 You know, there's a difference between poor and broke. According to Robert Kiyosaki, author of Reach Dad Poor Dad, there's a difference between being poor and being broke. Broke is temporary, but poor is forever. Here's the truth, being poor is more a state of mind than a state of a person's finance. It's about how you think or perceive money, whereas being broke is about a present catastrophe that can be taken care of effectively if right measures are put into place. Broke describes a person who barely has enough to take care of his needs, while Broke describes a person who has a temporary issue with money, which means that it can be fixed. Although broke people only have temporal issues with money, sadly, most people remain broke for a long time. For instance, in America, the median household income is $57,652, yet most of these households end up exhausting their income before the end of the month and goes about crying that they are broke. It remains that they are not poor, but they have run out of enough money to meet certain expectations until a set period that they are due to get some more money. So the question is, what is responsible for the state of being broke and how can they avoid it? Well, in this video, I'll share with you seven reasons why most people are broke and how to be different. If you're new here, consider subscribing so that you don't miss out on exciting videos like this. 1. You have no knowledge or education on money Do you know why only a few percentage of the entire people in the world are rich? It's because we are not taught how to make money or even manage our finances effectively in school. While you might want to hurriedly put the blame on the education system for not including a vital subject as that into its curriculum, you might want to start by blaming yourself first. Okay, have you ever heard the saying, you are your responsibility? I'm pretty sure you have. So while schools might have failed in their duty to help us learn as much as we can about money before exploring the real world afterward, you equally owe yourself the responsibility of taking charge. It is your life, remember? Steven Downs, a Canadian philosopher and commentator, said, we need to move beyond the idea that an education is something provided for us and toward the idea that an education is something that we create for ourselves. So the first place to begin, if you genuinely want to avoid being broke all the time, you need to educate yourself about money. It helps to learn how money works, how to manage your money, and how rich people have managed to build their finances to the level that they are now. Otherwise, you'll keep struggling with your finances over and over again. Two, you spend more money than you earn. Spending more money than you earn is one primary reason most people remain poor for a long time. Yet, people wonder or ask themselves, in what ways are they overspending their money? I mean, all they do is pay their bills. Let's start this way. Take a list of everything you've spent your money purchasing, including the bills you had to pay in the last three months. Get the total amount. Compare it to the total amount of your income in those three months. What do you have left? The question should be, do you have anything left? Here's the point. The reason why you often find yourself spending more than you're required to is because you don't budget or plan your spending. You spend your money based on your feeling. If you feel the need to have something, then you buy it, without taking a few moments to consider whether you need it or not, and what effect it will have on your finances. In some of the cases, trying to please people or to prove a point to them can also lead to overspending, and that's one reason you're still poor. Will Rogers, an American stage and film actor, said, Too many people spend money they haven't earned to buy things they don't want to impress people that they don't like. So, to become rich, you need to start paying more attention to budgeting so that you can avoid overspending. Three, you don't plan your spending. I know that it seems like a mean and challenging thing to do when it comes to budgeting. However, if you learn to budget the right way, you'll be surprised by how much you'll begin to enjoy the entire process. A part of budgeting is saving. It allows you to do a proper list of your daily or monthly expenditure in a scale of preference, ignoring those that are not an absolute necessity, after you have taken out a particular percentage for savings and investment. Dave Ramsey, an American radio show host and author, said, A budget is telling your money where to go, instead of wondering where it went. Several budgeting methods work. It isn't a one-size-fits-all situation. It means that you are more likely to succeed if you find what works for you. You can speak to a financial expert for help and clarity on some of the options, or you can do intensive research on the subject. Four, you don't save. Some people think that they need to start making so much money to be able to save some. Do you know what? That's why they haven't started making those big money. The reason why you are broke and keep living from paycheck to paycheck is that you don't know how to save money, even if you're earning nothing but peanuts. The truth is that if you cannot manage the little amount of money that you're earning right now, how do you think you can handle more? It just won't work. You have to start doing a good job now so that you can make the best of decisions when you have much more. Start by saving at least 10% of your income when you get comfortable with doing that. You can increase a little more. Before you know what's happening, you would have become an expert at saving. Perhaps we should talk about the benefits of saving so that you'll get a little more inspired to do so more often. One, save for emergency purposes. You can create an emergency fund that can cover at least three to six months of your basic living expenses so that when unplanned life circumstances happen, you don't go into panic mode trying to figure out what to do next. Two, another reason you should save money is for your retirement. You see, the best way to enjoy and live life to the fullest is to spend only a short period of your life working and spend what's left enjoying family time, building relationships and doing the seemingly simple things that matter most in life. To do this, however, you have to plan for your retirement. What kind of experience do you want for yourself and your family once you're retired? How much money do you want? How can you achieve it? Well, hold on a bit. I'll tell you how to achieve your retirement plan now. Five, you don't invest. When it comes to being wealthy, two essential factors shouldn't be mixed up. There's saving and there's investing. According to Robert G. Allen, an American author, how many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case. When you save money, how do you double it? You invest it. Now, here's something you should know. You see, sometimes, both rich people and poor people save money. Yet, the rich keep getting richer as a result of their money saved while the poor make little or no success. Here's the truth. Poor people save money because they are scared of losing it so they're not interested in doubling it or investing the money. Rich people, on the other hand, save money to invest. Remember what we said earlier about saving for retirement? Well, it's more like investing for retirement. You can't possibly save all the amount of money that you need when you retire by merely putting it in a savings account. You need to be able to multiply your money. To do that, you need to invest. At the end of the day, how much money you earn or save doesn't matter if you don't know how to multiply it. Investing means allowing your money to work for you. Robert Kiyosaki, the author of Reach That Poor Dad, said, it's not how much money you make but how much money you keep, how hard it works for you and how many generations you keep it for. So, start investing. Also, be sure to do proper research or you can seek help and advice from financial experts before putting your money into any kind of scheme. Six, you're not learning new things. Self investment. Next to investing money is investing in yourself. You see, you make money by monetizing your skills. You don't have to be or be able to do just one thing. You can learn to do a few things and monetize them. You can also learn to do one thing so well that you become an expert in it so that people will be willing to pay you any amount just to have your expertise on board. So, if you want to avoid being broke all the time, you have to find ways to increase your income and that means investing in yourself. Seven, you lack self-discipline. Finally, even if you know all of this and you lack the self-discipline to control yourself and your actions, well, it'll be useless. Self-discipline is your ability to delay gratification and do what's right if you want to improve your money habits. It is you dismissing the idea of pizza and ice cream so that you can put that money to better use this time around. It is saying no to those designer shoes and purses so that you can invest that money in your retirement fund. Self-discipline takes practice, which means you need to make a conscious effort to improve your self-discipline every day. So, take it one step at a time. 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