Here Are 5 Money Traps I Know To Avoid

If you come from a disadvantaged background, that doesn’t mean you didn’t learn crucial financial skills that will help you later in life.

For example, anyone who has grown up poor knows to steer clear of money traps such as overspending on frivolous things. But there are other important lessons they have learned as well.

Discover More: 6 Reasons the Poor Stay Poor and Middle Class Doesn’t Become Wealthy

Learn More: 3 Genius Things All Wealthy People Do With Their Money

GOBankingRates spoke to Daniel Meursing, CEO and founder of Premier Staff, about how his childhood has helped him successfully avoid financial blunders.

Also see Dave Ramsey’s top money traps to avoid.

Wealthy people know the best money secrets. Learn how to copy them.

From Clipping Coupons to Attending Star-Studded Events

“Have you ever wondered how someone goes from clipping coupons to coordinating events for A-list celebrities?” Meursing said.

“Picture this: A kid growing up on food stamps, watching his single mom work three jobs just to keep the lights on. Fast forward a couple of decades, and that same kid is rubbing elbows with the likes of Justin Bieber and Lady Gaga at star-studded events.

“Sounds like a Hollywood script, right? But that’s my life story, and along the way, I’ve learned a thing or two about avoiding the money traps that keep so many stuck in the cycle of poverty.”

Find Out: What the Upper Middle Class Makes in Different US Cities

Meursing said he remembers the day he realized he was no longer poor.

“I chuckle, thinking back to my first big payday as the founder of Premier Staff,” he said. “I stood in the grocery store, staring at the name-brand cereal, and for the first time in my life, I didn’t have to do mental math to see if I could afford it. That’s when it hit me: I had made it. But I also knew that if I wasn’t careful, I could lose it all just as quickly.”

Money Trap: The ‘I Deserve It’ Mentality

“When you grow up with nothing, it’s easy to fall into the trap of overspending once you start making money. I call this the ‘I deserve it’ mentality, and it’s a slippery slope,” Meursing said.

After landing his first big contract, he thought about going on a “spending spree.”

“But then I remembered all those times I watched my mom choose between paying the electric bill and buying new shoes for school. That memory kept me grounded.

“Instead of splurging, I reinvested that money back into the business. That decision allowed [my company] to grow rapidly, and soon we were working with clients like Ferrari, Louis Vuitton and even staffing events for Will Smith’s family.”

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Money Trap: Ignoring the Importance of Financial Education

Meursing pointed out that “growing up poor often means growing up financially illiterate.”

“When I started making real money, I realized I had no idea how to manage it,” he said. “I was like a kid in a candy store, but instead of candy, it was stocks, bonds and real estate. I knew I needed to educate myself fast or I’d end up back where I started.

“I invested time and money in financial education, attending seminars, reading books and even hiring a financial advisor. This knowledge has been crucial in growing and maintaining my wealth.”

Money Trap: The Allure of Get-Rich-Quick Schemes

Meursing noted that when you’re poor, the idea of overnight riches is intoxicating.

“I’ve seen too many people fall for pyramid schemes, risky investments or gambling, hoping to shortcut their way to wealth,” he said. “I once had a friend who blew his entire savings on a ‘guaranteed’ investment scheme. He ended up worse off than when he started. That’s when I realized that slow and steady really does win the race.”

Money Trap: Neglecting To Build a Safety Net

Meursing said growing up poor typically means you are merely in survival mode, living paycheck to paycheck. But he added that breaking this cycle is crucial for long-term financial stability.

“One of the first things I did when [my company] started turning a profit was to build an emergency fund,” he explained. “It might seem counterintuitive when you’re trying to grow a business, but having that safety net has allowed us to take calculated risks without fear of losing everything.”

Money Trap: Forgetting Where You Came From

Meursing said, “Perhaps the biggest trap of all is forgetting your roots once you achieve success. It’s easy to get caught up in the glitz and glamor, especially in an industry like ours where we’re constantly surrounded by luxury and excess.”

He recounted an event where he overheard someone complaining about the “cheap” champagne. He said, “I had to bite my tongue to stop from telling them about the times when a cold beer was a luxury in my household.

“That moment reminded me of how far I’d come — and how important it is to stay grounded.”

Lessons Learned

Meursing said one of his biggest lessons “on this journey from food stamps to Fortune 500 events” is that “financial success is as much about mindset as it is about money management.”

For anyone looking to break the cycle of poverty, he advised the following:

• Invest in yourself. “Education — whether formal or self-taught — is the best investment you can make. It’s the one thing no one can ever take away from you.”

• Live below your means. “Just because you can afford something doesn’t mean you should buy it. The gap between what you earn and what you spend is where wealth is built.”

• Surround yourself with success. “When you’re poor, it’s hard to think beyond your next meal. But planning for the future is crucial. Start small if you have to, but start. Your network is your net worth. Seek out mentors and peers who inspire you to grow.”

• Give back once you’ve reached the top. “Success means nothing if you’re not using it to lift others up. That’s why we prioritize working with charitable events and organizations whenever possible.”

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This article originally appeared on GOBankingRates.com: I Grew Up Poor: Here Are 5 Money Traps I Know To Avoid