Why do people who make a decent earning go broke? Why do people work so hard and yet come down to nothing just a few days after the months pay? Here are a few reasons and how to reverse this trend for yourself starting today.
1. Inability to Differentiate between Needs & Wants
Yes, you’ve got to live a good life but the ability to differentiate per time what is need and want will keep you from carrying an empty pocket and ending in desperation and debt. Needs are those things you cannot do without. For instance because the nature of my work, I cannot do without power and have to spend money on generating power when there is an outage. That is a need.
Wants are those things you’d love to have but do not make any significant difference in your life. For instance if you have 2 pairs of shoes, getting an extra pair because you have a weekend ball is a want.
Surprisingly, a lot of people focus on their wants and look for means to satisfy the desire for these wants and end up over spending every single month. The result is a dry pocket. Differentiate between your needs and your wants and work hard not to satisfy your needs unless you genuinely have extra left to cater for it.
2. Lack of Investment
One of the reasons why we invest is to prevent a dry pocket. The problem however is trying to invest with the overview of a quick turnover. Work at investing a certain percentage of your income every month on a long term asset or a long term investment programme that can work for your over time. For instance, investing in real estate every month, little by little is one great investment idea I love personally.
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