Three reasons you can’t afford to act like you’re broke

Lifehacker recently ran a great article titled “Feeling Poor Doesn’t Stop Once You Make Money.” The basic premise is that being poor is not so much a financial status as a state of mind, and one that you don’t necessarily escape just because you start making more money. It’s very true – if you’ve spent any significant amount of time struggling with money, you’ve likely picked up behaviors and habits that don’t just go away, no matter how much better your finances become.

On the surface, “living like you’re broke” may seem like a good thing. If you behave like you don’t have enough money, then theoretically you can’t overspend and put yourself into debt. The trouble, though, is that behaving like you’re broke and acting frugally are not the same thing. In fact, some of those “broke” habits you’ve developed can cause major, unnecessary damage if left unchecked.

You put your health and wellness at risk

When money is tight, one of the first things to go is preventative health care. We stop going to the doctor. We stop paying for prescribed medications. The quality of our diet decreases. We let physical and mental health issues go unchecked and untreated.

Following a period of extreme financial distress, I continued to avoid doctors, dentists, and optometrists for years, long after I could afford to pay for those services. Why? Because I never felt quite sick enough to justify the expense. I had convinced myself that I was supposed to just live with those various aches and pains.

I’ve since come to my senses, but I’m fortunate that nothing disastrous developed during that period. Many people aren’t so lucky, and find that the little concerns they ignored have developed into big time problems. If you’re not on the edge of financial ruin, make sure you find room in your budget for proper personal maintenance. It may feel wrong at first, but it could just end up saving you a lot of money (and your life)!

You fail to see the bigger financial picture

When you’re poor, your focus is on surviving that day, that week, and maybe that month. In other words, your decisions tend to focus on the short-term.

That mentality certainly makes sense when you’re living paycheck-to-paycheck, but once you’ve started earning more money, that kind of short-term thinking can do more harm than good. For starters, it prevents you from taking advantage of your full assortment of frugal shopping tools, like exploiting sales and buying in bulk.

It also hampers your ability to save money effectively. Remember, simply not spending money is not the same thing as saving. Smart saving requires an active plan. You need to identify where you want to place the money (for maximum return on investment) and then routinely take money out of your personal circulation (so to speak), which can hurt. Living in poverty tends to leave you with a long-lasting fear that something bad could happen at any time. So putting money out of reach – even if only for a short while – is scary. But it’s necessary. Just remind yourself, you’re not broke anymore, so it’s okay to start thinking about the future.

You forget what money is for

When you’re broke, money is life blood. It keeps you alive. When you’re no longer broke, you may find that you still look at money as something to horde and not spend. When your finances are healthy, however, you should really be looking at your money as a tool to help you live a long, happy life.

This means that once you understand what your goals and priorities are, and once you understand how to manage your finances properly to help you achieve those goals and meet those priorities, you really shouldn’t be afraid of spending money any more. Spending money is not a bad thing. In fact, the sole purpose of money is to be spent.

This can be hard for anyone who’s been poor to accept, but:

  • It’s okay to spend money to pursue hobbies
  • It’s okay to spend money to go on vacation
  • It’s okay to spend money to increase your knowledge and pursue a new career
  • It’s okay to spend money simply to have fun

As long as your budget supports it and you understand how the expense fits in with your various goals and priorities, it’s okay to spend money. And that’s really the most difficult and important element of the transition from poverty to healthy personal finance: letting go of the fear. Once you do that, however, you’ll find it’s much easier to make smart financial choices that put you in the best position to succeed, today and tomorrow.

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

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