A common misconception among those that are relatively new to the world of personal finance or those that are unfamiliar with personal finance is the belief that being broke is the same as being poor. Sure, the two terms both are similar in that one has limited access to wealth. That's where the similarities end though.
As a college student, I've lived relatively broke for the past 3+ years despite having a portfolio worth over $10,000. However, for all intents and purposes, I'm basically living paycheck to paycheck like most everyone else while I pay my way through my last 8 months of college.
What separates me and other newcomers to this community of FIRE and dividend growth investing from everyone else though is the mindset that we adopted at some point in our lives.
Although newcomers to the community such as myself may be broke currently, the distinction is that because of our mindset, with a bit of luck, we won't continue to have limited access to resources. We will eventually be free of our reliance on an employer to maintain our lifestyle. This is the very essence of the community.
We could contrast this to the poor mindset. Being poor is a circumstance that extends well beyond being dependent upon an employer or others to support one's lifestyle; the poor mindset is a set of beliefs that makes this dependence a chronic or permanent situation, at least until one's mindset or perspective radically changes. Obviously, there are exceptions to someone having no money solely because of an improper mindset. Bad luck can make it incredibly difficult to transition from no money to being financially secure.
The point of this is to inform everyone that unless you are born wealthy with a multi million dollar trust fund, you too will start with fairly limited resources or money (Gee, how insightful, Kody). Therein lies the opportunity to take control of your destiny to an extent and realize that the mindset you choose to adopt will be the difference between whether you identify as being broke or poor.
Chances are if you are reading this, you have reliable access to awesome amenities like electricity and the internet. These are privileges that those 100+ years ago weren't blessed with. They have fundamentally improved the lives of many millions of people.
We live in the Information Age. It wasn't long ago that if you wanted to learn about a subject, you needed to read books. That was the only real opportunity to learn anything. Now, almost anything you would ever like to know or need to know can be found in seconds with a simple Google search.
You have the choice how you view your current situation and how to respond. Maybe your circumstances are similar to mine and you're just getting started investing. Maybe you haven't yet started investing. Whatever your circumstances are, I want you to know that you are the architect of your life. If you aren't happy with your financial circumstances, just know that can be drastically improved with a bit of time, patience, luck, and discipline.
Were you able to distinguish between being poor and being broke before reading this post? What do you believe is the most striking difference between being poor and being broke?
Great post, Kody! This post made me think about my days in school, because the end of it taught me about what it was like to be poor. I wasn't the best with money during school. I partied a lot and spent too much on clothes. But I guess I always had an idea that I wanted to own a business. By the end of school I racked up student loan debt, credit card debt, and even was behind on my cell phones. I ended up paying that all off though and digging myself out of that hole a long time ago now. That taught me a great lesson on the difference between being broke and poor. Being poor is you really can't afford anything. It's pay day to pay day. But being broke is you are short on money for a particular period. You're not poor because you do have some money stashed away, but you don't have any extra money to spend. That's my opinion at least. Thanks for the read!ReplyDelete
Absolutely! Being poor generally is a situation that lasts until somebody changes their mindset, in my opinion. Glad you enjoyed the read and thanks for the comment!Delete