21/07/2014
One financial expert was quoted saying that many people rush down the financial poverty road in a luxury car.
It's true that lifestyle has become a problem for many people. We tend to work hard just to maintain this lifestyle. We aspire after and we just can't keep away from admiring people who have this lifestyle. We even borrow in order to fund this lifestyle, then we fool ourselves by thinking we are wealthy.
It's true that you can have a flashy lifestyle, yet you are the poorest person on planet earth.
In fact, a few people earn very much, a 6 figure salary, something not less than Ksh200,000 per month, and they lead a flashy lifestyle. These people think their financial future is headed in the right direction when it is actually the opposite.
When I sat to do some research about signs that someone was headed towards poverty, I came across very shocking revelations.
These signs are very critical to watch, especially when you are still early in your productive life. You don't want to fall into the pit.
1 You cannot survive without your salary
Has it ever occurred to you that you cannot live without your salary? Okay, a few of us can, but 95% can't. Think about your salary delaying for even a week and how you'd start cursing your employer for not depositing your check into the bank in good time.
Okay, you need your salary to pay your bills. This is what we call dependence. But it certainly can't be a long-term financial plan. You need to work very hard to reach a level where you can survive even without your salary.
To realize this goal, it means portions of your salary must go towards saving and investments, rather than moving to a bungalow, buying a bigger car and upgrading your entertainment joints. Realize that the bigger your car is, the more dependent you'll be on your salary.
2 Your liabilities exceed your assets
Have you posed for a moment to count the value of your asset and that of your liabilities? Okay, for most of us, the value of our cars, personal belongings or holiday destinations exceed our investment in terms of property or even shares.
If the value of your flosset is higher than the value of your asset, you need to sell some of your flossets. The reason being, they depreciate in value while assets appreciate.
Notice that an asset can fund a liability, but the vice versa is not true. For instance, an investment property you buy can fund a holiday, but your big car will not fund the same holiday. Bottom line is; don't sell your assets to fund liabilities.
3 You spend money to impress
We have a tendency of spending so that we can impress those around us. So we'll go for the most expensive phone, neighbourhood, car etc. By doing this, we believe that we will command more respect and attention, hence elevating our social status.
When you do this, you'll find that you are not commanding respect at all, rather, it's just short-lived attention!!
Now, in order to trigger that attention again, perhaps after the excitement has settled down, you'll need to acquire something else. When this happens, it becomes a never ending prison and a vicious cycle.
Spending isn't necessarily a bad thing, as long as it's in line with your personal value and choices.
Furthermore, when you spend to impress, you are spending for those people, not you.
There's a huge difference between purchasing a car because you want to be seen riding in it, and getting the same car because you personally want to experience the pleasure of driving it.
4 High level of consumer debts
You want to continue funding your expensive lifestyle, so you'll go for salary advances, furniture loans, credit cards etc.
In fact, any loan that doesn't result in some profit being made should be kept to the minimum. That's because such debts mean you spend more than what you are earning.
You buy clothes you can't afford with your credit card, you take your kids to a very expensive school through a loan, etc......
5 You live life without a plan
If you don't have a road-map for your life, this is a very sure sign that you are headed towards absolute poverty. That's why you find the points above relevant to your life.
The scripture says that people who don't have a vision or plan perish. Realize that no one will tell you the vision or plan you should have except for yourself.
Again, the steps you choose to take in life should take you closer to your vision. If you can't answer how your current job or business is propelling you towards your vision, it's a sure sign you are headed towards poverty.
Finally, when you have a goal, you'll understand the value of spending on things that take you closer towards your vision. You'll realize how leading an exorbitant lifestyle is all meaningles
