When money is tight, many people say they’re broke or poor.
These two words are synonymous for most, but there’s a big difference. They mean different things, not only in a material way but also in our mindsets.
So what is the difference between being broke and being poor? Let’s see.
What Is Broke Mentality?
Being broke usually means that you don’t have the money to spend on certain luxuries, but you have a roof over your head and food in the fridge. You have to make some sacrifices, but they’re not massive.
You often have a job and a stable income; you just need to find a way to use your salary to your advantage and make more money.
Having a broke mentality means that you know you’re not poor. You just currently don’t have a lot of money. This might not seem like much, but your mindset significantly impacts your finances.
Being broke means that you know that you’re in a temporary situation. You know you have a safety net—something you can rely on with more money on the way and something you can save on while building your wealth.
Broke people know there’s a promising future for them, and this is just their current situation. They’re not in poverty; they just need to work with the income they have right now.
What Is Poor Mentality?
Being poor is different from being broke. As a poor person, you’re often born into poverty and can’t afford to have your basic needs met.
Your financial situation often involves no assets, not knowing when your next meal is going to be, and constant worry about taxes and social workers.
Poor people constantly fear that their situation will get worse and that it’s impossible to change. Being in this situation isn’t just about the tough times. According to data, 37 million people in America live in poverty.
Being poor means that you most likely don’t have a job, can’t afford school and higher education, and your living circumstances are overall bad.
When you don’t have enough money to afford rent or food, you certainly don’t have enough to put aside for investing. This makes a lot of poor people lose hope for the future.
However, that’s not always the same as having a poor mindset.
When you have a poor mindset, you think you don’t deserve money. You’re stuck in this endless cycle. You don’t have the strength to take the first step.
You can look at the difference between being broke and being poor as a marathon.
You’re all running to get to the same goal, but you’re not at the same start line. Wealthy people are at the front, while those who spent their lives in poverty are all the way back and have to work a bit harder to make it to the finish line.
But it still doesn’t mean that broke and poor people can’t reach the same goal wealthy people do. They just don’t have much money at the moment.
Why Your Money Mindset Matters
Your mindset has the most significant impact on how much money you have, and it’s one of the main things stopping you from reaching financial freedom.
When you negatively think about money, it will never get to you. Everything changes when you start thinking abundantly, believing in your goals, budgeting your income, and creating plans to help you achieve financial freedom. This is the wealth mentality.
It’s time to stop blaming yourself and others and accept responsibility. No matter your education or living circumstances, you’re a person who can reach goals.
So take a look at yourself right now. Does your money mindset serve you? Or is it time to let go and adopt a new, rich mindset?
How to Change Your Money Mindset
If you want to change the way you think about money, you have to work hard. You have to relearn your way of thinking completely, and it’s not just talk.
Here are some of the tips that can help you walk this road.
Financial Literacy
Many people in this world lack financial literacy, which keeps them poor and prevents them from reaching true financial independence.
When you don’t know how money works, you can’t make it work in your favor. Rich people know how to spend their money, and they know all about investing. It’s exactly why they’re wealthy.
There are a lot of free and paid resources out there. The world is filled with financial tips, from books to YouTube videos, and that knowledge is completely at your fingertips.
Use all of the resources you have to learn about money. Because when you do, you won’t be scared of it.
You won’t be scared to invest, you won’t be scared of your debt, and you will learn how to create cash flow.
Your Surroundings
Take a good look at what’s around you.
What kind of content do you consume? What kind of values do your friends and loved ones have?
Words are powerful, and if the ones making it to your brain daily make you think negatively about money, you should get away from them.
This is why we extremely appreciate our Wealth Nation Money School community. This space is filled with like-minded ambitious individuals, and we’re always ready to build each other up.
Our goal is to reach financial freedom together. If you’re interested, check out this supportive community and get ready to change your money mindset.
Set Goals
Imagine the lifestyle. Visualize that picture in your mind. Set goals.
Write them on a piece of paper so that they’re visible and close to you.
Create financial plans to reach these goals and think about the life you want to live.
Be Consistent
The critical step is to be consistent, even when you make little steps, because those steps add up and continue to grow like compound interest.
No matter how uncomfortable you feel, you need to take the next step.
The most significant part of changing your mindset is forcing yourself to push through even when uncomfortable. Because that’s when growth happens.
It’s Time to Take the Wheel
Changing your mindset isn’t a one-and-done deal. It requires constant work, and it’ll make you uncomfortable at times. You must check in with yourself and force progress if you want to reach breakthroughs.
Gaining control over your finances isn’t just about having the right mindset – you also need the right tools.
For us, building wealth and owning our lifestyle is done by using a whole life insurance policy.
When you use a life insurance policy, you have a death benefit for your family and a chance to finance your lifestyle. This is done by overfunding the policy and using the cash value to finance your lifestyle.
We also used to have trouble with our mindset. But as soon as we accepted responsibility and took the matter into our own hands, we managed to get rid of $140,000 in debt and build a business where we helped people generate over $75 million in the past five years.
This could be you, but you need to know a little bit more about whole life insurance and the system we like to call Lifestyle Banking.
Are you ready for that?
Final Thoughts
Having a healthy money mindset is a key aspect of building financial freedom. if your relationship with money is bad, you’ll never be able to control it. It will control you.
Own your lifestyle, or someone else will!