Top Ten Reasons You'll Die Poor (And How to Fix Them!)

Through out my career, I’ve seen far too many people, even those upwards of 60 years old, with nothing left—no retirement, no savings, no assets, nothing. Yet, many are unknowingly following the same path. Here are ten common financial traps that can guarantee you’ll die poor if you're not careful—and tips on how to avoid them.

1. Financing Cars

Buying a new car feels great, but financing one is a wealth destroyer. Cars can easily be the number one reason people stay poor. They rapidly depreciate in value, and financing turns a depreciating asset into a long-term financial burden.

Instead, buy affordable, reliable used cars and pay cash whenever possible. I know cars can be expensive these days, so it’s important to stay within your means. If you need to finance a car, I completely understand. Try to follow these tips to avoid further financial ruin:

• Put down as much as you can—aim for at least 25%.

• Try to finance within 36–48 months. This usually gets you a better interest rate and helps ensure you stay in positive equity while paying off the vehicle faster.

• Keep the monthly payment to no more than 10%–15% of your monthly income. Any more than that, and you should consider putting more money down or choosing a different vehicle.

2. Credit Cards

Credit cards can be convenient, but they also trap you in debt with high-interest rates. Continuously carrying a balance is a fast track to poverty.

Pay off your balance monthly and limit credit card use to necessary expenses. I know the temptations credit cards bring. If you find that you cannot restrain yourself, you might be better off without them. Credit is useful, but that usefulness disappears fast when you’re drowning in interest and monthly payments. Don’t let the lure of credit keep you from making smart decisions—it’s okay if credit cards just aren’t for you.

3. Financing Things You Don't Need

From furniture to electronics, financing purchases you can't afford outright is a recipe for financial disaster. Stick to buying items within your means, and avoid taking on unnecessary debt.

For example, it’s better to get secondhand furniture and replace it over time when you can comfortably afford an upgrade. Don’t be afraid to be creative! If you can get a good deal on something like furniture, you can always spruce it up and have something unique that you put together with your own hands.

Point is—don’t be afraid to buy secondhand or wait for things to go on sale instead of financing things you don’t need. If it comes down to it, avoid buying it altogether. Your financial freedom is not worth paying interest because of an impulse.

4. Not Saving for Retirement

This is where I’ve become an expert over the years. I’ve seen too many people left to retire with almost nothing. Many people underestimate how much they'll need to retire comfortably. Failing to save early means missing out on the powerful effect of compound interest.

Start saving now—every little bit counts. Remember, in life there is always a sacrifice. Living lavishly now can sacrifice your ability to retire in the future. Living within your means and being money-savvy may sacrifice endless fun now, but it gives you a better chance at retiring with dignity.

5. Not Taking Advantage of Your 401(k) Plan at Work

If your employer offers a 401(k) match and you’re not taking advantage of it, you’re throwing away free money. Contribute at least enough to receive the full match—your future self will thank you.

I cannot stress enough how much money you are throwing away if you don’t! Not only is it free money, but it also compounds over time. For example, if you let $10,000 sit in your 401(k) and it grows at an average rate of 10%, in 30 years it will grow to around $174,494.02! Take advantage of the match and the power of compound growth. These two factors will be huge contributors to having enough money to retire.

6. Not Having a Financial Plan with Goals

When you’re sick, you go to a doctor. When you need legal help, you go to a lawyer. When you have a leaky pipe, you call a plumber. But what do we do when we have money problems? That’s right—most of us do nothing!

Without clear financial goals and a structured plan, it's easy to wander aimlessly and waste money. Create both short-term and long-term financial goals. These will guide your spending, saving, and investing habits.

Just like someone needing to lose weight might call a personal trainer, someone struggling financially should also seek guidance. Don’t be shy—there are plenty of resources out there that can help you.

7. Eating Out Too Much

Eating out frequently drains your wallet faster than you realize. Cooking at home not only saves money but also supports healthier eating habits. Budget for dining out and stick to it.

I’m not saying you can never go out and enjoy a nice meal, but keep it within reason. The average cost of eating out is $13–$20 per meal. A home-cooked meal, on the other hand, costs about $2–$5.

If you eat out three times a day for a week, that’s $273–$420 on eating out per week! Compare that to $42–$105 for eating at home per week. That’s a potential savings of $315 in one week, or $16,380 in one year. It’s still cheaper to eat at home, even with rising prices. There are tons of free YouTube channels with great recipes, so get inspired!

8. Neglecting Your Health

Ignoring your health can lead to severe medical issues, resulting in enormous healthcare expenses. Preventive care, regular exercise, and a balanced diet are investments in both your health and your financial future.

If you have the extra money, don’t be afraid to invest in a dietitian or a personal trainer. Just like financial investments grow over time, so does investing in yourself. In the end, you are your most valuable asset. There is nothing more worthwhile than spending money on your health.

9. Not Improving Your Skills or Learning New Valuable Skills

Spending leisure time only on entertainment instead of skill-building is a missed opportunity. Learning new skills or improving existing ones can significantly increase your earning potential.

With all the content available online, there are endless opportunities. Programs like Coursera (not sponsored) offer affordable courses and even certificates. These skills can help you move up in your current role or land a better-paying job.

10. Overspending on Entertainment

Going out or eating out occasionally is fine, but without a budget, entertainment can quickly become a financial drain. Set a realistic entertainment budget that aligns with your goals—and stick to it.

There are plenty of free or low-cost ways to have fun with friends and family. You can visit local attractions, go to parks, attend free museum days, or take a hike. Having a good time doesn’t have to mean spending a lot of money.

Final Thoughts

Avoiding poverty requires discipline, planning, and purpose in your financial habits. Identify your weak spots from this list, adjust your behavior, and start building wealth and financial security today.

It’s important to be mindful of how much money you have going out each month. Keep your liabilities low. Monthly subscriptions, financed items, and miscellaneous small payments may not seem like much individually—but they add up and can seriously hinder your ability to save.

The road may seem long and grim, but don’t be afraid to reach out for help. I’m here with Ervlop Financial, but no matter where you go, just get help. You got this!