamental difference between rich and poor people.
#3: Blaming Everyone Else
Now, I’m not here to sound like your dad or anything, but if you find yourself constantly blaming your failure on other people or factors that are out of your control, it’s time to snap out of it and start taking control of your own life and your own finances. No one’s going to hand you the world on a silver platter, you’ve got to go out and take it!
Poor people never want to admit that they were wrong. They want to never appear vulnerable or reveal that they don’t know something. For rich people, life is one big learning experience, and failure is the best possible way to learn. When you don’t succeed, the best thing you can do is to analyze your actions and see why you failed. Then, you can avoid making that same mistake in the future. Rich people do this constantly, and it’s why they’ve gotten to the places they are today.
If you’re still poor, you’ve got to come to grips with the fact that it’s your fault. And it might also be because you’re spending money that you don’t have yet.
#4: Spending Money They Don’t Have Yet
Have you ever worked with someone who spent like 90% of their paycheck before they even received it? It’s that kind of spending that keeps people poor for the rest of their lives. You’ve got to make a budget and stick to it. Make sure you’re not buying things you can’t afford.
I’ll never understand how someone can miss a rent payment when they just went out and bought themselves a new pair of Gucci shoes. Get some Sketchers and pay your rent! People go out and spend their paycheck before they even get it, and when they do get it, it’s not enough for them to cover their rent, auto insurance, and whatever other living expenses they have.
Next thing you know, you’re taking out a payday loan that’s got an unbelievably high interest rate, and you’re deeper and deeper in debt each month. Another slippery slope is spending with a credit card. It may seem like the bank is giving you free money, but trust me, they’re not. The longer you let your credit card balance sit outstanding, the more interest the bank is collecting from you, which means the money that you recklessly spent before you had it is just going to keep costing you the longer you don’t pay it off!
Don’t spend money that you don’t have. Budget out your earnings, make sure you can pay for your living expenses first, make sure you’re contributing to your savings second, and only after you’ve taken care of those things should you buy leisure or luxury items like Gucci shoes or the newest Xbox.
#5: Not Acting on Ideas
If you’re watching this and you’re currently in a bad financial situation, I hope you realize that you’re only a few minor tweaks away from financial security. You’re smart, you’re savvy, and just all-around great. You’re reading the Ideal blog, so you must be!
Mark Zuckerberg came up with the idea for Facebook. So what? I bet you could come up with something even better! Hell, I bet you have incredible ideas all the time! So, why haven’t you acted on them? A big difference between rich and poor people is that when rich people think of a good idea, they make it happen! Don’t shoot down your ideas before they even have a chance to come to light. Give it a try!
Have a good idea for a business? Use your free time and try to build it from the ground up. Look at it this way: you’re already broke, so if you fail, you’re right where you were. If you succeed, though, you could be the next Elon Musk, Jeff Bezos, or Bill Gates.
Don’t just say “what if” and wait for someone else to act on an idea you had first. You only have one life to live, and you don’t want to look back on yours knowing you could have been a huge success if you’d only just acted on that one idea you had all those years ago! Get off the couch and make yourself successful!