Poverty and bad debt can feel like a never-ending cycle. The weight of financial insecurity can lead to stress, anxiety, and even depression. However, it’s important to remember that it’s possible to break out of this cycle with the right mindset and habits.
I was there too when I lost my job, had no income and also got into bad debt but I was able to get through that particular season of my life. I strongly believe my situation changed because I shifted my mindset. You too can adapt these 5 mindset shifts in your life and change whatever financial crisis you may be going through.
So let’s get into exactly how I was able to shift my mindset and get out of poverty and bad debt.
The first mindset shift that had to happen was coming to a place of acceptance of my situation as it was. No running, hiding, lying or avoiding how things were. I had to face my situation and accept that was where I was.
All of us deal with things differently. I have found that coming to a place of acceptance is more of a powerful move and one that could generate results for you than when you are in denial about your particular situation.
When I lost my job, one of the things that I was very tempted to do was just not talk about it. I actually remember hiding myself in the house and aggressively applying for jobs with the hope that I would get one before people knew that I was jobless. It was just a period of my life where I was feeling a lot of shame and guilt for losing the job even though it was not my fault.
One major thing I realized is that once you accept your situation, you’re able to move forward. You’re able to come up with solutions pretty fast than when you’re still assuming that this is not your situation.
Once I got to a place of accepting that indeed I had lost my job and I had no savings, I started the solutions journey.
One of the solutions I came up with was to ask for my pension money. I went back to my former employer and asked for part of my personal pension contribution for the three and a half years I had worked for the company. That’s how broke I was, that I had to liquidate my pension. Since I was already living below my means, the amount I got was able to sustain me for a while. I could now plan my next steps since now my day-to-day bills were sorted.
You need to accept the situation you are in, whether it is that you don’t have an emergency fund, you do not have a job or you’re so deep in debt, you have to accept it and move on to solutions on how you can get to where you desire.
2. Realize that no one is coming to save you.
This is a harsh truth that you need to understand. It is very tough to accept this but it is the reality. It is a common narrative where relatives ask graduates to send their documents and they’ll help in looking for a job but this never happens.
After losing my job, I also called every connection I had in search of a job. It was very demoralizing when someone would tell me they’ll get back to me in a week or so and they wouldn’t. Only to find out that they forgot all about my CV.
Going through this process made me realize that indeed no one was coming to save me from my financial crisis.
I had to shift my mindset from depending on my uncles and the government to help me get a job. I quickly realized that the world does not owe me anything. Just because I had a degree, I was smart and I had three years of working experience no one owed me a job.
Understanding that no one was coming to save me put me in a mental state where I could show up for myself and stop the pity party.
Being in this realization humbled me. I didn’t have the luxury to be picky with jobs. As long as it was legal and morally okay with my values, I would do it.
I remember some people wondering why I was doing freelance writing yet I had a degree in economics. This didn’t dishearten me since I had accepted my situation and I was done pitying myself.
When you’re focused on justifying why everyone else is doing well and you’re not, you will never show up for yourself as you should. You must realize that no one is coming to save you. It is up to you to get up, do the research and choose a path that will get you to where you want to be financially.
3. Understand that budgeting is not for the rich only.
Before I learned about budgeting and started appreciating its place in getting me to financial freedom, I used to think that budgeting is something just rich people do.
This is such a faulty mindset. Budgeting is for everyone regardless of how much you earn.
I started understanding what budgeting is and what it is not. This started by unlearning that budgeting is a list of my bills and that it is restrictive. I realized that having such a mindset was stopping me from achieving my financial goals.
Once I started budgeting for the little money I’d make, I started realizing that what I was making was not enough. One thing I did was cut off some expenses. For instance, I stopped doing my nails and started doing my hair at home. I slashed out all things that were not necessities from my budget.
Budgeting will probably make you realize that you don’t earn as much as you think or that you don’t have enough money. There’s absolutely nothing wrong with that. This may help push you to either make some drastic lifestyle changes or to want to increase your sources of income.
If you don’t know how to budget or you’ve never done a budget before probably because you believe this is not for you, I’ve got you.
Get this Budgeting-done-for-you Excel sheet that you can use to plan for your bills, savings, investments, projects, debts and even entertainment for only Ksh. 750.
You can also sign up for this 3-hour self-paced budgeting masterclass where I take you step-by-step through how you can get started and how budgeting can work for you regardless of your financial situation.
If you get the masterclass, you do not have to get the budget tracker, it comes as a complimentary.
4. Develop a wealthy person mindset.
Another mindset shift that I had to go through was changing my mind from a scarcity mindset to that of a wealthy person. Having grown up in a poor environment, there are some money habits that I had that were like second nature to me. I didn’t even realize it.
The first thing I did was ask myself, ‘What do wealthy people do?’ I then started exposing myself to this information. I read finance books and listened to finance gurus. Some of the things I learnt from this is that wealthy people plan strategically. They don’t just save for the sake of it. They invest their money by putting it where it will earn interest and grow.
Wealthy people invest in knowledge and in networks. Most of them are willing to pay crazy amounts to gain the knowledge they need to get ahead.
That is when I started learning about how to invest and I started planning my money strategically.
Doing this changed my mindset which in turn changed my behaviour and my habits and overall my life changed.
When you start exposing yourself and start desiring a wealthy person’s mindset, the way you think and the way you behave changes. You need to start exposing yourself to such information even before you have the money.
Changing your mindset to an abundance mindset will help you get out of poverty and debt and will eventually make you wealthy.
5. Know your financial freedom numbers.
Majority of us wish to get that job, get that raise or get that amount of money but we don’t even know how much it would take to achieve that financial freedom. You need to know your numbers and not work with abstract figures.
For instance, what would it take to get out of debt? You need to know exactly how much debt you currently have and note it down. Then write down exactly how much you would need to have to be out of this particular debt. Then start working towards this. For instance, if you have a debt of 300K, your goal could be to pay 100K by the end of this year.
Another scenario, is when you wish to get that well-paying job. What does that mean for you? Is it 50K, 200K? You need to have the exact figure in mind.
I’ve found that once you put figures of what it takes to achieve your financial goals, it is easier to set up a plan to achieve them.
These are the main 5 mindset shifts that got me out of poverty and bad debt and I believe if you’re in the same situation, they can work for you too.
Poverty and bad debt can be challenging to overcome, but it’s not impossible. By adopting a few mindset shifts, you can start to take control of your financial situation and improve your overall well-being. Remember to focus on your goals, take responsibility for your actions, develop a growth mindset, practice gratitude, and learn to live within your means. With these changes in mindset, you can begin to create positive habits and make progress towards a brighter financial future. So take action today and start on the path towards a life of financial stability and freedom.