Does Your Circle Support You, or Pull You Down?

Look just at the financial situation of most college students and you’ll see about the same thing.  If they were not going to college, you would say that they were desperately poor.  They have incomes of less than $15,000 per year.  They have meager bank accounts.  They have few assets, except perhaps an old car.  They live two, three, or four in a small apartment or subdivided house.  They shop thrift stores or get free t-shirts from credit card companies.  They have meals of freeze-dried raman and pop-tarts, or perhaps have cereal for lunch and dinner some days.

With the exception of a few students from very wealthy families who have all expenses paid, new cars, and nice apartments, plus a job waiting for them in their parent’s company upon graduation, most students are basically destitute by the time they graduate and are ready to start their real adult lives.  In fact, children who come from poverty who do graduate college are usually in better financial shape than those who come from middle-class families.  The former have all tuition paid, where the latter must get student loans to pay tuition.  If both sets of students work a part-time job to pay for living expenses in school, the children from poor backgrounds can graduate debt-free where the children from middle-class backgrounds come out with $50,000 in debt or more.

And yet the students from middle-class backgrounds are likely to go to college, graduate, and then find a job that will allow them to buy a home and a car and enter the middle-class lifestyle, perhaps paying down their loans over a decade or two.  Those from impoverished backgrounds are not likely to enter college, or finish if they do.  If they do graduate, they are fairly likely to enter the middle-class lifestyle, although probably not in as great a percentage as their middle-class background peers.

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There are several theories on why this happens.  One is that the middle-class students, particularly if they’re white, have an inherent advantage.  They are “privileged,” with an unseen force pushing them along and allowing them to succeed.  Another is that the students from the impoverished background, especially if they are black or Hispanic, are hamstrung by racism and bias.  Despite affirmative action programs at both colleges and businesses, there is still this hidden force keeping them from succeeding.

But really, neither of these explanations holds water.  As shown in the introduction of this piece, financially both students start from the same place.  In fact, the student from the poor background has an advantage.  A student from a traditionally disadvantaged race has an even greater advantage since he/she would be preferred for admissions, scholarships, and hiring.  So what is the cause of the different results?  The answer really comes down to two factors:

  1.  Expectations
  2. Social support

Each of these factors probably shares an equal weight in the results.

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Expectations affect individual’s behavior.  Some individuals can overcome low expectations – in fact some people feel challenged when others expect them to fail.  Many others, however, either buy-in to others’ expectations about them or use them as an excuse not to try.  A child from a poor family on the wrong side of town is not expected to succeed, so no one pushes him to do his homework each night.  School is seen as a babysitting service and no effort is made to address poor quality classes or disruptive behaviors.  For a middle-class student, it is expected that he/she will complete homework and do reasonably well on tests.  Parents go to parent-teacher conferences and call the teachers if they feel class time is being wasted.  Many middle-class parents spend time each night helping with homework since they expect the student to learn the material and pass the test.  (Before painting the picture of the single working mom who works two jobs and therefore cannot help her children with homework, there is no indication that students from families where no one works do better either.)

Once a child from an impoverished background reaches college age, no one expects him/her to go to college.  No one demands that the student apply.  No one plans visits to colleges to see the campuses.  No one pushes the student to continue on since there is no expectation that he/she will do so.  A student from a middle-class family is expected to take the standardized tests, scout out several campuses, and apply to both dream and safety schools.  A middle-class student who decides not to go to college is met with a great deal of resistance.  One from an impoverished background is not.

Social Support

Some individuals will say that the support network of a middle-class student is part of his/her privilege and a contributor to his/her success.  Really, however, it is again really a lot more about expectations from the support network than support actually given.  Many middle-class students don’t get much financial support from their families and end up taking out student loans.  Likewise, they do not get a hot contact that allows them to land a great job or get an interview because of their family background or their skin color.  They do not get support in buying a house or a car.  They get all of these things through their own work.  The biggest thing they get from their support network is the expectation that they will do well and a constant reassurance that they can make it.  Their families are pushing them to succeed, as are their parent’s friends, their friends, and even individuals in their communities.

For impoverished students, their support network is often not a support network at all, but an anchor pulling them down.  Rather than having parents who are pushing them along, they may be expected to support their parents, physically or financially, even when they themselves are not able to really support themselves.  Parents may actually sabotage their children, demanding that they leave school or do things for them during the school week that keeps them from studying and attending class.  They are told constantly by parents, friends, and members of their community that they cannot succeed and that they should stop trying to be better than they are.

What is the solution?

Many of the situations from which impoverished children come are very difficult.  Parents may be addicted to substances or physically disabled.  There may be younger siblings struggling with hunger.  There may be abusive or extreme neglect in the home.  There may be the expectation that the student take care of the family and talk of college or trade school may be met with accusations and guilt.

All that I can say is that the same rules that make middle and upper-class children succeed work for the poor.  Getting an education, learning valuable skills, working hard and looking for opportunities to move up, being reliable, and saving and investing money are the keys to moving up in lifestyle and security.  If I were to find myself in the situation of many impoverished children, yet had the knowledge I have now, here is what I would do:

  1.  Get away from individuals who bring you down and find people who lift you up.  Find a good church or charities and spend time volunteering to meet the people who are giving people, since they tend to be the successful people.
  2. Put improving yourself first before family obligations.  While it may be possible to help your family by doing things like living at home but paying rent for your room and paying for your meals once you reach 18, realize that you need to be putting money away for your security.  Also realize that your family may be able to get more help from social programs if you are not living in the home since your income may count against them.
  3. Focus on education and training so that you can get better jobs with greater security.  Realize that you can better support your family and help them once you are on stable ground yourself, so don’t feel guilty for focusing on your education rather than trying to work low-wage jobs to support your family and siblings.
  4. Work to change your mindset.  Perhaps the hardest thing to overcome is all of the garbage you’ve been told since you were young.  Realize that success comes not from figuring out how to game the system, but from spending most of your waking hours tending to the needs of others in exchange for compensation.  Read books such as The Go-Giver, Expanded Edition: A Little Story About a Powerful Business Idea and 7 Habits of Highly Effective People.  Realize that you can succeed just like anyone else if you do the things that will make you successful.
  5. Build a better network.  Talk to people who are successful in your community and learn their mindset.  Throw out what you have been told about finances and work and fill your mind with information from successful people.

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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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