Breaking the Poverty CycleBy: Dana Ashley Cousins, Senior Account Executive Posted:
When you think of your financial situation as temporary, you start to understand it as something you can change. Having a positive mindset towards changing your financial position is extremely powerful as you put the steps in place to achieve wealth. Saving for a vacation or to buy something special such as a gift requires an individual to make adjustments to their spending habits, make sacrifices where necessary and forego some if not all non-essential expenses in order to make it happen. Just as how we can achieve a small goal through aggressive savings for an immediate want or need, we can now extend that further to attempt to break the poverty cycle.
Having a goal in mind is the first step. Start identifying what you would like to achieve. Your goal/objective needs to be in line with current your financial circumstances i.e. how much you currently earn from all income sources. Having identified the goal, the next step would be to determine how you will achieve this. Ensure that your goals are SMART – Specific, Measurable (have an amount in mind), Achievable (attainable based on your current income), Realistic, Timely (giving yourself a time limit. Eg – within a year or more). Now that your SMART goal is identified, the next step before the execution of your plan will be to break down your income vs your expense. Looking at your income and how you spend each dollar will show just how much money you spend monthly, weekly, and daily. Being granular with this process allows you to identify the gaps and weaknesses in your spending habits so you may trim the fat. Adjusting and eliminating unnecessary expenses, realigns you with your new goals and achieving them becomes even more possible. Ultimately your goal is to spend less than you earn at any given time.
Changing your mindset towards your finances, setting SMART goals, looking deeply are the necessary steps to achieving financial stability. To take this further to achieve wealth and ultimately breaking the poverty cycle means that outside of successfully managing our expenses, we need to ensure we have a nest egg. Being able to adequately meet our daily living expenses plus having funds set aside part from savings is key to wealth creation. This ensures that you do not have to borrow from individuals or institutions and incur interest on those loans when emergencies do arise which will most times occur.
The habits we create through financial discipline are a sure proof way to achieving wealth once we remain consistent in our efforts. It will be difficult; the sacrifices will seem overwhelming at first but after your goals have been achieved, the rewards will be plenty. The quicker you start, the greater your return will be down the line.