I’ve been on both ends of the spectrum. Growing up we never wanted for anything and I got almost anything I wanted. We spent freely without really thinking about it. When I was 16, my grandmother who up to that point had taken care of my mother and me suffered a massive stroke and ended up in a nursing home. She had the majority of our income and at that point all of her income went to the nursing home and her medical care. My mother had a meager income and a spending problem. She never knew how to manage money and up to this point had always used credit cards to live a life beyond our means and just pay it off later. I basically went through a crash course on life and money. I really had no concept of money growing up and suddenly we had the utilities shut off over and over again, faced eviction and couldn’t keep groceries in the house. By the time I was 19, my credit was already a mess. Not because I got credit cards to go shopping (I didn’t) but because it was the natural result of trying to scrape by when we couldn’t make enough money to make ends meet. I worked multiple jobs as soon as I was able to and all of my money went to bills.
Over the last 10 years, I have struggled to build myself and my family up in such a way that we no longer had to live like that. We started out not at the bottom, but already below ground and had to dig and climb our way out.
After many years of working to better ourselves, increasing our income and finally finding the key to make our business profitable, we moved to California. We began planning a year in advance to make the move. We worked our butts off to make enough money to get out here. We weathered several set backs along the way and finally came up with enough to put a deposit and pay a month up front on a place before even heading out this way. Despite all of this, we ended up homeless 6 days after our arrival in Los Angeles due to no fault of our own. More info on that here. We are still working on getting out of that situation now and that is part of why I am writing this. We have income, we are not giving up and we have managed to avoid the streets so far even if we haven’t managed to find a place willing to rent to us: Contrary to what many think: Being homeless is expensive, more expensive than being housed especially if you keep working to get yourself out of that situation rather than giving up.
I’ve given a lot of thought to this recently because of our current predicament. I’ve always believed very strongly that anyone can find a way to better themselves, climb out of poverty and build a better life. However, I can’t help but acknowledge that for those who start out with wealthier families, it’s an easier path. I’ve had talks with friends over the years and many more times lately who have never had to experience poverty growing up or in starting their lives. Many of them express the same sentiment “I don’t have money, my parents do.” While this is indicative that their parents are doing what they can to teach them the value of money and to work for themselves, that doesn’t mean that these kids have to work just as hard to get ahead or stay afloat as their poor background peers.
There are 2 main reasons that those who come from a wealthy background have an advantage over those who come from a background of poverty. First, Those that come from a wealthier background tend to have some level of a safety net of support (even if their parents don’t pay their bills). Second, they tend to have better attitudes about money and wealth building than their poorer counterparts because their parents inevitably have better attitudes about money than the poor parents do. Robert Kiyosaki has made a killing on his book Rich Dad/Poor Dad which explains exactly this (and teaches people that didn’t have wealthy parents growing up how to think about money in a better way).
On the first thing, let me explain more fully using a situation that I have witnessed happen to several people of both backgrounds.
As a young adult supporting yourself though employment, you’re single and probably scraping by with little extra on an entry level income. If you blow a tire on the side of the road, assuming you have a stable history, it’s probably not a big deal. You might have a jack and spare or donut and you limp home or to a tire shop and get a new tire. You might even call AAA, or your parents to come help depending on your situation. It’s not going to ruin your life.
If you come from a low income background and your tire blows on the side of the highway it could send your life up in flames. It’s often a luxury for those of a low income background to be able to afford enough extra in their budget to pay for contingency items like a spare tire, or donut or even AAA membership. Often times when people are struggling to pay their utilities and going without food for the day to make sure the power stays on, it’s just not an option. Survival for the next day is just more important than planning for worst case scenarios or things that might happened that haven’t yet. If you don’t have the money in your budget for a spare tire (I know for many years I didn’t, I didn’t even have car insurance a lot BECAUSE it came down to paying insurance or gas to get to work and work meant that I had a roof over my head because if I lost that too, I had no family to turn to that I could move in with as a worst case scenario, this is reality for a lot of people) then you can’t afford to have your car towed either and it gets impounded because you left in on the highway. If you are like a lot of low income people, you live in areas that have poor access to public transportation so even if you can continue going to work it might be 6 months down the road before you can afford to get a new tire on that vehicle or you might need to take out a payday loan and start that vicious cycle of each paycheck being gone before you get it and paying extremely high interest on your own money each week. If you can’t afford to get a tire right away and the car does get impounded (has happened to me) then you will probably owe the impound lot more than $2000 after only the first 2 weeks. That’s likely more than you paid for the car in the first place and far more than its worth. It’s also likely around the time you get paid next and have any remote chance of affording to fix it and it’s already too late. Now you have to figure out how to keep getting to your job without transportation and on top of that figure out what windfall might come your way so that you can get another cheap car. I’ve known many individuals who have to wait until tax time to replace their vehicles and have lost jobs, kids, and watched their lives go up in flames over expenses that could be easily afforded if someone in their lives could have loaned them $50-100.
It’s more common than you think.