Ever wondered how come your savings account isn’t growing? Or how you are always living from paycheck to paycheck? In today’s podcast, Rohit Rohilia, Kyle Reed, Samnang Tea, and Kamal Kalra talk about how your lifestyle tells you whether you are poor or broke.

Poor is unconditional or you were born into it. Broke is when you are in a mindset of being broke which is caused by yourself or a situation. People are often broke rather than poor and they are in this state because they are in the mentality of spending money or spending money to impress other people. This gets you in a situation where you are constantly living in a world where the money comes in, money goes out.

Experts suggest we live by the 70-10-10-10 rule where 70% of your paycheck goes to living expenses, 10% of your paycheck goes to charity. 10% goes to short term investment and last 10% goes to long-term investment. Start treating all the 10% are already gone, because once you get into that mentality you will stop thinking about that money which is essentially helping you grow and invest in yourself. Once you get into this mentality, it shifts your priority which limits your spending.

Here are some other tips that will help you get into that mentality:

  • Whenever you are at a store and they ask you for donation; get excited and say yes! Give a $1 or $2, but if you start giving charity, not only you will feel good about it, but you will be making other people happy. This alone is a huge investment in yourself.
  • Start by 10-10-10 rule where you start by putting 10% of your paycheck to long-term, short-term investment, and charity and then use the 70% of your paycheck for your living expense. This will help you realize your expenses which you can prioritize.
  • Save your direct deposit to savings and then transfer it to checking to pay bills. This way you are conscious of how much money you are transferring from your savings to checkings which will help you realize how much are you spending.

Lastly, ask your yourself before buying anything does it add value to you or your closed ones? If no, then do you really want it or need it?

Resources we mentioned in this episode:

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