1. The illusion of wealth principle. When you’re able to buy something cool, it feels like you have money, even when you don’t. People that don’t have money tend to ‘need’ to make purchases a lot more than people who do have it. However, there are people with high incomes who also have out of control spending.
2. The love of debt. My parents don’t have high incomes, but hate looking like they don’t make that much money. That means they love to do stupid things like remodeling the house. They of course have to go into debt to pay for their bad habits.
3. Obsession over money. The poor are often the most obsessed about money. Their self esteem is tied to their personal balance sheet. This causes problems because this unhealthy obsession compounds issues #1 and #2.
4. Belief that it’s impossible to save. Whenever I talk to people about saving money, most tell me that they are barely getting by as it is. The funny thing about that is that usually people are fine taking on extra debt to get things that they want to buy. Apparently it’s easier to make payments to someone else’s bank account than your own.
5. Lack of consciousness. If you don’t hold yourself accountable for what you spend, money will literally disappear. I personally used to ‘lose’ hundreds per month, even when I made less than $1000 per month. I honestly could not figure out what I spent it on.
6. Belief that ‘something always comes up’. If you don’t force yourself to save before you spend money, there will never be any left over to save. I’m pretty sure that’s one of the unwritten laws of the universe. 🙂
7. Lack of long term perspective. Our world is all about instant gratification. This causes us to spend money we do not have to buy things that we do not need.
8. Being broke. It’s easy to feel broke when you are. To change, you first have to decide that you want to.