7 important steps to get out of poverty

If you have been struggling financially due to poverty, this article is going to be your gold mine. Poverty has been suffocating millions of people in this country and around the world for a very long time. But I have a plan for you. I will show you exactly what you need to do step-by-step to get out of poverty.

According to the US Census Bureau, the poverty rate in 2020 was 11.4% which was 1% higher than what it was in 2019. This percentage is alarming and this rate is higher in developing countries.

The question is if you have been struggling with poverty for a very long time, how can you lift yourself out of it and create a name for yourself? Maybe you were born into a poor family with no formal education and no one to turn to.

Or maybe you were born into a good family and had an education, but due to poor life choices; you ended up in the ditch. It is also possible that you were born in a poor country where it is hard to gain access to formal education, good jobs, etc.

Whatever the condition you are in right now, it is not too late. You are not destined to be poor unless you choose to stay that way. I am here to help you pave your way out of poverty and become someone you always dreamed of.

I put this article together in steps that must be followed one by one. You must fully understand what it is you need to do to move forward and never look back.

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This is not a research paper.

Although some of the points I will mention in this post can be supported by scientific facts, these steps are not based on scientific findings. They are based on my own life and professional experiences, personal understanding of necessary tools to alleviate poverty, and the needed mindset to achieve what others deem impossible. This article is a complete guide you need to change your life for good. I have used these steps myself.

I hope these steps will teach you something and be your guide as you lift yourself out of poverty.

Without further ado, the following are the important 7 steps you need to get out of poverty.

1. Change your mindset

Steps to get out of poverty — Photo by Amadeo Valar on Unsplash

I will start you with the following quote:

“No problem can be solved from the same level of consciousness that created it”. Albert Einstein

The first and single most important step to get out of poverty is to change your mindset. Whether you are a single person, a community, or a nation, you must change the way you think before you lift yourself out of poverty.

Everything is about mindset and who you are inside is manifested outside. You are poor because you had a poor mindset that held you down for a long time. That kind of thinking must change. If you need different results, you need to become a different person and try different methods.

You are now poor because you were born into a poor family, poor community, or a poor nation with limited financial education. This is because if your parents are poor, they will not be able to teach you how to navigate financial problems. Your parents will spend most of their time figuring out what to feed you, clothe you, etc., instead of teaching you how to get out of poverty.

It is also possible that your parents are not educated. For this reason, they will not know what to teach you even if they have all the time in the world. Well, they are struggling themselves.

If you are poor, it is also possible that you are living in a neighborhood with a high poverty level or low-income people. This directly implies that parents do not have the intellectual capacities to help their children navigate poverty problems.

In addition, poor communities have a low quality of education. That is schools are below average and do not have all the support students need to compete at a high level. Therefore, even if you go to school, you might not get all the tools you need to help you get out of poverty.

a. The odds are against you unless you change the way you think

By now you can see that your family members, friends, and communities might not give you the help you need. So, how are you going to get out of poverty? Where will you get the help you need?

This brings me to the main point of this section.

YOU MUST WANT TO CHANGE. YOU NEED TO HAVE A DREAM AND A BURNING DESIRE TO ACHIEVE IT.

If you are thinking about getting out of poverty, you are already on the right path. The start of every achievement is a dream and a strong desire to achieve it. You must start a personal development journey and only think and breathe about your financial goals. Your main goal should be getting out of poverty.

I used strong desire because the level of your desire determines the level of your success. Everyone wants to get out of poverty but not everyone achieves this financial goal. Why? Because most people give up very easily. They don’t have the desire to do whatever it takes to achieve their goals. They change their minds and decide to live in poverty when things get tough.

What stands between you and success is you. How bad do you want it? If you need something really bad, you will achieve it.

Growing up in a poor family or community means that everyone around you does not think about getting rich or getting out of poverty. They are busy working 2 to 3 jobs so that they can have food on the table.

You must change this mindset and believe that you are not destined to be poor. You are not destined to inherit poverty. Only then, you will be able to establish a plan that will lift you out of poverty.

b. How are you going to get started in changing your mind?

The beginning is always the hardest. Since there is no one around you to help you get started, motivate you to win, or walk with you on this path, you must find the motivation you need from inside and elsewhere.

My recommendation: Start listening to motivational podcasts and reading about rich people, self-help books, and personal growth books. In order to become rich, you need a rich mindset. You need to visualize yourself as rich and work hard toward that status. That is how it works. Listening to positive podcasts and reading about rich people will help you learn how rich people become rich.

In addition, their stories, hard work, successes, and failures will be your reminder that you can do it too. These exercises will help you keep your burning desires alive. Trust me, you need your burning desires alive for a very long time.

2. Cut loose negative people and surround yourself with positive people who will challenge you to succeed

This is the second most important step needed to get out of poverty. You need this step as much as you need air to breathe.

Here is a three-step strategy of changes you must make to develop new habits and build a strong mindset that leads to personal development and eventually lifts yourself out of poverty.

a. Make a change on the inside

Personal development starts inside you. In order to succeed, you must make positive changes from the inside. Your inside is where you sit down and decide to get out of poverty, build new habits, and stick to them. Inside your mind is where you make a promise to yourself that you are going to undertake a self-development journey and get out of poverty. Once this promise has sunk into your subconscious, it becomes easy to manifest it.

b. Cut loose negative people

Changing yourself on the outside is something different. A wise man once said,“ You are the average of the people you hang out with.” In order to achieve real change and get out of poverty, you must change the people you hang out with.

If you go to clubs every week, drink every day, gamble a lot, smoke God knows what, etc., you won’t find it easy to get out of poverty. These same people who drag you into these activities will make it hard for you to change. They don’t know any better, and for this reason, they will not understand why you are changing.

Their responses to your changes will be taken negatively. They will feel offended and want you to stay the same. Negative people will tell you that what you want to achieve is impossible. Their greatest advice to you will be to “forget what you are doing and stay the same because that is who you are always has been”. They will think that sticking together with the pack is the greatest advice for you.

Why? Because they were born poor and never seen anyone getting out of poverty. That is why it is impossible for them to support you or understand why you want to change. In other words, they don’t know any better.

This is why you must cut negative people loose. If they don’t like and support what you are trying to accomplish, they will drag you down.

c. Start hanging out with successful people

Your job is to spend more time with people who are better than you and spend less time with those who are less than you. This is because successful people will challenge you to succeed. You will start thinking differently from talking to people who are better than you.

It is not about the complex things you learn from them. No. It is about the vibes, the feel, the way they talk, the way they think, etc. For example, a poor person will tell you that investing is a bad idea since you can lose your money.

But a successful person will tell you that investing will make you money as long as you manage your risk. Do you see the difference? What poor people know is that you lose money. On the contrary, successful people know that you will lose money only if you choose to. That is they know the problem and the answer.

You need this mindset and you cannot get it unless you hang out with people who are better than you. Surround yourself with people who have done what you want to do because they are the ones who know a direct path.

By hanging out with people who are better than you, you will start to think and see the world as they do. This is an important step if you want to get out of poverty.

At this point, you have not made money yet but you feel like it is possible to make it. That is the key.

In your quest to change your life and get out of poverty, you will need to develop new habits. Just like mindset, you need to get rid of some old habits and develop new ones.

For example, if you drink a lot, gamble, do drugs, etc., you must stop all these habits. The question is: What will you do after stopping these habits? They must be replaced by something else.

In other words, if you want to be rich, you must start behaving like rich people. You don’t learn how to be a good person after being rich. Money only amplifies who you are. Learn how rich people behave and start doing the same thing. If they say they read every day, start reading every day. If they say they work hard, start working hard.

Some of the habits you must develop to get out of poverty include but are not limited to:

Avoid procrastination
Have enough sleep
Have a workaholic mentality
Learn how to be patient
Respect time and people
Change the way you talk and be professional always
Learn how to read
Avoid get-rich-quick schemes
Show up to work on time
Be kind, etc

These habits will be there to move you forward and help you achieve your goals. Make these habits your principles and live by them. By mastering these habits you will be able to resist the temptation to go back where you came from. You don’t want to go back.

Always remember that you need a good foundation if you want your creation to be strong and stand out.

4. Have a basic financial education and increase your income

Having the basics of personal finance is a critical step to getting out of poverty. This is because what you know is what helps you increase your net worth and build wealth. In other words, you need to apply the basic principles of finance such as saving, budgeting, debt management, investing, etc., to your advantage.

Here are a few tips to boost your personal finance intellectual capacity.

a. Learn the basics of finance to help you get out of poverty faster

You need to know what money is, how to make it and manage it. In other words, you need basic skills associated with finances. This is because once you understand how money works, it will be easy for you to make it, manage it, invest it, and much more.

For example, there are some key terms you must know.

Debt
Asset
Net worth
Income
Net Income
Liabilities
Tax
Investing
Risk management
Gross income
Balance sheet
Cash flow
Passive income
Return on investment
Budgeting
Portfolio
Saving
Credit
Mortgages
Interest rate
Loans, etc

The reason you need to fully understand what these terms mean is that personal finance evolves around these terms. You cannot get out of poverty and build wealth without understanding the difference between assets and liabilities, for example. Why? Because you must buy assets and avoid liability in order to build wealth and become rich. The basics of finances will help you manage your money effectively. At the end of the day, if you cannot learn the basics of a language, you cannot speak it.

After learning the basics of finance, you will then move to the second part of this section.

b. Increase your income if you want to get out of poverty

Poverty is directly associated with a very small income that does not provide basic needs for you and your family. You just live paycheck to paycheck and sometimes your account is dry on your payday.

For this reason, the next task you must solve is to figure out a way to increase your income. There are many ways you can increase your income and the following are the most common ways to do it.

Getting more education
Learning a new skill
Working multiple jobs
Getting a higher-paying job
Starting a business, side hustles, etc.

Although these techniques are good, I recommend one of them: LEARN A NEW SKILL

Why do I recommend this one?

Knowledge is the key to everything but going back to school is not a good idea for someone who is trying to get out of poverty. Unless you don’t have any form of education, I would recommend staying away from college or higher education.

Why? Because you are poor. Going to school in your case will force you to BORROW money which will increase your liabilities and reduce your chances of succeeding after graduation. Remember, you will graduate with thousands of dollars in debt and you will have to start from zero.

But in order to get a raise at the same job or a different job, you will need to know more than you know today. It is possible that you have the skills but are underpaid. In this case, I would recommend getting a different job or asking for a raise. Otherwise, find a way to increase your knowledge and skills without getting into debt.

How to increase your skills without paying for it?

The best way to do it is to take advantage of employer-sponsored educational programs. If your employer supports you to go to school, do it. Does your company offer specific training and certifications that can help you move up? If yes, take them. By doing so, you will move up quickly or take your skills and training elsewhere for higher pay.

You can also do two or more jobs to make sure that your income gets a boost. Again, you must figure out a way to increase your income.

If you are good at something such as art, hobby, designing, playing an instrument, etc., you can always sell your crafts or start a side hustle. Just increase your income. I don’t care how you do it.

Do you make enough money but don’t know where it goes? If this is the case, the problem you are facing is not a small income. Your problem is poor management. You spend without thinking. The answer to this question will be elaborated on in the following section.

5. How to get out of poverty: Learn how to manage money

The next step to help you get out of poverty is to manage the money you make. Your main goal is to learn how to keep most of the money you make.

A wise man once said,” A person who spends all the money he makes is not better than someone who did not make it.”

The only way you can keep the money you make is to reduce your expenses and increase your savings through budgeting.

I repeat this: You must reduce expenses and increase your savings through budgeting.

If you cannot manage your money, it will manage you. There are thousands of people who make a lot of money and yet, are living like poor people simply because they cannot manage their money. According to Motley Fool, 69% of Americans had less than $1,000 saved in 2020 and 45% of Americans had $0 in savings.

These percentages do not indicate that these people do not make money at all. Some of them do and choose to spend everything they make. That is why you must learn how to manage your money, in order to get out of poverty.

Just because you increased your income, it does not mean your battle is over. You are just getting started.

In order to properly manage your money, you must learn how to reduce your expenses and increase your savings.

In order to succeed on these two important points, you must have a budget.

Your budget will be a tool to help you allocate your funds appropriately and minimize unnecessary expenditures. By deciding where to put your money ahead of time, you will avoid impulse shopping, brand-name products, shopping every day, dining out every day, living in an expensive apartment or a house, buying a new car, etc. All these activities do nothing other than take money out of your pocket.

Your friends will not trick you into eating out every day if you don’t have money for restaurants. That is how you manage your money and spend it wisely.

As a person who is trying to get out of poverty, you must never get into debt unless you have to. This is how I understand debt: DEBT IS GOOD ONLY IF IT HELPS YOU MAKE MORE MONEY.

You don’t need to buy a $500,000 home on a $50,000 salary. More importantly, you don’t need to get car loans to buy a new car simply because people in your neighborhood are driving flashy cars.

Matter of fact, you should never buy a new car. Unless you have passive income from your assets that cover the cost of buying and maintaining a new car. A person in your financial situation should never buy a new car.

A new car will lose more than 50% of its value in 5 years. On top of this, you will have full coverage, buy premium gas and expensive parts, pay high interest on the loan, etc. By the time you are done paying off your car, it will be worth 10% of its original value. On top of this, the total cost of the car will be like $10k on top of its original price.

Now, do you see why you need to change your mindset and hang out with the right people?

Do not borrow unless you have to. If you get to a point where you borrow, make sure to borrow wisely.

For example, if you want to buy a house, find at least a 20% down payment and buy a house that is no more than 3 times your gross income. This way, you will borrow less and pay off the whole house in no time. This will prevent you from carrying that mortgage for 30 years. As a result, the house will cost you less money.

If you have a ton of debt, do not borrow until you have paid that debt off. Never borrow money on top of another debt.

Use the following articles if you want to learn how to tackle your debt and pay it off in no time.

7. How to get out of poverty: Learn how to invest

The last step in getting out of poverty is to start investing. I define investing as making your money work for you. People who have not invested their money in something usually struggle with their finances.

This is because their active income is highly taxed. They make money but the government takes a big chunk from their incomes. After paying the government, they find it difficult to cover their expenses with the money they take home.

You need to learn how to invest like you need air. Investing helps you minimize your taxable income and make your money grow at the same time.

If you are not OK investing money by yourself, find a financial advisor to take care of this part for you. I recommend that you find an advisor to guide you through this process.

Without investing, you will be like everyone else: Making money and yet, struggling to make ends meet. You must learn how to stop trading your time for money. Only then, you will be financially free.

If you want to read more on investing, budgeting your money, or making more money, read the articles provided in the More Resources section.