Financial Literacy 101

The Difference Between Being Poor and Being Broke

First of all, I want to congratulate you for being broke! Go on, give yourself a pat on the back!

In all seriousness now, the fact that you have acknowledged that you are broke is to be commended. With any recovery, be it financial or other, the first step is always admitting you have a problem. Many people spend years denying their money troubles and ultimately making their situation worse instead of simply facing the truth. Luckily for you, being broke is temporary!

I first came to the realization that I indeed faced serious financial trouble after my partner and I had just moved to study in Brisbane. We had a combined total of $3,500 in savings, one car full of our belongings and a cat to feed. We both had no jobs lined up, and given that the apartment we were renting was unfurnished, we ate through our savings in just a few weeks. Sure, we had a brand new fridge, yet barley anything in it!

piggy-bank

While both of us were searching for work with very little luck, I began contemplating how we let ourselves get in such a rut. Whatever casual work I undertook as a bartender barely covered a bill and we were forced to rely on our parents in order to feed ourselves. Let me tell you, there is nothing more embarrassing than having to ask your parents for money. Especially when you know you won’t be able to repay them for a quite a while.

Eventually my partner managed to find a commission-based job in sales, however given that he was a novice money was hard to come by. My days consisted of sitting at home applying for just about anything related to my work experience and a whole lot of going nowhere. Whatever money we had was gone in an instant, and there seemed to be no apparent solution to this never ending cycle. It hit me that I had a massive spending issue when the last $100 bought me a brand new, overweight but gorgeous cat!

Waking up the next morning, I couldn’t believe just how financially idiotic I was. How could I have let this happen? How were we going to afford to live for the next week? A million how-tos and what-ifs clouded my mind as answers started to emerge. I was broke because I had:

  • terrible money habits
  • relied on the generosity of my parents (I know, shame)
  • no budgeting knowledge
  • been practically unemployed
  • didn’t how to save

Admitting that you have no finical security is a very scary thought. Even worse, admitting that it is mostly your fault makes it even harder. Electricity and gas bills were due, our cats were out of biscuits and my mother had maxed out her credit card. One pay-check wouldn’t cover ends meet, nor would we be able to depend on mommy and daddy for the rest of our lives. It was time to grow up. The hard slap of reality had hit me and it was time to change. I either had to learn how to manage money or prepare to lose everything.

Tired of having what felt like no control over my life, I decided to get educated. One of the first of many books I’ve read on the topic of financial management was “Rich Dad, Poor Dad: What The Rich Teach Their Kids About Money” by Robert T Kiyosaki and God, was this the best $7 I had invested in myself. Kiyosaki not only spelled out the concept of financial literacy but clearly contrasts the psychology behind rich and poor people. He showcases the mistakes that far too many of us have made when it comes to poor spending choices, which have ultimately led us to where we are now. He also inspires an interesting idea; For some, being broke is purely a stage of life on the way to financial security.

There is nothing wrong with being broke, as emotionally frustrating as it may seem. Being broke is merely where you are in between getting from point A to point B. It means that you are struggling and things are a bit stressful for now. Yes, we’ve all made bad choices when it comes to money, but getting out of the vicious cycle starts now. I want you to know that I’ve been there, and so have many others who are now far wealthier due to being temporarily broke.

The difference between being poor and being broke is that being broke is temporary. Live by those words every day. Say them whenever you’re struggling. Do not be ashamed of your money trouble; instead, rejoice it, for it is the best time to learn how to become wealthy. You are not poor, but figuring things out. Being broke means that you can do something about your situation and refuse to let yourself become poor. Being broke means that YOU are in control now.

Why not start now?

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