The #1 Reason People are Suffering Financially & What to Do About ItApr 26, 2021
Okay, I’ll admit it: I played a trick. Don’t get too upset (please). There was a good reason for it.
There are actually many ‘reasons’ people who have money and wealth lose it and go broke. So why the slight of hand? Why the three card monte?
To bring you in here. Because, let’s face it, if you’re not wealthy, if you don’t have mega riches socked away somewhere, what will you care about all the reasons so many rich folks go bankrupt?
But, if you know there’s one thing that binds them all together, one reason you might actually discern, then maybe, just maybe you’ll be able to find the secret to long-term, lasting financial success.
That’s all true. In fact, it’s incredible! But few people are even aware of it.
"We need to talk."
Those are some of the absolute worst words a person can hear when they’re in a relationship. Right? You might have heard them. Maybe more than once.
It usually precedes the ‘it’s not you, it’s me’ speech. Or the ‘let’s just be friends’ comment.
But you and me? Yes, we need to talk. We need to go over a few things before I unveil the one reason rich people go broke.
Because if I don’t go over these things, you’ll simply process what I tell you as information, take it, ingest it quickly, and go on your way.
Within a few days you’ll forget most of what you read here. Within a week or two, you’ll probably never think about any of this again.
But this one reason is so monumental, so incredibly powerful, it’s important to have the right context in place first. Don’t worry … I will tell you this one reason. By the time you get to it, you’ll have a better understanding for why it’s so colossal.
People don’t struggle financially because of a lack of information.
The rich don’t go broke and the middle class don’t struggle living paycheck to paycheck because they lack information.
“He just didn’t know how to manage his money” or “She was never given the right information on investments” are not arguments that work. They don’t hold up to scrutiny.
Because information is not just readily available, it overwhelms us. Look around! Everywhere you go, right there at your fingertips, you have mountains of information. In fact, we have more information that can be accessed just on a smartphone than just about anyone ever had access to throughout history.
It’s staggering the amount of information we have surrounding us every second.
Despite all that information about stocks, investments, savings, managing money, paying down debt, eating healthy, getting exercise, good foods, bad foods, healthy marriages, and so on, we have a society that is getting heavier and heavier, consuming more and more processed and fast foods, more people struggling to get to their next paycheck, and feeling worn out, exhausted, and unmotivated.
Hey, if information was all that was needed, we’d all be rich, skinny, and happy. During an interview I did with Dr. Paul Jenkins for Live on Purpose Radio, we talked about this and a number of other things.
Helping people for a quarter of a century.
I’ve been a financial advisor for more than 26 years now. I’ve sat with my clients, many of whom were very wealthy individuals, couples, and families, gone over their statements and outlook, mapped out the perfect financial plan, and included action items for them to follow through on, and despite all their excitement and boasting, I’d learn the next time we met how they went right from my office to a tech store to grab the latest, greatest techno-gadget or high-def TV, booked a tropical getaway, or some other major expense.
The shelf life of the plans I developed for them was about 5 minutes, it seemed.
So one day I was having dinner with my good friend Robert Kiyosaki and his wife and a mutual friend, neuroscientist JW Wilson. I expressed my frustration and JW leaned over and whispered, “All that information … does not cause transformation.”
I was floored. Everything hit at once. A revelation.
Information by itself does not cause transformation.
That was precisely why no matter how much money a person earned, how much they worked, they couldn’t be financial secure. There’s so much information, but few people actually have a clue.
The financial services industry sells a product. They’re not actually out there to transform lives. They give information. Tools. What I refer to as ‘below the line’ tools. Important, sure, but unless you focus ‘above the line,’ you’ll remain stuck on what I call Pain Island, unable to find true, lasting financial peace.
Don’t believe that this is a global problem?
If you’re like most people I talk to around the world, you probably assume that only the poor or lower middle class people are the ones struggling financially. You just want to know why rich people go broke so you don’t make the same mistake.
What if I told you that when I began on this journey to transform lives seven years ago, 73 percent of full-time working adults (not freeloaders, not just poor or middle class people) were living paycheck to paycheck.
It sounds incredulous, I know.
Fast forward to the last year I’ve seen data on this, which is 2018, and the percentage had jumped: to 78. Seventy-eight percent! Those are pre-COVID numbers, mind you.
It’s staggering! About eight out of every ten full-time working adult is struggling to get from one paycheck to the next. And what’s even more stunning is this: 64 percent of those same people couldn’t scrounge up $400 for an emergency expense.
That means they’d either have to turn to family or friends or rack up a high interest debt on credit cards.
People are consistently outspending their income, regardless of how much they earn!
That 78 percent includes people earning $20,000 a year as well as $500,000 a year, and more!
Look at your own life, your own history, your own patterns. What has happened through the years as you changed jobs, were promoted, and earned more money?
You bought more. I know you did. The more you made, the more you spent. The more you spent, the more you had to spend to maintain this new lifestyle … that you enjoy.
There’s nothing wrong with enjoying the lifestyle you have, but the key question comes up now: why would you sacrifice your future for material comforts today?
Most couples I meet say they have to both work just to make ends meet, so they put their kids in daycare or barely spend much time with one another.
Really? No, not true. Aside from truly impoverished people earning just a few dollars an hour and living in a high-cost city, most couples choose to both work because they want nicer things, a fancier car, bigger house, better clothes.
And here’s where we come to the crux of this blog.
The reason rich people go broke.
Ultimately, our financial struggles come down to the same single derivative problem: our beliefs.
As Dr. Jenkins noted during our interview, we are programmed by our parents, teachers, and guardians. From early on in life, our beliefs about money are ingrained in us from someone else.
Just as we didn’t have a choice in our primary language, we didn’t have a choice in the beliefs about money that were passed down to us.
And we never even consider them. But some examples of poor beliefs about money that lead people into financial pain, keep them there, or cause them to go broke can include:
- Money is the root of all evil.
- I’ll never be wealthy.
- I didn’t come from money.
- I’m not good with math.
- The system is rigged and unfair.
- Life is unfair.
- Well, it’s only $100 more on my credit card …
- I’ll deal with it later.
- I need to look like I’m successful to be successful.
- What will my (friends, parents, etc.) think when I’m driving/wearing/living in this?
Broken or poor beliefs about money, material possessions, and so forth lead to the excuses we make. Such as, “If I buy this more expensive luxury car, people will think better of me, and I’ll find more success.” The excuses move us to take action; we actually go out and overspend for things we don’t really need. That leads to stress as we suddenly struggle to cover our expenses each paycheck.
I call this the B.E.A.R. Trap. Our Beliefs that lead to Excuses which encourage us to take unhealthy Actions financially, which lead to stress and other bad Results.
Dr. Jenkins referred to an exercise I mentioned as ‘metacognition.’ Thinking about thinking.
If you’re struggling financially, no matter how much you earn each year, if you’re living on Pain Island and want off, the first step is to recognize your belief system involving money.
Write down all the beliefs you have about money, working, spending, or whatever. Write them all down.
Once you’re done, if you really want to dig deeper, check out my book, The Top 10 Reasons the Rich Go Broke. You’ll really see how those beliefs you’ve just uncovered in your own life can and do affect you. And how they affected people of wealth, too.
You’re not alone. And no matter how much debt you have, how poor your credit score happens to be right now, just know one important thing: it’s not your fault!
You’ve been programmed to fail. But now that you know the reason, where it all starts from, you can transform your life!
Isn’t that just awesome? So let’s get you off Pain Island and into a life a true, lasting financial peace!
John MacGregor is an international best-selling author, global speaker, and financial mentor to thousands of people worldwide. For over 26 years John has been assisting individuals with their personal financial needs using paradigm shifting techniques and strategies so people can finally live the life they deserve to live. Check out John's website for a variety of free resources so you can immediately start your journey to financial freedom and peace of mind.