When you are poor, things don’t just seem to be more expensive, they really are more expensive.
I spent most of my 20s living in state-provided housing with my wife and 2 children. When I couldn’t get work, there were periods that we spent living from welfare payment to welfare payment. Things were very tight.
Almost everything I needed to buy seemed expensive and financially out of reach. Only now that I have worked my way out of that situation, do I realize it wasn’t my imagination and that things were more expensive. I was in a poverty trap and that I didn’t even know existed.
Unknown to me, the extra expense was also costing my health, my job prospects, and even my education.
When you look at the following issues you may recognize some of them and you may even think some of them are trivial. However, like most financial things, things compound, and they soon mount up.
Buying Cheap Alternatives Costs More in The Long Run.
When you have little or no money, you have no choice other than to buy the cheapest items available to you.
This means buying lower-quality goods, that only last a fraction of the time of their more expensive counterparts. Ultimately, this means buying the lower-cost version more frequently. Eventually, you end up spending more on the lower quality, cheaper items, than if you bought the more expensive item.
This is explained very well by the late author Terry Pratchett in his Men at Arms book;
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”Terry Pratchett, Men at Arms: The Play
Grocery Shopping is Too Expensive
Shopping for groceries on a limited budget has its own budgetary challenges.
First, you are unlikely to benefit from the savings offered by shopping in bulk. Instead of buying large discounted family-sized packages, it forces you into buying the smaller more expensive packages.
Second, just getting to the shops can be an expensive endeavor. If you don’t have your own transport you either have to pay out for public transport or for home delivery. If you have to rely on public transport a “big” shop becomes almost impossible, so you have to make multiple trips on public transport.
Those that can’t afford public transport or home delivery are forced into shopping from local corner shops or gas stations. Items bought from these types of locations will cost much more than if they had been bought from a supermarket.
Credit and Other Financial Services are More Expensive
This is one of the more frustrating problems I kept coming up against. I would apply for credit and the response would be;
“We don’t think you can afford this credit, so we are going to charge you more for the credit.”
Let that sink in for a minute or two. The company thinks I’m likely to default on their credit, so they are going to make it harder for you not to default.
Having worked behind the scenes at some credit providers, I know their view is; you’re a higher risk and it is business sense to charge you more because of that. Which is a logic I can appreciate. It still stings when you are the one looking for credit, though.
This has a couple of other hidden impacts on your finances.
First, if you want to buy financial services, such as insurance, with monthly payments, you are in fact paying for it on credit. And as mentioned before, if you’re are poor and a bad credit risk, you will pay even more interest.
Second, if you are paying for your utilities (including mobile phone service) with any sort of prepayment facility, you are using a form of credit. While they won’t advertise any interest rates, they will hide extra charges for your high risk in their rates.
You will pay higher rates for your gas, water, electric, and phone calls than if you were on a traditional pay monthly/quarterly arrangement. It may also require you to pay an additional deposit that you wouldn’t need to pay on a traditional arrangement.
Transportation is Expensive
Just getting around can be an uphill financial struggle when you have little or no cash. You’re generally limited to three options;
- Public transport
- Old unreliable vehicles
- Walking or pushbike
Public transport is not just expensive, it can greatly limit your options in life. If like me, you live in the middle of nowhere, you might find public transport limits your employment opportunities. Public transport may not go where you work or operate at times you need (e.g. for night shifts).
Old unreliable vehicles will breakdown at the worst of times costing you more money or even worse your livelihood. I had a 20-year-old Mini that occasionally wouldn’t go in to reverse if it was facing downhill. Thanks to that little quirk I once got trapped at the bottom of a slope, unable to reverse out. By the time I found enough people to push me out, I had missed a job interview.
Your Health Has To Come Second
The most important area the lack of money impacts on is your health. This in turn had a direct impact on your ability to work reliably. A massive catch-22 problem when you have no money.
Having a lack of cash means you are impacting on your health in several ways, including;
- Not being able to afford a gym membership to maintain your health.
- Having to buy heavily processed food rather than fresh healthy food.
- Having to work multiple jobs to get by means you are wearing yourself out.
- Not being able to afford health insurance if you’re in a country that needs it.
This increases your chances of being ill and being unable to work. Especially when you get on in life.
If you are expecting me to have the magic bullet for all these problems, unfortunately, I don’t. And if that is the only reason you read this article; I apologize. I don’t even know how I got my family through those times.
I hope, if you’re finding money a struggle, making you aware of these challenges helps in some way. One thing I have discovered in life is; only when you are aware of what you are up against, can you fight back.
If you are really struggling and having to work out how you are going to pay for your next meal, get help. From personal experience, I know this is often easier to say than do. For many, including myself, seeking help first meant having to admit that I had failed in my duty of providing for my family. I fought this internal mental battle for nearly 10 years.
In reality, not facing my problems and seeking help was what was failing my family.
If you are facing these challenges, I wish you luck and my thoughts are with you.