It’s no secret that poverty is a cycle. What’s less well known is how that cycle is perpetuated from generation to generation by inherited habits that keep poor people poor. Specifically, habits passed on to you from your parents, neighbors, or relatives.

If you’re struggling to break out of poverty, take a moment to see if these habits apply to you. Breaking the cycle takes work, but it’s easier when you can identify the mindsets holding you back.

1. Acceptance

You grew up around people who didn’t have much money, so you assume that’s just how life is supposed to be.

When you grow up in an environment where most people struggle to make ends meet, you likely live under the assumption that this is just how life works.

But that doesn’t have to be true for you.

As a kid, you maybe only saw people scraping by. Maybe your parents constantly talked about how much money your family doesn’t have. And the differences between you and your rich friend were super obvious.

You might have even rationalized this assumption by thinking that people who have money must have stepped on other people’s toes to get it. So even if you begin making more money than the people you grew up with, you start to feel alienated or guilty.

The good news is you can change that assumption to one that better serves who you are today. It takes some serious internal work, but it’s worth it.

2. Impostor Syndrome

You don’t believe you’re worthy of financial success.

Growing up “poor” or “low-income” messes with your self-esteem. A 2019 study found that children who grew up in poverty were more likely to consider themselves worthless[1]. A big factor in this might be not getting your basic needs met, let alone your wants or desires.

When you inherently don’t believe you’re worthy of financial success, it can subconsciously affect the way you handle your money. It might show up as:

  • Feeling like you don’t deserve to put money aside for your goals
  • Feeling resistance when you attempt to ask for a raise
  • Or thinking that rich people are somehow better than you.

No matter how it shows up in your life, you can likely trace it back to some of the beliefs or struggles your parents or relatives had around money.

Journaling your experiences and the habits that keep poor people poor can be a great way to begin correcting this assumption.

3. Lack of Knowledge

You’ve never been taught how to manage money properly.

One of the biggest hurdles to breaking the habits that keep poor people poor is access to financial education. As of 2023, only 25 states required high school students to take a financial literacy course[2].

Managing money isn’t a talent. It’s a learned skill. So when you come from a background where you weren’t taught how to manage money, it can be difficult for you to break the cycle.

You may find yourself trying to catch up on knowledge that makes you wonder, “Why didn’t anyone tell me this?”. The bright side is that there are many resources online that can help you learn the basics and fix your relationship with money.

4. Isolation

You don’t have any role models for financial success.

If none of the people in your life have achieved financial success, it can be challenging to picture a financially secure and successful future for yourself.

On the other hand, when you have a role model who’s already been where you’re trying to go, it helps give you the courage to pursue your goals.

Your role model doesn’t have to be in your immediate family or friend group. Look for someone with a story similar to yours who’s achieved the level of success you want for yourself—even if it’s just someone online.

Find out the steps and habits they embraced to get there and emulate their behavior.

5. Survivalism

You grew up putting survival before progress.

“Poor people don’t have time for investments, because poor people are too busy trying not to be poor. I need to eat today, not September.”

– Earnest “Earn” Marks, the main character from the hit series Atlanta

When you’re living hand-to-mouth, it’s hard to focus on anything other than your survival. That means long-term planning often takes a backseat to more pressing concerns like putting food on the table or keeping a roof over your head.

As a result, people who are struggling financially tend to make decisions that may provide relief in the short term but ultimately keep them trapped in poverty in the long run. Decisions like:

  • Paying half of a bill instead of the full amount just to treat yourself to something small
  • Withdrawing money from your retirement account to cover outstanding costs despite a penalty
  • Financing a new car you can’t afford instead of paying a $1,500 repair on your old car.

So the decisions you make in survival mode tend to cost you potential gains in the future. Even if you’re making your way out of a low-income environment, you may have trouble with investing or saving without feeling like the money might not be there tomorrow.

6. “The Traps.”

When you’re struggling to keep the lights on, buy groceries, or pay rent, some companies prey on your desperation by offering what looks like a solution.

That’s how people end up in debt traps. These are financial products and services that charge an absurdly high amount of interest to let you borrow money.

  • High-interest payday loans
  • Predatory credit card offers
  • Overdraft fees
  • High-interest title loans

These things are designed to ensnare people with money problems. While you might get the initial relief of being able to pay that bill or cover that emergency, you’ll be paying much more in the long run.

Financial products like payday loans can carry a typical APR (annual percentage rate) of almost 400%. But if you’re hurting for money, there might not be many other options at your disposal. That’s the high cost of being poor in America. Avoid these traps at all costs.

7. Sales Are Everything

You overspend on items just because they’re “on sale.”

When you grew up with parents who are struggling to make ends meet, you’re probably familiar with routinely perusing the clearance section or weekly shopping sales on a shoestring budget.

This behavior likely saved your parents money on things you needed, but it also builds a sneaky little habit that could cost you way more in the long run: buying things just because they’re on sale.

It’s hard to bring yourself out of a scarcity mindset when you’ve been there for years. These habits kept you alive and kept your parents alive.

But it often means there’s a leftover thought of “you never know when you might need it” or “you’d better get it now before it’s gone.” Even when you don’t need the item or it’s not in your budget, you may be tempted to buy.

It’s a scarcity mindset, and it can be challenging to break it. Once you exit survival mode, it’s important to recognize the role this behavior had in keeping you safe while also replacing it with a better mindset.

8. Lifestyle Creep.

Wanting more is natural. Wanting too much is destructive.

If you’re in a financial position to get yourself and your family out of poverty, you probably have a reasonable income. If you’ve put in some hard work, you might even be looking at a bonus or a promotion with a salary increase.

There’s nothing wrong with treating yourself – within reason – for a job well done. That can even motivate you to pursue other goals. The issue comes in when you begin to gradually increase the costs of your lifestyle alongside your income.

👉 For Example

Say you killed it at your job over the past six months and your boss gives you a well-deserved raise. Suddenly, you go from making $50,000 a year to making $65,000. That’s a whole $15,000 you didn’t have before! You decide to upgrade your life to reflect all this new money.

  • You trade in your old car for a new one with a bigger monthly payment. You can handle the increase now, right?
  • You decide to start budgeting for at least five expensive meals out a month instead of your normal two.
  • Instead of increasing your savings balance, you choose to splurge on luxury goods.

Before you know it, you’ve locked yourself into a new, expensive lifestyle. And as the cost of living increases, you find yourself asking for another raise to maintain it.

Instead, live below your means.

Make small improvements to your lifestyle where it’s needed. But use the extra money to generate additional income or create an emergency fund with interest-bearing accounts or investment vehicles.

Summary: The Habits That Keep Poor People Poor

Poverty is continued through inherited habits, but wealth is passed down through a set of inherited habits as well. When you’re determined to become a first-generation cycle breaker, you’ll have to exchange the habits that kept you alive while you were poor for the habits and assumptions that will bring you financial success. Then you have the responsibility of passing on your new knowledge to the next generation.

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