People Who Have Experienced Poverty Share What Most People Don't Understand About Being Poor (34 Answers)

Sam, the founder of the Financial Samurai blog, shared with Bored Panda that the key to financial freedom is building passive income streams so that we aren't "overly dependent" on the income from our day jobs. "The more passive investment income streams you have, the better. Starting with stocks or funds that generate dividends is the easiest for most investors because you can open up a brokerage account and buy just one share. Then you can invest in Real Estate Investment Trusts (REITs) and private REITs as well," he explained.

According to the expert, the key is consistency and building up your investments slowly, over time. Sam warned us that buying and selling cryptocurrencies won't generate any income because "it is more of a speculative play." Despite how lucrative it might all sound, it's still a risk. You'll find the expert's ranking of the best passive investments right over here.

Sam told Bored Panda that after doing an analysis of Credit Suisse's annual Global Wealth Report, he came to the conclusion that building wealth requires four things: belief, grit, time, and community. "Roughly 35% of Financial Samurai's readership are millionaires compared to only 6.5% of America's population. Therefore, learning as much about your personal finances as possible and interacting with a community are very important," he said that the information we absorb and the communities (both digital and real) that we surround ourselves with are vital to our long-term success.

"Instead of just reading a book, I'd subscribe to your favorite personal finance site for free that's continuously writing about new ways to build wealth. Get involved with people who are continuously taking action to build more wealth," he suggested how we can all further our education in the world of finance.

Meanwhile, in my previous interview with Sam, he explained that the lack of financial education is the biggest barrier for people to rise out of poverty and become rich. And if you are stuck financially, your priorities always have to be food and then shelter.

“We learn things like chemistry, geology, and English in high school and college, but there are no mandatory courses on personal finance. For example, if more people thoroughly understood their mortgage contracts before signing, the housing crisis between 2008 – 2010 may not have been as deep,” he told Bored Panda earlier.

“In another example, if more people knew they could negotiate a severance instead of quit with nothing, more people would have a more comfortable financial runway to take their time and find a new job or start a new business that is truly meaningful to them. The more people are empowered with financial knowledge, the better financial decisions they can make to ultimately live the lives they desire.”

According to financial expert Sam, saving money is a powerful tool at your disposal. But the amount you save has to be sufficient. “One of the key mantras I tell my readers is this: If the amount of money you’re saving each month doesn’t hurt, you’re not saving enough! Too many people go through life, paying no attention to their finances. Then they wake up 10, 15, 20 years from now and wonder where all their money went,” he said.

“Always pay yourself first. By paying yourself first after each paycheck, and making it hurt a little to change your spendy ways, only then will you know whether you are saving enough,” Sam urged others to look at saving seriously.

Sam pointed out that large families have various strategies that help them save money, even though they have more mouths to feed. “Use hand-me-down clothing and shoes for all children with occasional aesthetic adjustments between boys and girls if desired. Buy food in bulk. Send kids to a preschool co-op where they require parental involvement usually once a week.”

The expert continued: “Send your kids to public school and forget about the ridiculous cost of private school tuition. Enjoy the free parks and libraries. Have kids share rooms to save on buying a larger house. But the two most important things are having one parent who works to help subsidize healthcare costs and avoiding private schools.”