Why the poor stay poor while rich people get richer? It’s ridiculous that the world is designed this way. And in addition, there’s a snowball effect where poor will keep getting poorer. Here’s one interesting take: our society has inadvertently (or advertently) created a “system” that keeps poor people that way.
When I was writing my post about financial advice for college students the other day, I wrote about free credit cards that they could utilize.
Well how does that work when you’re not a college student, but rather someone who is poor?
Why The Poor Stay Poor: Credit Card Fees
Let’s assume that you have a bad credit history, or no credit at all. Credit card companies may not be interested in doing business with you and if they do, you’ll more than likely only be qualified for a card with high interest rates and/or annual fees. When you’re poor, these additional obstacles are put in place by the “system” as a way to swipe more pennies to the dollar off your wallet.
Why The Poor Stay Poor: Bank Fees
Do you have a bank account? How often do you accidentally overdraft because you were trying to buy food? Or worse, how many don’t even have a bank account because of bad credit? Banks today also have tagged on fees that require you to either keep a minimum balance (probably difficult if you’re poor) or maintain a schedule monthly direct deposit. For many poor people, this is not easy.
Why The Poor Stay Poor: Costs of Earning a Paycheck
Because of this, they cannot afford to have a bank account. How do they get their checks cashed? They have to go to one of those locations where they pay someone to cash their check for them.
Why The Poor Stay Poor: Rent
Have bad credit? Unable to provide a proof of monthly income? It’s unlikely you’ll be able to find a decent apartment to live in. The landlords run credit checks on you before renting out their space and if you have bad credit, it will show up. If they decide to let you rent, it’s more than likely your deposit will be higher, usually one to two months worth of rent (at the very minimum). If you’re already have financial troubles, one to two months of rent in a lump sum payment may not be easily done.
Why The Poor Stay Poor: Transportation
So you try to make things better by securing a job. How is the public transportation system in your area? Chances are, the only company willing to hire you based off your credit history might not be the best job, but hey, you’ll take what you can get. Even if that means traveling across town via 3 different buses and then walking 10 blocks.
Eventually you save up enough to get a car. But no, you won’t be purchasing a brand new car, no way. You just need something to get your across town in one piece. So you have to go to one of those used car lots. And by used I mean REALLY used. This is Joe Schmoe’s Used Dealer Lot in one of those areas of town. Where the sales man is wearing a plaid suit and tries to sell you volcano insurance. They make their commissions preying on unsuspecting people and contribute to why the poor stay poor.
You end up buying the car. You drive it for a week and it hits the 210,000 mile mark. It breaks down. You need to get it fixed. But you’ve just spend all your cash on this car. What do you do? You end up charging it to your high interest rate credit card.
Or, you can take out that unsecured cash loan. For 100% APR!
Why The Poor Stay Poor: Kids
Let’s hope you don’t have kids.
When you are poor, it just seems that society keeps you that way. It’s extremely difficult to dig yourself out of the hole of truly being poor. Some people are born into this lifestyle and it’s very difficult to alter their way of life with financial education. For them, that is life and that’s how it works. For others, they may have been living a normal “American Dream”-ish lifestyle and poor financial decisions made them this way.
Why The Poor Stay Poor: Medical Bills
Can’t afford health insurance? Don’t worry, Obama passed the Affordable Care Act. Luckily when I was an independent contractor, I was able to afford the BRONZE package for only $2,000 per month in premiums! WTF? I looked at the Gold to see how much that cost, and it cost over $3,000. Yay for being sick. At this rate, a funeral is probably cheaper.
And when you’re this poor, you start to identify the things that everyone takes for granted. Clean water, bank accounts, credit cards, direct deposit, insurance.
When you’re this poor, the weight of the world is on you. It’s a cannibalistic society out there, where companies and businesses prey on the poor.
Even though this post is over 4 years old it is so relevant! I totally agree with the thought and the world that we live in is tough on the average class!
I never thought something like this ..It’s exact ..What happens in the society ..And this is not right ..But what to say to profit mongers .Nice post ☺️
I’ve been harping on this for years. People seem to think being poor is a choice, AND IT’S NOT. The way our country is set up, every choice you have is based on your financial situation, and there isn’t too much you can do to change that. Then they tell you “Just go to school or learn a trade”. And because of that, millions of millennials are in more financial debt than our parents EVER were.
Very interesting and true concepts. Thanks for sharing
Very interesting and true concepts. Thanks for sharing.
High interest on cards and high costs of rent are definitely correct for those who are struggling. I often wondered about the logic of charging a fee if a check bounces. It bounced because there was not enough money in the account. What makes the bank think an additional fee would help?
Very insightful posts and very true. A great topic! Keep enlightening .
As an educator, I can’t agree with you more. It is systemic and perpetual. The rich will always find away to make their schools and resources exclusive.
whenever my boyfriend and i talk politics, this is one of the topics that come up most often because it’s so true and so frustrating. with how things are going it seems like the middle class is disappearing and the rich keep getting richer while the poor keep getting poorer 🙁
Healthcare is a huge problem in the US as is making it affordable for everyone so I 100% agree with what you said on the ACA. These are all great points you make.
This post really is reality! The poor stay poor because they don’t have access to the resources that others in high socio economic classes do, and it continues a vicious cycle that gets tiny bandaids like gentrification, but no real remedies.
Certainly,…there are so many systems in place in our society to keep the rich and powerful in place while keeping the rest down. May we break down these barriers in the future to help bring everyone up to a better quality of life. Thanks for sharing.
my perspective is this: 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. We can always change our situation! but that’s only my belief!
Agreed, everyday I see poor people making bad financial choices. Actions and Habits play a big part.
This is definitely true in a lot of Countries, especially the USA. This is why so many people are choosing a digital nomad life so they can live in a Country where their little pay can go a lot further. Sad that we have to move to another Country to not live in poverty.
It’s interesting to see all of those points listed out. I knew about each of those things, but I had never thought of them as a whole before.
A lot of people especially oligarchs really capitalized on whatever resources including humans. If we continue using each others head for our own growth, then we’re doomed.
It makes it hard for the lower or middle class to get ahead. Many living paycheck to paycheck or not being able to make ends meet. The system is definitely broken.
This is so true. As an educator, I also see many former students from low-income families burdened with large college loans. Many, if not most, of them, do not finish college, and are stuck trying to pay back these loans while working low-paying jobs.
Yes! Our economy works for no one! Except the super rich. You’re absolutely right that our system is the problem!
This article is still so relevant and it’s heartbreaking in that fact. People often assume that poor people are lazy and it’s important to have perspective on each individual’s situation that brought them to where they are today and to have compassion and understanding for those people.
This is still so relevant and so sad that it’s still true. People often assume that poor people are lazy and worthless and that couldn’t be further from the truth. It’s important to have perspective and compassion for those affected.
If you’re already have financial troubles, one to two months of rent in a lump sum payment may not be easily done.
I am currently in this f’d up situation. My life is super rough at the moment and it’s after losing a job and learning my apartment termed my month to month situation. I’m a single parent and still working and have afflilate programs but not enough. Man it’s so messed up.