How to not be poor when your parents are poor?

A wise man once said, “Poor thinking habits keep most people poor”. If you were born into a poor family, you will inherit poverty and become poor just like your parents unless you take action. Why is this true? Why do most people who were born into poor families end up poor? The answer is simple. Poor parents don’t have the right mindset, good money habits, financial knowledge, and the skills necessary to build wealth and teach their children how it is done. As a result, kids in poor families inherit the same poor thinking habits and bad money habits from their parents.

Having poor parents, however, does not necessarily mean you will also become poor. you can break out of the poverty cycle in your family, build wealth, and become a millionaire if you choose to do so. Practicing good money habits, improving your financial education, practicing daily saving habits, budgeting your money, and investing in your future can help you build wealth and get out of poverty fast when your parents are poor.

In this article, I will show you exactly how to get out of poverty when your parents are poor in 7 simple steps.

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Benefits of getting out of poverty when your parents are poor

Why is it beneficial to get out of poverty? Financial freedom gives you the ability to design a life of your own. Getting out of poverty when your parents are poor helps you improve your life and support your family and community. Here is a list of the benefits of being financially free after lifting yourself out of poverty.

You never have to worry about money stress

You don’t worry about what to eat, wear, or drive.

You don’t get kicked out of your home because you are unable to pay your rent and related living expenses

Financial freedom means you don’t take out too much debt to help pay the bills

You go wherever you want, travel abroad when you want, and manage your time as you see fit.

You never worry about running out of money during retirement.

Not being poor gives you opportunities to give money and support NGOs or create your own, volunteer, etc.

You can also use your money to lift your family out of poverty. For example, you can pay off the mortgage for your parents, buy them a car, or simply give your family the financial support needed to survive.

Your kids can go to school without expensive student loans because extra cash can be saved in a 529 college savings plan.

What to do if your parents are poor?

Not everyone is born with a silver spoon. Some people are born in extreme poverty and a small percentage does break out of it. The good news is that your parent’s financial situations do not dictate your future. You can take control of your financial situation and build wealth at any time regardless of your age, experience, or education level. If you don’t take action, however, you will stay poor just like your parents.

But, if you want to carve your destiny and lift yourself out of poverty, I have actionable tips to improve your life and finances. You don’t have to live paycheck to paycheck your entire life.

Without further ado, here are tips to escape poverty when your parents are poor.

1. Get out of debt as fast as you can

Borrowing money is only good for the lender, not the borrower. If you have debt, the lender has a grip on your income and there is nothing you can do about it. This is what the bible says about borrowing, ” The rich rules over the poor, and the borrower is the slave of the lender. Just as the rich rule the poor, so the borrower is a servant to the lender. The poor are always ruled over by the rich, so don’t borrow and put yourself under their power”, Proverbs 22:7.

I am not a bible person and this article is not about the bible. Instead, it is about poverty and taking control of your finances. I am trying to make a point here. The company you owe money has a lien on your income until your debt is settled. That means, no matter what you do, the lender must be paid first. In other words, you are a servant to your lender because you work hard to pay them and for every payment you make, they make a profit.

To get out of poverty, you need to change the flow of money. Instead of working to pay off debt, work to save and invest. This is the only way money flows into your account instead of out of it.

If you have debt already, pay it off as soon as possible. Even if you have to survive on rice and beans for a while, get out of debt. You cannot get out of poverty when all the money you make goes to the lender.

Start by paying off high-interest debts such as credit card debts, personal loans, and car loans. Once these loans are paid off, increase your mortgage monthly payments. The only debt you can keep for a while is your mortgage as it takes longer to pay it off. Also, stop borrowing money to buy expensive stuff. Wealth is in what you keep not what you spend.

Here are tips to pay off debt fast.

2. Educate yourself

Have you wondered why kids from rich families end up rich even if they might not inherit the money? It is because of the financial habits, skills, and knowledge they get from their parents from a young age. If your parents are poor, you won’t have access to the financial skills and habits of the rich. But, you can still learn everything independently even if your parents are poor and your whole clan is living in chronic poverty.

Knowledge is one of the most powerful tools for achieving financial success. You don’t need to go to school for knowledge that leads to financial success. Self-education always works fine. Learn about personal finance, budgeting, saving, investing, and how to avoid bad debt such as personal loans and credit card debt. As you learn and practice these good habits daily, your life starts to change which makes you feel good about yourself.

Always remember that what you know determines the decisions you make and the life you live. Learn to make better financial decisions and not get hurt. Those who have better information always make decisions that shape your destiny unless you fight back.

3. Develop a strong mindset

Most people born into poor families end up being poor because they never learn the success habits of the rich. Parents with poor mindsets encourage their kids to go to school and work hard to get good jobs. While a good job is the foundation of financial stability, it does not guarantee success. Without the financial habits that lift people out of poverty, you can still be poor on high income.

So, why do some people become rich and stay rich for generations while others are always scratching the surface? Why is your family always struggling with money? What can you do to get ahead financially just like everyone else? The answer lies in the way you and your family think about money.

Even if you practice success habits, you might still be discouraged by people around you. That is why having a strong mindset is essential to not get affected by negativities from people around you. Doing something different will make people jealous and they will try to shut you down. It will also be difficult to give up all the fun to save money, invest, or plan for the future when everyone else driving expensive cars, going out every day, and partying like there is no tomorrow.

How to have a strong mindset when trying to get out of poverty in a poor family?

Being positive about your future and developing good financial habits than your peers can be difficult. Losers and negative people will always try to pull you back when what you do does not fit their agendas.

Here are a few tips to have a strong mindset, overcome all challenges, and get out of poverty in a poor family.

Read personal growth books. Good examples include Think And Grow Rich by Napolean Hill and The 7 Habits Of Highly Effective People by Stephen R. Covey.

Learn the basics of personal finance and read personal finance books. Good examples of personal finance books include Rich Dad Poor Dad by Robert Kiyosaki, The Millionaire Next Door by Thomas J. Stanley, and The Richest Man in Babylon by George Clason.

Set up goals and keep your thoughts on those goals

Surround yourself with positive people and those that encourage you to succeed and get out of poverty

Listen to motivational videos and read biographies of successful people

Network with people with similar goals

Find mentors and follow their guidance

Change the way you feel and think about money

You might also like: 6 ways to develop a growth mindset

4. Establish unbreakable goals

Goal setting is an essential step to getting out of poverty when your parents are poor. Goals are what keep you going when things are tough. Your goals also help you track your progress and make adjustments when needed. You cannot hit a target you can’t see. Your goals are your targets.

Most poor families never set up goals which justifies why they spend all the money they make. You can’t save money if you don’t have saving goals. You cannot invest without investing goals. It is hard to improve your financial situation when you don’t have a financial plan. Poor people never save for retirement due to not having retirement goals. Kids from poor families take out student loans because their parents never established college funds for them. The list goes on. Just like you need air to survive, you need goals to get out of poverty when your parents are poor.

Examples of goals to set up when you want to get out of poverty and everyone is poor

Short-term financial goals. These goals include emergency savings, saving for a car down payment, a house purchase, etc.

Long-term financial goals. These are 10-year, 20-year, or 30+-year goals such as retirement saving goals, college savings, etc.

Investing goals. Investing is essential if you don’t want to be poor when your parents are poor. You can earn passive income as interest, capital gains, or dividends from investing.

Health goals. You must have a healthy mind and body to get out of poverty when your parents are poor. Your health directly affects your ability to do better in life. Make sure you eat healthy food, exercise regularly, get enough sleep, and drink enough water.

Travel goals. If you dream of traveling the world, start thinking about improving your finances and getting out of poverty first. It costs money to travel around the world. So, you cannot travel as you wish when working 24/7 to pay your bills.

To summarize, create a plan for your life and write down your goals. What do you want to achieve? Make your goals clear, concrete, and realistic. Then create a step-by-step plan on how to achieve them.

5. Work hard and be disciplined

Getting out of poverty is not easy especially when your parents are poor and living paycheck to paycheck. You have to think differently, ignore some of the money advice they give you, and learn the financial habits of the rich. While your parents might have good advice, most poor parents don’t have financial tips that lead to success. That is why they are poor.

To not be poor just like your parent, you need to work hard and be disciplined enough. You might be treated like an outlier simply because you are trying to get out of poverty. Success doesn’t come overnight, it takes time, effort, and perseverance. Be consistent with your effort and over time, you will start seeing results.

You might also like: 7 simple tips to stick to the plan

6. Network and create useful relationships

Trying to get out of poverty when your parents are poor without help is like trying to lift a house alone. Yes, you can work hard, save a lot, and invest, but having the right connection goes a long way. Connections help you learn from others, get the support you need, land opportunities, and much more.

The people you hang out with will largely determine whether you get out of poverty or be poor like your parents. Surround yourself with positive and hardworking people who inspire you to succeed.

7. Establish multiple streams of income

Boosting your income is an essential step to getting out of poverty when your parents are poor. Your full-time job might not be enough to cover all your financial needs which is why you might need a second income. Making extra cash also helps you boost your savings and increase your investment contributions. You can easily make money through side hustles, picking a part-time job, or simply starting a side business.

Don’t rely on one job or a source of income. Start a side business, invest, or find other ways to increase your revenue. The more money you make, the faster you will get out of poverty.

You might also like: 9 ways to increase your income fast

8. Create a budget

Another strategy to get out of poverty when your parents are poor is budgeting. Poor people never create a budget which leads to overspending and living paycheck-to-paycheck lifestyles. Poor people don’t know how much they make or spend monthly. So, all they know is that a paycheck is coming in and the money must be spent.

To avoid impulse shopping, increase your savings, and eventually get out of poverty when your parents are poor, create a personal budget. Use your budget as a guide toward your daily spending and savings. Never spend more than you make and always live within your means.

9. Start investing

Your life will change for good the moment you realize that profit is better than wages. Yes, you can work hard and make money, but the best way to make money is to earn money without working for it.

For example, if you have $10,000 in a 5% APY deposit account, that will $500 profit you did not work for. Can you imagine making five hundred dollars without showing up to work? What if you have $100,000 with the same return? That gets you $5,000 free money. As long as you are not trying to get rich quickly, investing is the easiest path to wealth.

Most successful people are either investors, business owners, or inherited money. Not everyone should start a business. But, everyone should invest some of their earnings to grow wealth. That is if you want to get out of poverty, investing is going to be your only way out. Start with safer investments such as bonds and money market accounts to get the hang of it. Then, add some money into stock-based funds such as index funds, mutual funds, and ETFs.

10. Start small

If your family is struggling financially, you won’t have hundreds of thousands of dollars lying around. That does not mean you cannot invest money. You can always start small and increase your contributions as your financial situation improves.

The issue is that most people don’t appreciate the slow process of getting rich. They want to get rich now. They are not patient enough to appreciate the process. You tell them that investing as little as $50 monthly can help them improve their financial situation, and they don’t get it because it takes a while for the compound interest to kick in due to a low ROI. So, they don’t invest.

If you don’t think starting with a small amount can help you get out of poverty, let me show you what a $50 monthly contribution can turn into in a few decades.

If you invested $50 monthly at 10% for 30 years, you will have over $114,000. In total, you would have contributed $18,000. That means $96,000 was profit. Interesting philosophy. How did you only save $18,000 and now you have $114,000? The secret is compound interest, which is the secret recipe for building wealth that poor people don’t know about.

If your parents are poor and don’t have a lot of money to invest, start with what you have and contribute more as you go. The most important thing to do is to get started.

What are the causes of poverty?

Most people are poor because of self-limiting thoughts about financial success and how money works. These limitations prevent people from learning the basics of finance and money management. Moreover, poor people never establish goals or develop good money habits which keep them poor for their entire lives.

Lack of a clear understanding of their values and skills. Without recognizing their unique skills, talents, and abilities, individuals do jobs that underpay them, leading to insufficient income, and a cycle of poverty ensues.

Poor financial literacy. A lack of knowledge on budgeting, managing money, investing, and saving can lead to poor financial decisions and choices. Most people stay in poverty due to uncontrolled spending, lack of savings, and an absence of investment.

The comfort zone. People lack the motivation to aspire beyond their current situation which prevents them from striving for a better financial situation. So, they remain stuck in their current state of poverty.

Why do poor people remain poor?

Generally speaking, poor people remain poor due to low wages and poor mindset regarding themselves and their financial situations which prevents them from saving enough money. Additionally, people borrow beyond their means to look rich only to find themselves in debt traps. So, they work hard to pay off their debts and never get a chance to save and invest in their futures.