Being Poor Vs Being Broke

Throughout my life I have been able to associate with people living in many lifestyles; those who are making a lot of money yet still trapped by linear earnings, and those also in poverty. While I was growing up, I would compare myself to a different group, and either feel rich or poor. I was sometimes confused.

One day, I heard one of my associates say, “I’m not poor, I’m just broke.”

I remember being so confused by this statement. Weren’t poor and broke the same thing?! I just didn’t get it. Growing up, I was so puzzled what it means to be broke vs. poor.

The book "Rich Dad, Poor Dad" by Robert Kiyosaki, help me answer this puzzle. To describe oneself as poor is to accept an external definition of oneself; to believe that there’s a distinction between the classes, and you’re simply stuck at the bottom. It’s who you are and there’s no way out. It’s a long term situation and (this is important here) your financial identity is labeled by others.

To be broke may mean that you have no money, but it’s a temporary situation. You’re just one months away from financial stability. Perhaps your bank account is empty today, but flush times are just around the corner. It’s a short term period and importantly, it’s self defined. Perhaps you began your own business, and the starting financial challenge is just a obstacle in the beginning.

But is there an actual difference between poor and broke?

Yes and no. Poverty is a valid and real existence for billions of people the world over, but for many Americans, we’re just broke. We have the opportunity to take on a second job, hold a garage sale or take a focused look at how we’re spending our money. Chances are we can figure out at least a couple ways to spend less and earn more. In America, we even have the ability to start our own business using network marketing for less than $100.

The problem with the word poor is how negative it sounds. We all know people who choose to live beyond their means in order to avoid an appearance of poverty. Leasing cars they can’t afford, buying stuff on credit cards and even renting furniture to paste together a false image of financial comfort. By accepting that we’re broke instead of poor, it’s easier to temporarily drive a paid-for beater, wear thrift shop clothing and decorate our homes with upcycled castoffs and hand me downs. All the while living within our means and setting money aside for big picture goals.

Whether you choose to label yourself as broke or poor, what really matters is taking a deliberate role in your own money matters. Investigating the smartest ways to be financially responsible, on both the spending and earning sides so that you can move past either label.

People who are poor say, “I can’t afford it.” A person who instead asks “How can I afford it?” is not poor even if they have no money, because they are thinking like a rich person. It's your thoughts that lead to your actions and your actions create your future. Beware because our emotions are usually controlling our thoughts.

Even when you are faced with circumstances that are outside your control, you can still control how you respond to the situation. A person with a rich mindset sees opportunities, the silver lining on the clouds. Your mindset is key.

So the next time you find yourself bemoaning your finances, remember that phrase, “I’m not poor, I’m just broke.”

I wanted to leave you with this, money is not the key to happiness. But, I do believe that the more money you have, the easier it is to get the “key” made. When I was younger, I once told a man who was wealthy that “Money won’t bring him happiness?” He replied, “Either will the lack of money?” We were both right. How has being broke affected you and your family? It can be devastating, can’t it? Being broke means more stress, more physical illness, more bouts of depression, more anger, more worries, and more fears.

Yes, we’re all going to have some rain in our lives. That’s part of life, like it or not. But when you’ve got money, it’s easier to stay dry because you can afford to patch the roof or buy a new umbrella.

Remember, no matter what your income level, this advice is the same for everyone. Spend less than you bring in and invest in Assets and not liabilities.