A few years ago, we ran a story on why poor people stay poor and we got a lot of criticism by people who told us that perhaps we are all born with different circumstances and that money isn’t everything. We, of all people, will be the first to tell you that money is certainly not everything but it does have its weight for the majority of the population, because money is ultimately a facilitator of happiness even if materialist things are not on your agenda. Today we are going to dig into the reason why poor people stay poor as it holds true to The Third Circle Theory.
If you have followed Secret Entourage, then you are no stranger to Third Circle Theory that has helped change the perspective of many accredited entrepreneurs worldwide. When thinking of why poor people stay poor, we must think of the argument that the Third Circle brings up between Habit vs Action. The essence of people not changing as explained in the book is primarily based upon the fact that the focus to change is driven through action, rather than habit. If you ever wondered by poor people make the same financial mistakes over and over despite knowing it is not helping them, it is because their habit has taught them to do that and therefore they cannot change how they are by adding one new action. As long as the habit exists in a negative fashion, the more it outweighs any positive action taking place.
A great example to analyze when deciphering habits vs actions is looking at workout videos and their marketing strategies. Workout DVD’s cater to the action piece, and not so much the habit, partly because any video that actually creates the change it promises only keeps you from buying the next one that comes out. So as a result, workout DVD’s cater to an action and its immediate result and often sound like “get the body you want in 20 min a day” instead of a very powerful and habitual message like ” become healthier in 20 min a day”. Every one of these DVD’s work and regardless of what type of workout you actually like, all of their routines are good and efficient but unfortunately cannot be sustained by the untrained mind, as doing a workout routine is an action that anyone can participate in but remaining consistent with it is much different and often not a mindset those buying the DVD have which is why they buy it to begin with. The person who buys the DVD doesn’t understand habits vs actions and is looking for a solution fixer, rather than examining the solution and understanding that the root of the problem is not their workout but rather their entire daily routine which is not healthy in nature or does not encompass exercising. As a result, they seek an action that fixes the problem, rather than look to change a habit which takes much longer and much more work to accomplish. This goes back to our segment about The Biggest Scam in the World.
This now leads us to the aspect of money and why poor people will continue to remain poor. Many will say that during tough economic times, the government should not have bailed out banks but rather given back to the people which as a result would have boosted the economy but that certainly would not have been the case. If the habit of poor people is to spend more than they have and to not understand and control their emotional dependance on money, then injecting them with more money is not going to help solve any problem other than further the problem itself. The reason why poor people remain poor is not because of their lack of knowledge around what to do, but rather their ability to execute on what they know consistently and make money making and saving, a habit rather than an action. Identifying that habit is the missing element is important as most people are in denial that habit is what drives change and not so much a simple action.
Next time you question why you are not financially where you need to be, simply start looking for habitual changes instead of single action fixes. Here is a good example to leave you with. Most people who don’t make enough money always look for more money making opportunities which is why they never actually make more money and also the reason many of those get rich quick online systems keep popping up. People just look for more ways to make money while either working their job or simply working additional jobs but never really pause to analyze their spending and how they are currently making money. So most would look for a better job, and or a side job instead of starting a business so that they eventually are out of the constant rat race, because starting a business takes time and effort and is not a quick fix. Someone who lives understanding the Third Circle will look at things differently as their vision has expanded from 3 to 10 years now and the benefits of long term planning simply looks much more attractive to them but there is also more to the equation since making money is often looked at as a gross figure by most. While that may be fine, there can be a lot of money between a gross and net number and understanding how to close that gap could leave you with the same amount as someone making 1.5 times what you make.
In conclusion, the reason why poor people stay poor is because they don’t understand how to differentiate action from habit and certainly not only do not understand how money functions within the system, which as a result makes them dependent on such systems, but also have no ability to disconnect their personal emotions from money. The sad part is that all of that can be fixed fairly quickly through the Third Circle Theory observations.