I used to date a chef, and while we were dating, I couldn’t help but notice all the charity work in his field. It seems that the culinary community is active and passionate in charities that support the eradication of hunger.
So, likewise, I think the personal finance community should be active and passionate in helping charities that eradicate poverty. (I’m just throwing that out there).
But if you’re going to help a charity, particularly for an issue that has been as well-trod as poverty, you have to have a theory about what efforts are going to work. Otherwise, how are you going to know which charities to support?
The statistics are grim. 70% of those born in the bottom quintile of income stay in that quintile for the rest of their lives. Pew did a survey to determine what separates the 30% who rise from the bottom to middle or even upper classes. What the 30% did differently was that they tended to:
- graduate from college;
- have a dual income family;
- not have extended unemployment;
- have savings; and
- be white.
There’s not much that we can do about the race issue (it makes me sad to see that stat) without knowing a bit more, and even then our resources are limited. BUT there seems to be quite a lot that the personal finance community can do to support some of the other areas.
Savings is a big one for the PF community, but it’s a surprising reason for mobility. Of course, if someone has a higher salary, they’re likely to have higher savings (so it’s not the having of higher savings but the higher salary that is ultimately causative), but as we all know in personal finance, higher income doesn’t necessarily mean higher, or any, savings. It could also be that those who are savers are more likely to know about personal finance and believe they can rise out of poverty (another confounding factor)
Though the above tendencies are correlations and not necessarily causative of mobility, the PF community certainly believes that savings can be a game changer. In the above article, the executive director of Doorways to Dreams, an organization based in Allston, MA, that encourages savings among lower-income people, says: “[Savings] can help a household successfully navigate financial emergencies, place a deposit on an apartment in a safer community, or help finance the cost of higher education.” Let’s hear it for emergency funds!
I think there’s a common misconception that hard work is what separates those who get out from poverty and those who do not. I’ve never thought that (and none of the above categories have to do with hard work). My parents came to this country with nothing and while they were lucky to have steady jobs, they didn’t kill themselves working. They were savvy with their money, which I believe to be the real game changer. Being savvy isn’t necessarily hard work (because not buying things is definitely less work than buying things). But I firmly believe that building savings is what helped them rise through the classes and I think it’s a strategy and a skill that may need to be taught and encouraged.
This post isn’t about negativity or blaming the poor. If you read my review of The Broken Ladder, I note that the poor are making perfectly rational and reasonable decisions considering where they are and what they’re taught, but they’re often not the right decisions to get ahead.
I’ve heard that there are two kinds of ways to help someone in a bad situation. The stereotypically female way is to sit with them and commiserate. “Wow that sucks. Let’s wallow a bit.” The stereotypically male way is to say “Get up. We need you.” One is not better than the other; we need both. If a kid gets hurt playing baseball, she needs someone to acknowledge her emotions, but she also needs to feel needed and important. She needs to be hear that her hurt is real but she also needs to learn that she has the strength to overcome her obstacles by herself.
I think we spend too much time explaining that it sucks to be poor and that we understand how hard it is. There’s actually a little bit of derision from saying things like “you can do this.” It’s the soft bigotry of low expectations. There is this mentality that the poor are very good people, they try very hard, do all the right things, but they are powerless – and it’s not as nice a mindset as people think it is. It’s this weird dichotomy in personal finance where all the blogs are about mastering your money and improving yourself, but when it comes to the poor, “Oh it’s ok. We don’t want to minimize your struggles so this doesn’t apply to you. Don’t try to get up; stay down.”
It’s thoroughly amazing that anyone gets out of poverty but I believe more can. Or at least, I think we should proceed as if we believed that more can get out of poverty. Otherwise, we can easily resign ourselves to doing nothing and changing nothing. Yes there are a million structural reasons why the poor stay poor. Yes it’s a complex issue. Yes, this is a drop in the bucket to fixing things – but it’s our drop in the bucket. And we are responsible for doing our part.
I tried to find some charities that can utilize all that collective personal finance knowledge we have in some of these areas. I realize that people can donate to charity, but any blog community can do that. The PF community can provide particular gusto in providing know-how when it comes to making and saving money.
Graduate from college/Deal with Unemployment/Dual Income Households
These are wonderful opportunities to be a good (financial) role model for at-risk youth. And sometimes I’ll meet people who clearly did not know what they were getting into when they signed up for higher education and I feel pretty bad about them. It’s a pretty scary thing to navigate without someone to guide you.
In the same way, a mentor could help with a resume, cover letter, interviewing tips, applying for unemployment insurance, support and networking for someone unemployed. A mentor can model a good relationship/strong marriage, which a lot of people who grow up poor are unfamiliar. Divorces and bad relationships are very expensive.
I’ve heard that food deserts are a huge problem for nutrition for the poor. But after reading Ruhlman’s book about grocery stores, I realize that if a grocery store thought produce would sell, it would stock it (it stands to reason). It’s not the lack of healthy foods in poorer neighborhoods; it’s the lack of education and interest in nutrition.
Groceryships is tackling the lack of education about nutrition and cooking, while also helping to pay for groceries and provide community support. This program is only in L.A. (where I don’t live) but if I could show people how to shop and cook on the cheap, I would love that.
Help a family break through the cycle of poverty by helping to pay an unexpected cost that threatens to derail their future.
You don’t have to be an accountant to help low-income families file their taxes. You use the same know-how that
Become a financial educator
[This is a link to a volunteer opportunity near me. But you can search the database for opportunities near you.]
My ex came from a lower-class background while my parents were middle class. I learned a lot of things from my parents that he was never taught probably because of the socioeconomic difference. My parents were tough negotiators while his mother learned to accept whatever she could get. My parents had more confidence, and were more likely to contest bank fees or walk away from a deal they didn’t want. Because of this, I really had to teach my ex to be pushier. Once he was overcharged $800 for an airplane ticket and I got on the phone and fixed it – he was just going to accept it. These are the kind of middle class skills that could really help someone with a lower class background get ahead.
Do what personal finance bloggers do best and talk about money!
Provide financial education to re-entry program.
This is a link for a Texas program, but there are likely programs in other states.
Help with a microloan program.
Some of these programs also offer business advice. Microloans help with entrepreneurship, which is such a big deal in the personal finance community.
Perhaps the place where personal finance bloggers can make the most difference is highlighting strategies for saving money directed at the lower classes. It’s Grocery Month at thegiveandget. I will, of course, tackle the $29/week food stamp challenge. It’s good that I have so few readers because there’s such controversy over it. Anyone who tries it is sure to get attacked for implying that it’s sufficient grocery money. I have no doubt that I will be able to complete the challenge (this is how much I usually spend on groceries without even trying to budget). Writing about actual hardship makes us all more creative and may be helpful to those who live with these actual constraints.
What other ways do you think the personal finance community can help the poor? Also, do you think it’s a responsibility of the community to do so?