Poverty is expensive and to be poor is a perpetual high-wire act.
If you don’t have a refrigerator or a microwave or perhaps kitchen utensils, you’ll find yourself falling back on convenience-store food or eating out which is not only costly but also nutritionally deficient.
Say you are equipped to prepare meals at home, you’ll pay more for food in the long run as it is cheaper to buy food items and groceries in bulk but you cannot afford to do that.
If you need a loan, you will end up paying an interest rate many times higher than what a more affluent borrower would be charged.
If you’re poor and lucky enough to have a car, a time comes and you need new car tyres, that’s a lot of money to drop at once so you put it off for as long as possible. But having bad car tyres causes other damage to your car costing you more money. Now you need new tyres and new brake pads.
You feel sick but you can’t afford to go to a doctor to get checked so you let it go for as long as you can until it becomes worse and now the treatment is going to end up costing you more money than that doctor visit was going to.
You want to buy a new shoe for work. The expensive one will last 3 years but you can’t afford it. The cheap one is a third of the price but will only last for a few months so over three years you end up spending more money on shoes than an affluent man.
The list of possible scenarios is endless.
Even the environment attacks poor people.
In January 2010, a 7.0 magnitude earthquake struck Haiti and killed circa 200k people. An equally forceful earthquake hit New Zealand in the same year. No deaths occurred in New Zealand. The difference? Poverty. (Safe shelter actually but you get the point)
In 2004, the Indian Ocean tsunami killed 230k people. All of them were resident in poor and middle income countries. In 2011, a similar event struck high-income Japan. The waves were 30-feet taller. The number of people who died? 19k. Again, poverty was the difference. (Again, safe shelter. Most of the affected people in poor countries lived in precarious housing conditions)
No amount of financial literacy training can make up for an income that is impossibly low. A broken side-mirror could creep up on you, you may experience a sudden illness, your laptop could crash unexplainably. Years of personal finance training cannot prepare one for such exigencies nor is budgeting advice from someone who has never had to survive on two cups of rice for 10 days. No matter how much you budget, you’re always going to be out of pocket and advocating for increased savings is not a way out of this loop.
It is impossible to save one’s way out of poverty as you cannot give what you do not have. Saving your way out of poverty has proved to be practically impossible as savings is directly proportional to one’s income level. This can only be achieved either by increasing your streams of income or aggressively upscaling your skills and charging a premium.
Poverty causes people to live on the sidelines, abundant in scarcity. It is a disaster. The flow-on effects of this financial strain is that it causes people to be short-term thinkers and under-resourced. You’re only able to look a few days ahead or when your next payday is in order to make things stretch out. There’s the constant anxiety of not being able to pay your bills, it affects your relationships and limits all your life choices (even your choice of a life partner). At some point, it transcends from being a lack of money to a lack of hope because you can’t do anything about it.
