Breaking the cycle of poverty and mediocrity

I made a startling discovery yesterday: a good number of people in our society today are struggling to keep their heads above the water, not because they lack opportunities or resources to develop themselves, but because they lack the motivation and knowledge to fully utilize the vast opportunities at their finger tips.
 

According to the Wall Street Journal 2013, "Americans lose 90% of inherited wealth by the third generation." Capital Ideas (2013) also states that, "Most billionaires are self-made, not heirs." The magazine goes on to say, "Most individuals on the Forbes 400 lists did not inherit the family business but rather made their own fortune."

The truth is: true wealth and success is never an ‘accident’. It’s the result of lots of hard work, self discipline and determination over a long period of time. It's about making the right choices, and having the right habits day after day, month after month, year after year.

Similarly, poverty and mediocrity are not an event. They don't happen to a person overnight. Rather, they happen gradually, as a result of bad choices, habits and attitudes. If we are to become truly successful, we need to identify all those things that contribute to a lifestyle of mediocrity and poverty and avoid them.

Here's a list of the top five culprits that slowly lead to poverty:

1. Indisciplined spending

Wealth managers say many people are simply inexperienced at handling large sums of money  in any disciplined way— think of the so-called sudden-wealth syndrome experienced by lottery winners and many professional athletes. (Wall Street Journal, Spring 2013)

2. Complacency and laziness

Another common trend advisers see? A belief among some inheritors that, hey, it's permanent vacation time, and there's no need to create any new income streams. They believe that their inheritance means they never have to work or do anything for themselves ever again. "There's a mentality that something will come from somewhere," says Stacy Alfred, director of the wealth structuring group at Merrill Lynch Private Banking and Investment Group.

3. Get-rich quick schemes

Get-Rich-Quick" schemes are plans which offer high or unrealistic rates of return for a small amount of investment while at the same time promising that such investment is easy and risk-free. Generally speaking, if the offer is too good to be true, you should be wary. The problem with these schemes is that they are actually a form of gambling and returns are not guaranteed. Also, people who participate in these schemes never really get to learn how to make or manage their money in responsible manner. They often make a quick buck, and lose it all just as quickly.

4. Out-of-control debt and credit plans

We live in a world where people shop continuously, and thanks to technology, there's no longer a need for people to even leave their homes to do so. Items can easily be bought online and credit cards used to pay for everything.

Many businesses encourage clients or shoppers to open an account, which allows the shopper to buy items on credit and then pay off the debt over a period of a few months, with interest. This may initially look like an attractive offer, especially if you don’t have any cash on you at that very moment. But over time, the accumulated interest can lead to huge debts which one may not be able to pay off. This can be very dangerous, especially for people who use credit schemes and payment plans on a regular basis.

5. Dependency on others

A lot of highly talented and intelligent people suffer from the "Somebody will take care of me" syndrome. They believe that it is the duty or responsibility of others to provide for them, and as a result, pass up on countless opportunities to develop themselves. They may reject the idea of going to school and getting an education or starting a business, and choose rather, to ask others for things so that they can survive from day to day.

But, we can break the cycle of poverty and mediocrity in our lives by cultivating the right habits, exercising self-discipline and making good use of every opportunity to develop ourselves. We can save more and spend less. We can learn to work harder and smarter instead of seeking short-cuts to wealth and success. We can come out of debt and begin to prosper, rather than merely surviving, one day at a time.

Here are the top 3 habits of successful people:

1. Learn

Do a course, attend workshops and seminars, read books and gather information that can help you excel as a student, business person or employee. Keep up with the latest trends and developments in your field. Information is power.

2. Avoid debt

Don't spend money you don't have. Make a budget and stick to it. Also, resist the urge to buy things on credit all the time. Credit schemes always make things seem cheaper than they really are, only to overwhelm you with interest later on.

3. Save and invest

Don't spend everything you get. Save and invest at least 20% of your income every month. It may initially not seem like much, but over time, can accumulate into significant amount and one day help you to buy a home, send your kids to University or live comfortably well after retirement.

In closing, remember, "Before the fruits of prosperity can come, the storms of life need to first bring the required rains of testing, which mixes with the seeds of wisdom to produce a mature harvest.” 

― Lincoln Patz