Just like the late, great Notorious B.I.G., I believe that the saying “mo’ money, mo’ problems” holds true – especially if you don’t know how to handle your money right.

I know first hand the actions people take that keep them broke and how they can put themselves in the poor house.

Yes, making more money could be the end to some of your financial woes, but keeping more of it does as well. I’ve seen people raise a family of four off of $35,000 a year, whereas some single people live paycheck to paycheck on $80,000.

Exaggeration?

Nope. Some of us save more while others spend every dime they have.

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My Broke Actions

My first school was a Catholic School which didn’t have the attendance to keep it open. My second one, another Catholic school, ended up converting to a charter school because of – you guessed it – financial reasons.

I hated change, but the pay increases kept me satisfied for a little bit. Looking back now, I don’t know if I was grossly underpaid or if I just happened to find employment at more financially sound schools.

As much as anyone would have been happy with the pay increases, can you believe my financial situation didn’t change much? Yes, I was fortunate to buy my first home, but I purchased it when I was only making $42,000, and my expenses didn’t increase that much either.

What did change, however, was my spending habits.

My Salary During a 3-Year Time Frame

• 2007 – $42,000
• 2008 – $56,586
• 2009 – $62,626

The more I made, the more I spent.

As much as my pay increases should have helped me, they only put me further and further into debt. I couldn’t understand why I was still broke.

Now, I’m not going to tell you raises are bad because they’re not. Money won’t make you happy, but having enough of it will help to alleviate some of the stress so you can have enough to take care of life’s necessities.

Listen to me when I say this if you don’t get a grasp on your financial situation – no matter how much money you make – you’re going to be broke.

 

So why did I continue to struggle to pay my bills after having an extra $20,000 hit my bank account? The only thing I can say with all honesty is that my mindset was out of whack.

The more I made, the more I spent. I didn’t just have more money to pay bills, I had more money to buy that cute pair of shoes I wanted.

I had more money to go out with friends. I had more money to put my son in all the activities he wanted to be in. I probably spent too much time at Christmas Tree Shops and Home Goods.

Related Post: 7 Sure-Fire Ways to Stop Living Paycheck to Paycheck

I bet you’re wondering why I did it.

According to one of my favorite books in the world, Rich Dad Poor Dad , the poor think and act differently than the rich. Now I’m not thinking of how the rich vacation on yachts in the Riviera, but more in terms of how they think, feel and behave with money.

The actions people take will make the difference between living paycheck to paycheck and leaving a legacy for future generations.

There were a lot of mistakes I made in my 20s and 30s, but I blame them on actions and mindset. I read books and listened to Dave Ramsey. I tried to follow his Financial Peace University, which worked but only when I put in the effort.

Before I was able to change my actions and keep more of the money I made, I compared what I did to my wealthier family and friends.

The problem with that is that no one knows what goes on in other people’s wallets. Just because someone is wearing a Louis Vuitton handbag, doesn’t mean they have any money in it.

So…to help you to become more financially savvy based on what I’ve experienced and read, I listed the actions people take that keep them broke and how you can get your money right.

Actions People Take that Keep Them Broke

Related: Personal Finance Books That Have Changed My Life

Broke Action #1 – Hanging with Negative Nancy and Broke Joe

Some of what I say might hurt your feelings, but that’s okay. I do all of it out of love. I want everyone to live a life of abundance, but in order to do so, you have to see what you’re doing in your own life that might keep you in the poor house.

Ever heard of the saying, “Two birds of a feather, flock together”? Well, it’s true, especially when it comes to money. If you hang around three broke people, you will ultimately become the fourth.

Misery loves company, and if you surround yourself with individuals who only breed negativity, then they will suck out your hopes and dreams like a vacuum cleaner and prevent you from reaching yours.

 

I used to hang out with a group that was always broke. Whenever I wanted to go out to eat, they would tell me they had to wait until payday. They would then complain that they didn’t make enough money. Soon I found myself complaining and sitting at home waiting for payday just like them.

Not only were they always broke, but they also spent their paychecks on clothes, hair, nails, anything besides bills. They would literally get two and three payments behind and stress over impending disconnection notices.

I had to get out of that group – FAST. Once I started hanging out with friends who not only made more money but had an overall better relationship with money, did my mindset around money change as well.

I stopped living paycheck to paycheck because my new group took care of their financial obligations first and didn’t feel the need to spend every dime they earned.

Wealthy Action to take today: Surround yourself with people who are positive thinkers and have a wealth mentality. These people do not need to be millionaires, but they should be at the very least a step-up from your current situation.

People with wealthy mindsets will hold you accountable and you can learn from their actions and beliefs.

Broke Action #2 – Spending Money to Appear Rich

 

We spend most of our time buying things we can’t afford to impress people we don’t even like. We need to have a bigger house than our friends and a faster car than our neighbors.

Broke people equate their bank accounts to their self-worth. Even if their bank account is small, they must at least look rich to others to maintain the appearance of a certain level of status.

You don’t need to earn a lot of money to acquire wealth. I know millionaires who don’t know where their next dollar will come from whereas there are people who live well off of $40,000 a year.

Broke people spend their money on unnecessary things and live from paycheck to paycheck.

Your neighbors Jack and Jill may look like they have it all – big house, nice car, great clothes, but you don’t know what goes on behind closed doors.

Jack and Jill may be up to their eyeballs in debt and fight every night about it.  Maybe they’re leasing their car and have little to no savings.

Or maybe they are doing well. Maybe Jack and Jill make $100,000 more than you or one of them is a trust fund baby. The truth is, you don’t know.

So stop trying to compare yourself to them, stop trying to measure up with what someone else has.

Stay in your own financial lane.

If you can’t afford a new car right now, buy a used one or treat the one you have better.  Put money into savings, pay down bills, buy only what you need and splurge only when you can afford it. Stop hanging out with friends who spend lavishly on things they can’t afford.

Stop hanging out with friends who spend lavishly on things they can’t afford.

If you don’t, you will be miserable. Your financial house will crumble, your relationships will suffer, and your self-worth will plummet.

What makes you great is not how big your bank account is, but how big your heart is.

Wealthy Action to Take Today: Stop buying stuff you don’t need and can’t afford. If you find yourself making purchases to make yourself feel better, work on your self-worth and seek professional help.

Broke Action #3 – Not Saving Enough Money

You have to save for rainy days.  There’s no getting around that.  Not having a cushion can make an unfortunate event worse. Who wants to have to choose between paying rent or getting their car fixed?

No one, that’s who.

When you start to fall behind on your bills, it gets harder and harder to catch up. It’s even harder to get ahead once you’ve fallen behind. And let me tell you, it’s not a good feeling.

Related: 7 Silly Habits of Broke People

Fifteen years ago, I was in a situation where I needed a family attorney, quick, fast and in a hurry. Not only did I not have any money saved, but I wasn’t getting paid until the next week.

I ended up doing something I hate doing and that was to borrow money from family and friends. I thought the situation was degrading, but I made a vow I wouldn’t put myself in it ever again.

 

What was worse? Many of my friends who I thought were doing well, were waiting for payday like I was. It was a sad situation all around. Not having savings will also force you to make unwise decisions such as tapping into your retirement or obtaining high-interest rate payday loans.

Anyone can start saving.  If you make $1000 a week, you shouldn’t spend 100% of that.  If you are, then you need to either get another job or check your spending habits.

By making small changes in your lifestyle, you can begin to save money.  If you can just save $100 a week, you can put a dent in your savings.  If you eat out every day for lunch, try bringing something from home and put that money away.

Do you have cable?  If so, do you really need 200 channels?  If you’re not really watching tv that much, reconsider your plan or get rid of cable altogether.

Wealthy Action to Take Today: Save at least 10% of your income. Aim to save at least enough funds to cover living expenses for three months or more.

Broke Action #4 – Believing They’re Broke Because of Some Outside Force

 

Yes, there are people who are broke due to no fault of their own, but this is the exception, not the rule. Studies have shown that certain behaviors distinguish wealthy people from their poorer counterparts.

Forget about the people who were born with money coming out their butt, but consider those who not only gained wealth through hard work but also was able to maintain it.

 

Wealthy people tend to have an intrinsic locus of control, whereas broke people tend to have an extrinsic one. Locus of control basically deals with something happening because you feel you do or don’t have control over it.

This means that wealthy people often believe that they are wealthy due to their actions, compared to broke people who believe that outside forces are to blame for their circumstances.

For example, a broke person may complain about their minimum wage dead-end job and their inability to make ends meet.  A broke minded individual will believe that they are stuck in their position and will not look for alternatives to making more money.

They won’t seek higher paying jobs or gain additional training that will make them marketable in the workplace.

Forget what people tell you that your income is tied to how hard you work.  That’s not true, it’s all about mindset.  I know many hard working garbage collectors, but I also know many CEOs who vacation a good portion of the year too.

Wealthy people believe that they can increase their income by making smarter choices. They don’t feel as if they are destined for a life of poverty.

They understand that they are in the position they’re in because they know they haven’t done what’s needed yet and they know that they will have to work to get themselves out of it.

The wealthy minded person may ask their boss for a raise, accept opportunities for additional training, or look elsewhere where they will be appreciated for their hard work and effort.

They also look to mentors and people who are where they want to be and model their actions and behaviors in order to get there.

Action to Take Today – Stop thinking you have no control over your financial destiny.  Figure out where you want to be and determine the steps needed to get there.

Broke Action #5 – Making Small Goals

 

Broke people make small money goals, such as having enough money to pay the electric bill or praying for enough money to hold them until their next payday.

Wealthy people will make big goals and take actions to meet them. They may hope to make enough money to buy a brand new car in cash or to find investors for their start-up in the sum of tens of thousands.

Having goals will give you something to aim for, but there is such a thing to have goals that are too small. If you only aim to get enough money to get your hair done, then that’s what you’ll achieve.

How successful will you feel, however, if it rains as you leave the salon? Poor people pray for extra money to pay bills and make ends meet. Wealthy people want to build empires and leave their children, grandchildren, and great-grandchildren wealthy.

Wealthy Action to Take Today – Aim high and set bigger goals. If you want to run your own business, set your goal to make enough so you’re able to leave your job within six months or to obtain ten new clients by next month. After you’ve achieved each goal, aim higher.

Broke Action #6 (Bonus) – Depending on Only One Source of Income

 

A broke man will solely depend on the income given to him by his employer. He’s at the mercy of his boss, who can decide when and if to give him a raise or if he will remain employed.

A wealthy man will have multiple streams of income coming in, so if they do receive the pink slip, this won’t be such a detriment to his livelihood.

Think about your favorite professional athlete. How many times do you hear of bankrupt former NFL or NBA players? The smart and successful ones dabble in other ventures that will keep them rich well after retirement.

Maybe they’re the spokesperson for a popular sports’ drink. Maybe they sell real estate on the side.

Whatever ventures they have going on, they understand that in order to grow wealth you must have multiple streams of income coming in.

They know that a broken leg could be the end of their career and their million dollar contracts can be blown in the wind. Learn from them and think of your own backup plan.

Wealthy Action to Take Today – Assess your skills. Is there anything you can do that will help you earn extra money? Can you sell some of your belongings at a flea market or on Ebay? Can you spend a few hours a week teaching children to play the piano?

Can you start a blog or freelance your photography skills? There are many ways you can make extra money if you put your mind to it. The more streams of income you have coming in, the less likely you will feel dependent on just one.

Want to stop being broke and get your finances under control?