I didn’t grow up with much money. There was a time in my life when I wasn’t certain where I would be living not just from month to month, but from week to week. This is where I lived before becoming homeless and on my own at 17.
It didn’t stay that way long. Through a lot of hard work, I was able to completely change my life and my financial situation. My wife and I are both very career focused. We did well and we both enjoyed success. When we purchased our last house in 2016 in an upscale Northern Virginia neighborhood, I thought we had finally arrived.
We were caught in a cycle
But regardless of how much we increased our income through raises, investments, or promotions, we never really seemed to gain any ground with our finances. We were caught in a cycle of constantly increasing our spending to accommodate our new salaries. I was still acting like I was poor.
I know this is a bit of a stretch, so let me explain a little. Growing up poor, we were living paycheck to paycheck. Each month we were only major emergency away from total financial ruin. Even as a teenager, I worked while going to school to help pay the bills. And the accounting on my bank account was always a zero-sum balance by the end of the month.
Now I’m obviously not in that same situation anymore. It’s tough to call yourself poor when you live in a house like that and can afford to have a housekeeper come by and scrub the toilets for you every two weeks. But the truth is I was still treating my bank account like I was poor. After not having money for so long, I kept spending it like it would disappear if I let it sit for too long. I was still treating my account like it was a zero-sum game every month.
“Do I really need this?”
There was no need for me to continually purchase newer cars and larger homes. I continually upgraded my phone even though the one I already owned was working perfectly (and already paid for!). I kept finding myself saying over and over again, “I can treat myself to this, I work hard and make good money”. Unfortunately, that was the mindset holding me back.
You see, as we all progress along our financial paths we are tempted to increase our lifestyle in order to fit our income. Seldom do we take the time to sit and think, “do I really need this?”. Often the answer is no, and in continuing in this mindset, we are keeping ourselves from being financially independent.
Whoever said that money cannot buy happiness never had to deal with not having any.
Another area that growing up poor affected my mindset in was investing. You see, when you grow up poor, you get a first-hand view of all of the things that you cannot have without money. I’m not talking about luxury gifts or domestic staff, I’m talking about cupboards full of food, and cars that can take you to school reliably. Whoever said that money cannot buy happiness never had to deal with not having any.
So once my wife and I had some extra money in an account my wife wanted to do the responsible thing and invest it. But the idea of potentially losing all of our savings scared me to death. This fear was preventing me from taking advantage of the fact that I didn’t NEED the money at that time. If we lost all of our savings in the stock market, we would’ve been fine. Our salaries more than covered all of our bills. It was an emotional attachment that was holding me back from capitalizing on the opportunity to invest. To me losing that savings would have signaled the beginning of a slip back into poverty.
It took a long time for me to be comfortable with investing. Even now, I am probably a little more uneasy about the potential of losing the money than other people in my financial circumstances. But my wife and I have begun investing the majority of our excess income. To combat my fears of “losing it all”, we have diversified our portfolio to mitigate the risks of investing in the stock market. I won’t get into that here, that will definitely need to be a blog on its own.
I don’t have all the answers…
Again, I’ve only just started this journey to financial independence, and I don’t have all the answers. The struggle with the poverty mindset about money was a huge struggle for me, and is something that still remains today. But by working through it, I’ve been able to identify areas that my family can improve upon to continue our path to financial independence.
Thank for reading, and I hope to see you in TheBreakaway.
