Most of the time, going from poor to rich doesn’t happen by chance. It requires tweaking your habits and remaining consistent to slowly improve your financial health.
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Vincent Chan, a personal finance advisor and YouTuber, adjusted his routine to emulate the habits of wealthy individuals. In a recent video, he outlined some of the most effective ways to transform your habits from those of a poor person to those of a rich person by being aware of what poor people do that the rich don’t.
1. Playing the Blame Game
When things aren’t going your way, it’s easy to blame external forces instead of yourself. You can blame your boss for your low salary, poor sleep habits on social media apps and lack of exercise on busy schedules. Blaming others is a defense mechanism that protects your ego and provides an excuse for your poor habits and performance.
To achieve your full potential, Chan said you need to start taking responsibility for yourself. Chan referenced an article from the National Institutes of Health that drives this idea home. He explained the Locus of Control: “People who believe they control their outcomes are more likely to succeed than those who don’t.”
When you attribute your failures and successes to yourself, you can begin to take accountability for your actions and correct your mistakes.
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2. Not Knowing Their Priorities
People with money know what their goals are and have a plan to reach them. This plan means knowing the most efficient order of steps to take to hit your financial objectives. While this order may not be the same for everyone, Chan provided an example of what to do.
Many personal finance experts will encourage you to invest your money, citing the power of compound interest and the long-term upward trend of the stock market. Chan doesn’t disagree that investing is a good idea, but said you first must hit your savings goals. Once you are out of debt and have built up an emergency fund, you can begin investing.
3. Not Controlling Their Environments
Most people like to think they’re in control of their actions, but in some cases, they’re not. Chan explained that oftentimes, your environment has a crucial impact on your productivity. To optimize your surroundings, you should find ways to distance yourself from your bad habits, such as not working in the same room as the TV or putting your phone on airplane mode to reduce distractions.
4. Skipping Out on Health
Chan pointed out that putting an emphasis on your health is another thing rich people do that others overlook. Focusing on your physical and mental well-being will help your work and personal life in multiple ways. For example, good nutrition, sufficient sleep, physical activity and other healthy habits will increase your motivation, help you make better decisions and increase your immune system functions. Making your health a priority can help you avoid burnout and improve the quality of your life.
5. Confusing Frugal and Cheap
Being frugal and being cheap aren’t the same thing. Chan explained that being frugal involves making smart purchases, such as buying six months’ worth of floss in bulk. Cheap would be reusing the same floss over and over to save money. Basically, frugal people try to save money by maximizing value, while cheap people try to cut corners to save money. Being frugal and thinking critically about your purchases can help you save a lot.
6. Not Understanding Taxes
Chan pointed to taxes as an issue that many poor people don’t understand. He explained that getting a tax refund means you overpaid throughout the year. While you do get this money back, you could’ve made it work for you. Using that money to pay down debts, earn interest in a savings account or compound in your investing portfolio would’ve been better than just letting the IRS hold onto it for a year.
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This article originally appeared on GOBankingRates.com: 6 Things Poor People Do That the Rich Don’t, According to Vincent Chan
