How can you go about breaking the poverty cycle? Many families are stuck in a poverty cycle, going from one month to the next without ever increasing their wealth. It’s a situation that many find themselves in: there simply isn’t enough money available in the pot for any to be squirreled away as savings.
The question for many families with kids is how to get out of the cycle of spending and increase income enough to make it possible to save. Here are some ideas.
Stop Focusing On A Single Source Of Income
The rich aren’t usually satisfied with a single source of income. They realize that to make it big, they need to rely on multiple income streams that work together synergistically.
What this means in practice is different for each individual. But in general, it involves taking the skills and connections you’ve acquired at work and applying them to a new money-making endeavor outside of work.
Suppose, for instance, that you work for a smoothie company as a nutrition writer. Over time, you’ll build up significant skill in writing as well as expertise in nutrition. Having those skills make you valuable not only to other companies but also to people who want to learn more about diet and apply it in their own lives. Over time, you could build up a base of private clients and earn far more from them than through your regular job alone, just by walking them through healthy diet plans in your spare time. You could then use the extra income you generate from that work to invest in companies in your industry you firmly believe will succeed in the future.
Be Passionate About What You Do
What’s the best way to break out of the poverty cycle? Part of the answer is to become celebrated for what you do. Many gurus, including Dennis Prager, believe that being giving of oneself is the key to financial success. The more lives you help improve, he says, the higher your monetary reward. He counsels people to forget about money as a goal and instead focus on ways to improve the lives of others in their community. And the best way to do that is to be passionate about whatever you’re doing, even if it’s not a passion.
When you become obsessed with something, you become great at it. You don’t necessarily have to be a genius, just wholly absorbed in what you’re doing. Clients, co-workers, and customers will all sense that you’re “all in” with your work, and that will inspire trust and confidence in what you do. Don’t settle for average.
Stop Relying On Debt
One of the reasons people turn to institutions like the Credit Counselling Society is because they’ve become accustomed to living on debt. But debt, if used in the wrong way, is problematic, and can keep families in poverty for far longer than necessary. Debt eats away at wealth by forcing families to sacrifice the future for the present.
Debt, however, has become a tool that many families now rely on, thanks to more than a decade of super-low interest rates and glitzy credit deals. Many people rely on “easy monthly payments” rather than saving up to buy things outright and end up paying thousands of dollars each year in interest to various wealthy creditors. Money spent in interest cannot be put to work for the family, denying wealth in the future.
Recognize That Family Members Are Your Most Valuable Asset
What is the most valuable asset your family owns? Your house? Your car? The family business? It turns out that the most valuable asset is the people themselves (unless you happen to own an extremely expensive house, car or business). The average person will earn more than $3 million throughout their lifetime, far more than practically any other income-generating asset you may own.
It’s clear, therefore, that one of the best ways to help your family break the poverty cycle is to invest in training. Having the right skills can nudge that $3 million up to $4 million and beyond, especially if you choose to train in an industry in which wages are growing.
Finding the right job is also crucial. Not all industries are the same, and so you need to think carefully about where you focus your efforts. You may want to get into the trucking industry, but because of new technology coming down the pike, it’s unlikely that wages will rise. It’s doubly unlikely that you’ll be able to quadruple your earnings in the sector. Software, on the other hand, offers many opportunities, as does data science.