It seems like if you knew how to stop being poor, you wouldn’t be poor, right? It’s not as simple as that. Breaking the poverty cycle takes time, effort, and a lot of willpower. With the proper steps, though, you can break the poverty cycle and start living your best life.
However, it starts with learning why you’re poor.In this article, we'll discuss the actionable ways you can learn how to stop being poor and in turn set you on the path to financial wellness.
How to stop being poor starts with understanding the vicious cycle of poverty
Before we discuss how to get out of poverty, let's take a closer look at some of the reasons that could be the cause of your situation. Remember not to feel bad or shameful, but know that sometimes it's due to things that aren't in your control.
However, it is possible to work your way out of the vicious cycle of poverty. Here are a few of the most common causes of poverty:
You come from a disadvantaged background
You’ve likely heard the phrase ‘born with a silver spoon,’ right? It refers to people born into wealth or born with everything they need.Not everyone is as fortunate, leaving them financially troubled from the start.
Many people are born into low-income families or families who lack generational wealth. If the habits of your ancestors continue in you, you could suffer from poverty too.
You've experienced unfortunate tragedy
Life is unpredictable and happens at the worst possible times.Medical emergencies, accidents, house fires, and criminal disasters can leave a family destitute. No matter how much you prepare for the worst, life has a funny way of working sometimes.
Medical expenses often cause financial issues and even bankruptcy, as can destruction of your home or the inability to work due to a severe accident. The crisis itself causes financial issues and then breaking the cycle of poverty feels nearly impossible as you spin in circles trying to get ahead of yourself.
Perhaps you've made poor financial decisions
Sometimes to find the reason we are poor, we need to look in the mirror. Our poor financial decisions can have a ripple effect on our wealth. For example, if you get in the habit of using credit cards and living outside your means, it can quickly lead to poverty when you can’t afford your bills and the minimum payments on your credit cards.
If you’ve made poor financial decisions and caused yourself financial strife, it’s not a time to blame yourself, but rather focus on what you can change so you can learn how to stop being poor.
How to stop being poor: 10 Steps for breaking the cycle of poverty
In order to escape the vicious cycle of poverty, you need to start by recognizing where you’re at. When you can admit you’re suffering from poverty and need help, you’ll be ready to take these ten steps to stop being poor.
1. Focus on what you can control
Suffering from poverty feels overwhelming, but don't let it. Take control of how you feel and how you think about money. Rather than looking at the big picture and thinking, ‘I could never get out of this,’ look at the little things you can control. For example, you can’t control it when you fall ill, but you can control what you spend your money on outside of the necessities.
When you’re learning how to get out of poverty, you must focus on the controllable things in your life. As you focus on them, you’ll feel more sure of yourself and ready to take the more significant steps—the steps that will get you out of poverty.
2. Stop comparing yourself to others as a key step to stop being poor
When it comes to how to stop being poor, stop looking at your neighbors, friends, or even siblings and feeling jealous over what they have. Don’t let belongings define your worth. So what if your neighbor drives a Mercedes Benz, and you drive a Toyota? Will they like you better if you drive a fancier car? If so, they aren’t true friends.
Focus on what you think versus what others think. If your friends and family all buy brand-name items, but you’re perfectly comfortable with the less expensive generic items, you do what you need to do.
Don’t try to keep up with what others do because you don’t know their financial circ*mstances. Sure, they may look like they can afford the expensive clothing or fancy dinners, but how do you know they aren’t racking up credit card debt they can’t afford?
Focus on you and only you. If others like you, great. If they snub you because you don’t spend like they do or have the same belongings, they don’t belong in your life.
3. Put yourself in the company of others who make smart financial decisions
You are the average of the five people you spend the most time with—does that scare you? Think about the people you spend the most time with. Do they make intelligent financial decisions, or do they spend recklessly?
Chances are, whatever they do, you’ll do too, subconsciously. You may say you want to learn how to stop being poor, but when you’re with your ‘group,’ your actions say otherwise. Instead, surround yourself with people who have the same ideals as you.
When you are with people making smart financial decisions, subconsciously, you will too. When you inherently make wise financial decisions, you’ll break the poverty cycle without feeling overwhelmed—it will happen naturally.
4. Establish a plan for how to stop being poor by figuring out where you stand
To learn how to stop being poor, you must know where you stand. This step isn’t easy because you have to be honest with yourself. You must look at your bank accounts and compare them to your liabilities and see where you stack up.
Once you’re aware of your circ*mstances, you can plan better moving forward. If you don’t have a budget yet, create one now. Use an app, pen, and paper, or Excel spreadsheet to track your cash inflow and outflow and see where you should make changes.
Are you spending more than you make? Is it too hard to pay all your bills each month? Categorize your spending, figure out where you should cut back, and take it one step at a time.
Give yourself grace during this period. You’ll make mistakes, and that’s okay. Learn from them and pick up the pieces to move forward. So you can stop living paycheck to paycheck and start saving money.
5. Set goals to move forward financially
You can’t get out of poverty unless you have goals. You must show that you want to change your situation. If you haven’t already, make your goals visual. Write them down on sticky notes and put them on your bathroom mirror and refrigerator—two places you go every day and will see the reminders.
If you’re creative, create a vision board and put it somewhere prominent in your home. What will you do when you’re out of poverty? What goals do you have? Do you want to buy a house, a new car, or find your dream job? Get as specific as possible with your goals to motivate you to do the hard work to break the vicious cycle of poverty.
6. Start a side hustle to increase your income
If your 9 to 5 income isn’t enough, but a part-time job seems exhausting, consider a side hustle. Anyone can start a side hustle from home—you can even work several of them since you’re in charge of when you work on them. Side hustles could be freelance writing, taking surveys, graphic design, or driving for Uber.
Platforms like Fiverr and Upwork make it easy to work from home, and companies like Uber, DoorDash, and Instacart make it easy to work outside of the house without having set hours or a boss breathing down your neck.Dedicate your side hustle income for specific expenses that will help you reach your goals to get out of poverty.
7. Use your time to educate yourself better and advance your career
Did you know one of the top investments you can make is in yourself? Learning how to stop being poor starts with you. You don’t need a lot of money to invest in yourself to better your career either. Sometimes, it’s just about time.
Many employers offer free tuition support or educational opportunities to advance your career. It’s up to you to find the opportunities and take advantage of them. Even if you’ve started at ground zero, everyone has to start somewhere.
Just look at Michael Jordan—he was cut from his high school basketball team, and look at all that he accomplished.Invest in yourself and set aside time to educate yourself and take your career to the next level.
8. Spend wisely and cut back where you can
So you can’t get out of the poverty cycle if you don’t watch your spending. A budget is essential to help you progress, but you also have to watch your spending. If you’re an impulse buyer, get an accountability partner—someone you must answer to about your purchases.
When you have someone that will ask you questions and expect honest answers, you may think twice before making an impulse buy.This doesn’t mean you can’t spend; everyone has to spend money at some time, but knowing where and when is the key to ending poverty.
9. Pay down your debt to get on the path for how to stop being poor
Breaking the cycle of poverty is only possible if you are able to pay your debt down. High-interest credit card debt is an opportunity cost for any other use of your money. Figure out a strategy that allows you to pay your debt off as fast as possible.
Even if you can only pay an extra $10 a month toward debt, that’s $10 you knock off the principal balance, which means less interest accumulation. Use the debt snowball method to pay your debt down.
Arrange your debts in order of balance, smallest to largest. Make the minimum payment to each debt and the smallest debt (first in line), make any extra payments you can. Do this until you pay the first debt off in full.
Next, take the same amount you paid to the first debt (minimum payment plus extra) and add it to the minimum payment of the next debt. This creates a snowball, to help you out of high-interest debt.
10. Invest and save as much as you are able to
Include in your budget room for savings. Ideally, you should earmark 20% of your budget for savings and debt payoff, but as you’re trying to break the cycle of poverty, this may not be possible.
Work your way up, putting more money aside each month for savings as you can. In a perfect world, you’ll have 3 to 6 months of cash set aside for emergencies so you can prevent this from happening to you again. If you are just getting started, just focus on saving your first $1,000. Once you get there, you can plan to save more.
Use these steps to help you learn how to stop being poor and get out of poverty
Learning how to get out of poverty isn’t as hard as it seems. What it takes is dedication, patience, and a lot of grace. You’ll make mistakes, and that’s okay. Pick up the pieces and move on, don’t dwell on it.
If you take it slow, move forward as much as possible—even though the few backward steps you’re bound to make—you’ll find your way out of the vicious cycle of poverty once and for all.
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