6 habits keeping you poor

My name is Paulo Nogueira and for as long as I can remember I have obsessed about money and personal finance, having come from a working class background in the UK and wanting to do better for myself, it seemed like a way to build a better life for my family and I.

I’ve pretty much gone through everything in personal finance from repairing my credit due to poor decisions whilst at university, paying off my student loans, getting my first job and progressing in my career in financial services, buying my first home and then my investment property to now researching endlessly on the most up to date news, stories and theories on personal finance to help you build real wealth.

In addition to that I have spoken to countless people who have spoken to me about their personal finance journey and across all of that I came across a few things pop up again and again that have repeatedly shown to keep people poor which you should avoid.

1. Neglecting to maintain a clean credit history.
This habit silently but drastically increases the cost of nearly every major financial transaction in your life. Your credit score is more than just a number; it's a report card on your financial reliability that landlords, insurers, employers, and lenders all review. With a poor score, you'll face exorbitant interest rates on mortgages and car loans, costing you tens—even hundreds—of thousands of dollars over a lifetime. As financial educator Dave Ramsey starkly frames it, "Your credit score is an 'I love debt' score. It measures how well you dance with the devil." It’s not just about access to debt; it’s about the immense "stupid tax" you pay for mismanaging it. Protecting your credit is a fundamental act of financial self-defense, ensuring you keep more of your hard-earned money instead of handing it over in the form of punitive interest.

2. Failing to pay yourself first via automated savings.
This is the cardinal sin of personal finance: treating your own future as an afterthought. When you spend first and save what's left, you are unconsciously prioritizing every other obligation ahead of your long-term security. The ancient wisdom from The Richest Man in Babylon lays down the immutable law: "A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn." The modern application is automation. By setting up automatic transfers to savings or investment accounts the moment you get paid, you make wealth-building a non-negotiable part of your life. You are not relying on willpower. It’s a bill for your future life, which will pay dividends one day.

I’ll never forget one day I was speaking to a work colleague who saved lived at home, so he could save copious amounts of money even though he made great money at our job and I asked him why, and he said “it’s for my future wife and children… I don’t have them yet but I’m sure I’ll love them very much and I want the best for them”

That really stood out for me because I never thought about it that way the ability to look at your future and see it with the same immediacy as you see your present allows you to take decisions for your future self in a much more logical way that is conducive to long term wealth creation.

3. Overspending To Appear Wealthy

Overspending to keep up with the Jones’ is the seductive illusion that keeps high earners from ever becoming wealthy. It is the act of trading potential long-term assets for short-term status symbols, believing the appearance of wealth is the same as its substance. Whether it's the new luxury car that plummets in value, the Instagram-worthy vacation funded by debt, the designer wardrobe, or the oversized mortgage for a house in the "right" postcode, this habit converts your income into expenses instead of equity. You are financing a lifestyle that consumes your capital. The seminal research in The Millionaire Next Door reveals the sobering truth about real wealth: "Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high." As financial philosopher Morgan Housel adds in The Psychology of Money, "Spending money to show people how much money you have is the fastest way to have less money." True wealth is silent—it's the unspent money invested, the paid-off mortgage, and the financial security that doesn't need to be displayed. It's what you accumulate and keep, not what you flash and finance.

The truth is that the everything you want to “overspend on” will still be available in 3 - 5 years time when you’re in a better position to budget for it. Also from personal experience every ‘luxury’ item I really wanted looses it’s “draw” for me a few weeks / months after I purchase it. At the end of the day, a watch is a watch, a bag is a bag, a car is a car. Some of the smartest people in the world, with millions of dollars in consumer testing market that item to you in a way that seems irresistible, it rarely lives up to the expectation. Peace of mind is real wealth.

4. Staying in a job too long with stagnant wages not matching market value of your skills
This is the slow, silent erosion of your lifetime earning potential. Loyalty without a reciprocal investment in your growth and compensation is a one-sided contract that benefits only your employer. If your income is not keeping pace with inflation and the market value of your skills, you are effectively taking an annual pay cut and making a donation to your company each year. Staying in a static job is a system designed for financial stagnation. The more you can earn, the more you can save, the more you can invest and the more you can invest, and compound the quicker you can get your family to financial freedom. Modern financial thinkers like Ramit Sethi advocate a "conscious career strategy," urging you to spend extravagantly on what you love by first ruthlessly maximizing your income. Often, the most powerful system for growth is strategic movement—knowing when to leverage your experience for a promotion or a new role elsewhere, rather than waiting passively for recognition that may never come at the cost you deserve.

This is something I have tried to avoid but I too have been a victim of it, I’ve sometimes stayed at jobs when it was clear the promotion or pay rise wasn’t coming but I was comfortable, I loved my team, my customers, what I did everyday but do you know what when I left I ended up liking what I did at my next place as much if not more, and the peace of mind of being paid more for it, was incredibly helpful. I find that people who don’t leave when it no longer suits them often have this view that they’re not able to get better than what they currently have and it feels like there “could be a cost” to leaving and it not working out however by staying whilst being underpaid, overworked or unpromoted is definetly costing you something so it’s often better to take the leap and try, believe in yourself and you’ll be surprised how well you could do.

5. Not starting to invest early, missing compound growth.
This is the single most expensive financial mistake driven by procrastination. Compound interest isn't just interest on your money; it's interest on your interest, creating an exponential growth curve. The later you start, the steeper the mountain you must climb. Warren Buffett famously likens it to a snowball: "My wealth has come from a combination of living in America, some lucky genes, and compound interest. The trick is to get a very long hill and start rolling that snowball as early as you can." Every year you delay, you lose not only that year's contribution but all the growth that contribution could have generated for decades. Time is the irreplaceable ingredient, and starting early, even with small amounts, is infinitely more powerful than starting later with larger sums.

This is by far the biggest mistake I made, Whilst saving for a house I convinced myself I needed to stay in all cash because I was afraid of what may have happened if I needed to buy and the market took a turn which is prudent however I missed so many years of positive stock market returns, luckily for me I was fairly careful about how and where I bought my first home to ensure we did well on return for it which is better than any stock market return I could have invested, the same with buying our second property.

I did invest just not in the stock market, however I had similar returns in the property, however it could have been a significant drag on wealth building for me.

6. Not acquiring a high-income, in-demand skill.
In a knowledge economy, your primary source of wealth is no longer just labor; it's your specific, valuable knowledge and skills. Relying on a generic skill set that can be easily automated or outsourced is a high-risk strategy. The goal is to develop "specific knowledge"—as investor and philosopher Naval Ravikant defines it: knowledge that is "creative, technical, cannot be outsourced or automated, and is found by pursuing your genuine curiosity and passion." This is what makes you irreplaceable and allows you to command premium rates. Investing in yourself through education, certifications, and deliberate practice is the highest-return investment you will ever make, as it directly and exponentially increases your earning power for decades.

In Summary a lot of these lend to one another for example if you build a high income skill, it effectively forces you to move for more money if you don’t overspend, and allows you to invest more disposible money, if you continue with automated savings and investing early enough that additional money over a long period of time it will compound and grow into wealth.

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