In our ever-changing world, the divide between the successful and struggling individuals has always intrigued me. After observing various lives, I have come to deduce the following key insights:
People who are poor actually have a lifestyle inflation problem. It is no news that for a lot of people, spending increases directly with income, either arithmetically, or exponentially. The sooner a lot of people start to earn more, they start to spend more, and this thing happens subconsciously. When a person gets an increment at work, they begin by getting a new wardrobe, a new car, a new house, and so on. This spending starts innocently but over time, the brain is triggered to see those new changes in luxury as necessities. This actually leads to more money, to keep up with the lifestyle which isn't even real because at any point in time, there is a financial hiccup, you will be close to ground zero.
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A lot of people believe in using up money as it comes, so they do not bother to track expenses but this is wrong. You cannot spend every penny that comes to your hand, or buy everything that you wish because you have the financial capacity at hand. By doing so, you are actually digging into a financial pitfall without knowing. Spending money on random impulsive purchases is the wrong thing. Work with a budget if you can, or have a particular amount of spending you can do in a week, month, or even yearly, and stick with it. While you are spending money, you should also put it into consideration the amount you are making as income.
That said, borrowing above what you can pay is another mistake that a lot of people make. You see, anybody can borrow money, both the rich and the poor, but then what you borrow the money for and how you can repay back matters a lot. Never borrow money that you cannot pay back easily, because it is the job of the lender to outstretch your credit limit, while it is your job to stay below it. Their job is to give you a large loan and get the money with interest from you. Because you are getting a large amount of loan approved for you doesn't mean it is a good deal for you. It can be a bad one because what you qualify for and what you can pay back are two different things.
Having just one source of income is a problem. You cannot live on one source of income in this continuously inflating economy. The job that could keep you going and pay for your lifestyle would not be able to anymore in five years' time. So it is good that you start to increase your source of income. Spend your entire time growing more income sources that are viable. Also, learn the tax policies in your country. Taxes are meant to take from you so the government can have additional money to what they print for projects, so it is important that while you have to pay your tax, you should find a more cheaper way to do so.
By avoiding these common money mistakes and adopting prudent financial habits, individuals can pave the way to long-term financial prosperity and secure their financial future.