How to Stop Being Poor.

I’ve been reading quite a bit about poverty lately.  Here I am only referring to poverty in first world countries where there is the capability to move into the middle class – not a war-torn West African nation or a country or one where a dictator or oligarchy are creating poverty by limiting choices.  When people do grow up in places where there is the opportunity to generate personal wealth through education and hard work, why do some people remain poor? 

Some people believe that poverty is a result of the conditions people find themselves in.  If you come from a poor family, or grow up in a poor neighborhood, or if you are from a single-parent home or black or hispanic, the odds are stacked too much against you to pull yourself out.  Others believe it is often caused by the individual and that most people could pull themselves out.  Both sides agree that people who stay poor make bad financial decisions.  The question is just whether it is poverty that makes people make the bad decisions or the bad decisions that make the poverty.

I’ve found from the things I’ve read and the people I’ve met that there is a difference between people who are poor and people who just don’t have money.  Most people spend a portion of their life with very little money, but for many this is just a stage of their lives.  Typically during college and when starting out in a first job, people need  to save every penny, eat very modest meals, and think every time before they jump in the car and use gas.  I’ve known a lot of people who had trouble coming up with $100 per month for rent in a shared apartment.  I’ve also seen people rent one room each of a house, including the living room and dining room, having only the kitchen and a bathroom as communal space.  Many people also start first jobs at minimum wage or even for no wage as interns.  These people normally work their way up, however, and join the ranks of the middle class.  Most will also tell you that they never felt poor – they were just doing what they needed to do to get started in life.  There are other people, however, who never make their way into the middle class.  Years later they are still just barely making it.

The difference comes down mainly to attitude and decisions.  One probably drives the other, in that a good attitude results in good decisions, while a bad attitude results in bad decisions.  Certainly a big reason for a good or a bad attitude is the environment in which you were raised and the environment in which you live as an adult.  People who live in environments where everyone around them are working to better themselves tend to have a good attitude and do the things needed to succeed.  Those who live in environments where everyone has given up tend to give up.  In fact, anyone doing things to better themselves in such an area will be the target of scorn and ridicule.  Few people grow up in a bad neighborhood, make enough money to move into the middle class or become wealthy, then stay in that bad neighborhood.

Is race a factor?  No and yes.  While there was certainly a lot of discrimination against blacks and other minorities fifty years ago, today most hiring manager would give preference to minorities when hiring. Admissions officers at colleges certainly don’t discriminate against blacks and Hispanics since those groups are almost always underrepresented on campuses.  The way that race is a factor is the belief system in some minority communities that racism will cause them not succeed.  “You can’t get a fair chance if you’re black, so why even try?”  It really just the same hopelessness that keeps all people in poverty, compounded with the additional burden of race, that drives the same bad decisions.  

That hopelessness builds on itself and becomes self-destructive for a community. People break things and deface everything with graffiti.  Children come to school with no intention of learning and disrupt things for everyone.  Parents dive into the escape of alcohol and drugs.  People move into perfectly functioning apartments and destroy them.  Gangs move in and no one does anything to stop it out of fear or hopelessness.

The first thing you need to do to get out of poverty is to change the attitude of hopelessness and defeat.  You are worth something.  You can make it.  There is no reason you can’t learn new skills and get a better paying job.  There is no reason you can’t learn and graduate high school, then have free college waiting for you because you are in poverty.  There is no reason you need to have a child when you are 17 or 18.  There is no reason you need to do drugs or alcohol, which will keep you from getting and keeping a job.  No one else can change your attitude for you, but there is no one out there keeping you in poverty.  Once you stop having that negative attitude of self-defeat, you are no longer poor. You just don’t have money yet.

If you are still in school, work hard to learn all that you can and get the grades needed to get into college. If it is clear that college isn’t for you, find a good trade and go to a trade school. Look for opportunities to train under a skilled craftsman. You can make more as a welder or an electrician than many people with college degrees. 

The next step is getting away from the people who are telling you that you can’t make it and start hanging around people who tell you that you can.  Get away from the big cities with their high cost of living and move to a suburb or small town where there are both jobs and affordable housing.  Get involved with a good church and get on church committees so you can meet others and start to make connections that can lead to better jobs.  Get involved in social and civic organizations.  Find people who are living the way you want to live, ask for advice, and start doing the things they do.

Next, stop doing the things that keep you poor like buying lottery tickets and smoking.  Perhaps the most important thing, do not have sex with anyone until you are married, and don’t marry someone who isn’t responsible and who won’t help you build a stable home. Having children early and trying to raise them as a single mother or father is a very difficult burden to overcome. You can’t complete your education and make those important first steps up the ladder if you have young children to take care of.   It is also very difficult to save anything if you are paying for day care and babysitters daily.

 Next, start doing things that people in the middle class do.  Work hard at your job and look for ways to learn new skills.  The more valuable you are at work, the more you can get paid.  If you can learn to supervise people, you can make more money.  If you can learn to run machinery or computer systems, you can make more money.    Be there early to your shift and get all of your work done and then some each day so that you’ll be the most valuable employee and won’t be affected by lay-offs and downsizing. Ask about training programs.  Ask middle managers and senior managers to mentor you.  Figure out what you can do to make more money for your employer in terms of customer service and skills you can learn since the more your boss makes, the more she can pay you.

 A final thing that derails those trying to get out of poverty is that little things like a broken car can result in the loss of a job or dropping out of school.  Manage your money well.  Find ways to save on food and other necessities.  Put away money and pay cash for things – never buy anything on credit.  Have cash in a bank account for when the car breaks down.  Have money for medical expenses when they arise.  Put away $50, or $20, or whatever you can manage from each paycheck.  See how you can cut your costs and then save the savings instead of spending it on something else.

 There is nothing stopping you from moving into the middle class.  You are important.  You are valuable.  Your life matters.

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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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