The Unexpected Reason Why It’s Easier for the Rich to Save and Harder for the Poor

unexpected reason easier for the rich to save and harder for the poor to save

That feeling when you see a low-income person with nicer stuff than you

My mother had heard that some kids at our church couldn’t afford new clothes. She asked me to help her pick out some clothes to give to them. This was the 90s so we went to the typical teenager stores of the time – Old Navy, Guess, Calvin Klein, Ralph Lauren, Tommy Hilfiger.

When she gave them the clothes, I noticed that they discarded the Old Navy duds but were quite excited about the name-brand items. The name brand items weren’t better looking but they were emblazoned with the brand name (this was the 90s when that was the style). I thought this was peculiar because new clothes are new clothes. I proudly wore (and still wear) clothing from Walmart and would have been grateful for the gift.

Similarly, when I visited a child for whom I was performing pro bono services, I couldn’t help but notice that she was wearing a Helly Hansen coat. That coat was probably more expensive than the one I was wearing, as her attorney.

Something similar happened when I was talking to a woman I mentor at an event for our mentees. Nearby was a child of another mentee decked out in a shiny rose gold shirt with matching rose gold accessories, including cat ears, hair trinkets and shoes. I definitely never had such nice things when I was a kid, and I’m sure my parents earned at least quadruple the income that hers did.

The Confidence of the Middle Class

When I was younger, I didn’t quite understand the dichotomy. When you don’t have anything shouldn’t you be grateful for anything? Why spend a lot on clothes, particularly children’s clothes, when you are worried about the rent, the electric, the car, etc.? Shouldn’t these families learn to be minimalist and frugal?

But sometime after seeing my mom donate those clothes, something clicked for me. Yes, I was wearing cheap hand-me-down clothes. But I also never had to worry about where I was sleeping for the night. I never had to worry about where my next meal would come from.

Most importantly, I never had to worry about someone accusing me of being poor.

My family wasn’t rich, in absolute terms or in comparison with the people in my middle-class public school, but we were safe – both in terms of living in a safe neighborhood but also in terms of social status. I could “afford” to wear cheap clothes because I had confidence that if someone even joked about me being poor, my classmates could vouch for my living in their neighborhood in a suitably sized house.

Why the Poor Have Nice Stuff

If I were poor, I’m sure being called poor would be absolutely terrifying. I wouldn’t have the self-confidence of a middle-income person. I wouldn’t have people who could vouch for the size of my house or the white collar-ness of my parents’ jobs.  Because of this anxiety, I’m sure I would change my lifestyle so I would never fear being accused of being poor. I would wear nicer clothes, eat fancier meals, drive a nice car. I would do these things not because it made mathematical sense, but because, I would want to avoid anyone second-guessing my social class, and thus, subtly second-guessing my worth. (I’m not saying a person’s worth is dependent on their social class, or that it should be that way – I’m just saying that many people feel this way).

I can remember talking to a friend who had grown up poor that it was a pretty common occurrence to see someone with nice new shoes. Everyone around him was poor, so it never made economical sense. But I think most of us can remember a time when they had something someone else wanted – and it felt great. Or when we were able to give our kids or loved ones something that they really wanted – and it felt great. We are all guilty of giving into our emotions over our head – and the poor are no different. There’s something about having something shiny and new that can make someone feel better about themselves, their lives, and give them hope for the future. It doesn’t make logical sense, but it makes emotional sense. And if something resonates emotionally, that doesn’t mean it’s necessarily false or valueless. In small doses, a tiny purchase can bolster us – even as in large doses, they can ruin us.

You try to keep up appearances by buying nice things to bolster your own self esteem. Maybe you can barely afford rent but no one needs to know that. The very last straw isn’t homelessness or even when others stop believing in you. The last straw is when you can’t believe in yourself. And if you can’t have the stable life, you can at least look the part, to others and to yourself.

A Poverty Mindset

This mindset isn’t only held by the poor. You can grow up at any income level and still have a chip on your shoulder. There are people who grew up far richer than me that might identify with it. But it’s a mindset that is easier to overcome as a rich person than as a poor person. It’s a simple matter of looking around and being grateful for having the roof over your head. It’s much easier to be confident when you have some constants in your life.

When a rich person says that he could pull himself up by his bootstraps if he had a reduced income, he may be right. To be more specific, he is right that he may have the skills, health, education, connections and confidence that if he were put in a situation with low income, he could lift himself up by his very own bootstraps. He could visualize where he was before and say, well I got there once and I believe in myself to get there again.

But the poor aren’t “rich people pretending to be poor.” The poor are the way they are.

When people point at the poor and say, why do you have the newest iPhone or the big SUV when I, as a rich person, have a flip phone and take the bus, this is part of the reason why. It’s not that the poor are secretly not poor. They very much are. In fact, they are acting in ways that very much show that they’re poor, though perhaps not monetarily. They are poor of mindset. And that can be harder to fix than a cash flow problem. They may very well not believe that they can get out of their situation so the thinking may go, I might as well have my fun now. You may not have hope, but at least you have an Xbox.

The Unexpected Reason Why I’ts Harder for The Poor to Save

When people say, the poor shouldn’t care what other people think, that’s a fallacy too. The rich don’t need to care what people think of them. The rich can insulate themselves from people they don’t want to have around; the poor cannot. The poor have to see social workers, teachers, school administrators, government workers, neighbors and family because they rely on all these people to survive. So the poor have more people judging them than the rich. Thus, the poor have more people they want to and need to view them positively. In fact, the poor likely get a lot more bang for their buck by spending extravagantly on appearances.

Additionally, being rich drastically changes how you’re viewed even without spending any money. For instance, I can be frugal because I have so many indicators to show that I’m wealthy. When people come to visit, they don’t care that my furniture is secondhand Ikea because my apartment is in a neighborhood where the median home values are $1 million.  They don’t notice the lack of TV, because I have a laptop laying around that costs over $1000. When I say I don’t have a car, the understanding is that I choose not to, not because I can’t – because everyone knows I’m a lawyer and I make bank.

Similarly, when I say my clothes are several years old, low-priced and sourced from ignoble locales like Payless and Walmart, it doesn’t affect others’ views of me because I’m young, thin, pretty and rich so my humble clothes seem more expensive when I wear them. Everything seems more expensive in my life because of me. It’s actually a waste for me to spend on more expensive things because I will get compliments whether my dress is from Target or Gucci.

The Dirty Secrets of the Rich

No one wants to wear Mark Zuckerberg’s clothes, but they want to be as rich as Zuckerberg and then be free to wear whatever they want. The people who get away with wearing junky things are the rich.

The purpose of expensive things is so people will think you’re rich. If you’re already rich, you don’t need people to think anything of you. People will come to you if you’re rich. If you’re poor, you still need to prove yourself to get a job, friends, connections, business partners, etc. The irony is that the Gucci works best for those that can’t afford it.

The dirty secret to being frugal is not caring what people think. The secret to not caring what people think is being rich.

If you don’t have these indicators of wealth, it’s a lot less likely that being frugal seems like a worthy goal. Having the junky items I have just makes you look poor, and no one wants to look poor without secretly being rich.


49 thoughts on “The Unexpected Reason Why It’s Easier for the Rich to Save and Harder for the Poor

  1. I like your perspective, and I’m pondering the idea that that poor people don’t want to be seen as poor.

    Previously I’ve assumed it was the trappings of bad financial habits that poorer people buy top end items.

    1. I assume some of the poor may also have bad financial habits but I’m also sure no one wants to be seen as poor. People don’t assume good things about the poor anymore.

  2. “You may not have hope, but at least you have an xBox”

    That’s a great line and an interesting perspective. I grew up in Baltimore lower middle class, but surrounded by many poor families. We used to say they were ‘overcompensating’ when they bought things they shouldn’t. They wanted to show they weren’t poor.

  3. Nice work! It really is perfecting the art of not giving a shit. It took a long time for me, growing up poor, to learn to have the confidence and swagger to not care. I have the oldest car at my office and I’m the boss, does anyone say anything? No, because I have a line of people who volunteer to work for me!

    1. True, that’s the answer to all of life’s problems – resist peer pressure! Harder to do than say though. I’m glad you’re walking the talk.

    1. Thank you! It IS really hard to find people with similar mindsets. There’s been some talk on the Twitterverse for hooking FI singles up (not saying you’re single but it probably works for marrieds too).

      1. Where is the FI hookup Twitter chats happening? 😀 Are their prerequesites or self defined? 😀

  4. With all the conversation flying around twitter these days, this is such an important post. It’s so much easier not to care what people think when you can say what you’re doing is a purposeful choice, not a result of your surroundings.

    1. I totally agree. I find that the wealthier I get, the less I care about frugality, and that’s a choice only the rich get to make.

  5. Having been on both sides, I can say this is very accurate! Growing up poor, I always had this desire to one up my friends with clothes, shoes, video games, and, yes, my Walkman. Now I understand that we were all just competing to see who could LOOK the least poor.

    At this stage of life, I couldn’t care less about any of it. I wear jeans, a v-neck, and converse almost daily because I know what I have and I’m comfortable where I am. Great job on this!

    1. Ahh this was mostly a theory but I’m glad you validated it. I think it just makes sense that the wealthier you get, the less you need to care about those things.

  6. It’s complicated, yes!
    Projecting why other people do what they do is fraught with misunderstandings and lots of potential wrong turns.
    Wearing designer or name brand clothes is a form of “signaling” and very few poor people want to be seen as such. Or so I think.
    Once we attain a certain state of mind, whoever designed our clothes become less important to us. So frugal-minded people have their own form of signaling.

    On the other hand there is the theory that “frugality is for rich people”. There are no TV commercials urging us to wear downmarket clothes in order to show we don’t care about name brands. Flashy new things are what TV programming is made for. So that is what is the brainwashing that occurs from advertising.

    1. I think your concept of signaling is dead on. We are sending signals through what we buy and the poor want to signal that they’re rich and the rich want to signal that they’re frugal/wise.

  7. Love everything about this article. It is so on point and really shines a light on an issue that so few can/want to discuss. Part of the (amazing) human spirit is that we never want to be seen as vulnerable. Unfortunately, that pride/self-defense mechanism can have deleterious effects. I am hoping that your words will leave an impression on many others. Thanks for posting!

    1. I definitely agree that the desire to shield ourselves from vulnerability makes us human – but can wreak havoc on our finances. Understanding this concept is so important. Thanks for stopping by!

  8. This may all be true, but the problem remains….what can we do about it? No easy answers, but we sure do need some!

    1. I think the personal advice needs to focus on the emotions behind money rather than the math. That’s not necessarily specific to the poor but I think people forget that the mindset of becoming rich comes more naturally to some than others. Thanks for stopping by!

  9. This is why I find the “deserving / worthy poor” so harmful – it encourages people to adopt that “can’t look poor” mindset because how do you prove that you’re worthy? Without obviously being old or infirm, it’s hard to show worthiness at a glance so the next best thing is to not look poor so you won’t be mistaken for an undeserving poor person and treated accordingly.

    As a society, we are not kind to people who don’t have as much as us, almost as if ostracizing them will insulate us from experiencing the same circumstances.

    I was lucky enough not to care that I was wearing hand me downs, homemade, or yard sale clothes well into junior high. Junior high was the first time I learned to shop for clothes in a store, in fact! I started caring mostly because nothing ever fit me and I became aware of looking like a clothes hanger with oversized clothes but lacking a sense of fashion for a long time really helped the whole frugality thing.

    The biggest reason I didn’t have to care about whether I looked poor or not was because I looked like a great target for bullying (tiny person) and could beat the crap out of bullies. After that no one dared say boo to me because they worried about my tiny fists of justice way more than they wanted to have fun at my expense. Win win.

  10. Great post! I would add another layer – having grown up poor myself, a huge element of poverty and the despair it breeds is shame. Shame for not being born in the right family, shame in not knowing the “classy” way of behaving, shame of not knowing how to express yourself and go after what you want in a way that others approve of, shame at not having access to food, housing, clothing, etc. that others take for granted, shame for not knowing whether the future holds anything valuable for you.

    Buying above one’s means is sometimes about having even a few moments of not feeling shame and despair.

    It’s only possible to develop habits to rise above “being poor” if you are lucky enough to be exposed to more stable, established folks then yourself and go through with the hard, hard struggle of behavior change.

    1. What a great post, and the comments are so insightful. I remember poor kids wearing Air Jordan’s when they came out, coming to understand that the shoes represented the “one nice thing” they owned and how much that mattered.

      I am reminded of that idea that taking all a rich girl’s money away doesn’t make her a poor girl. Nor does giving a boatload of $ to a poor girl make her rich. Many factors go into the level of wealth or poverty a person settles at.

      1. The comments have been really great. Air Jordans are no joke though even if you’re rich. And yes, there’s something different between class and wealth.

  11. I thought your article was spot on, about how and why people buy the things they buy, and believe in the value of things, measured up to the perception of how other people judge them.
    In this respect, you cannot but be correct on how the poor ‘value’ expensive brands / things more, because that is how they project themselves as not being poor. At least visually.

    Thanks for the article; it made lots of sense to my understanding and confusion on why people behave and act they way they do, when it made no sense at all objectively (eg; buying a brand new S9+ when I know for a fact he’s really stretched on a few basic necessities)
    (And to emphasize your point, I really couldn’t give a damn what others think of my ‘ancient’ S6+ which I got 2nd hand.. 😀 )

    Thank you

    1. Well it’s good not to care what others think, to a certain extent. I’ve gotten a lot of positive feedback from the article – it’s really more of a hypothesis but it resonates with a lot of people. Thanks for stopping by!

  12. Really insightful, being poor in America means you have a giant TV and smart phone. In other countries it means not eating or having a tarp for a roof…
    Also, social media has made “looking” the part an incredibly important part of being a young adult or maybe just an adult(?). It’s a strange new world out there.

    1. There are plenty of affordable gadgets and fashion and not that much affordable housing so I think a lot of it tends to make sense. Thanks for reading!

  13. This was beautiful. Thank you for writing it! And I totally get you because I’ve experienced and noticed the stuff you’ve mentioned. My friends who had money pretty much wore the cheaper looking clothes, whereas my friends with less money always somehow seemed to be buying expensive things to show off. My parents loved buying brand names items to show off when we were poor immigrants scraping by. And now, having worked our way to upper middle class, they barely buy brands and stopped showing off. It’s intersting how this works because, not trying to over simplify or generalize, it really does seen that it’s easier for the rich to stay rich and the poor to stay poor. Though from a biophysics standpoint, we just need that jolt of energy to overcome the “money” energy state we’re currently in. Get the call rolling in the right momentum.

    1. I think I’ve had the same experience in that as my family has achieved more wealth, we care less about looking the part. Now we just try to get my dad not to wear his hawaiian shirts too often. =D

  14. “They are poor of mindset. And that can be harder to fix than a cash flow problem. They may very well not believe that they can get out of their situation so the thinking may go, I might as well have my fun now. You may not have hope, but at least you have an xBox.” I really like your ideas here. I grew up poor but would you believe I didn’t know it? We lived in a tiny old house with 7 people and my mom held out on giving me a Kmart jacket until Christmas one year because that was my main gift (I froze during Oct and Nov and Dec, not knowing she had it). In high school I wanted Guess jeans (1980s) but obviously my folks weren’t buying them. So I got a job and bought them. My parents were bootstrapping and are wildly successful now but they never felt ashamed or less than, no matter how little money they had during their journey. They passed that encouraging attitude on to me. The saddest thing is that being poor used to be fully respectable and poor people had dignity. Now I encounter people with the attitude you describe (and worse) too often. Too bad our school system no longer teaches kids about the immigrants who came to the US with nothing and worked to become crazy rich despite what people today would call disadvantages.

    1. I think the poor are viewed differently now, and it’s a shame. America is all about strivers, or at least used to be.

      I think kids generally have no idea what situation their parents are in. I thought we were poor but we were probably lower to middle middle class. Kids have no clue!

  15. Wow, what an eye opening perspective. I’ve never thought of it as a privilege to not care what others think, but I suppose it really is. Thanks for thinking outside the box and being willing to tackle tough, nuanced subjects.

  16. Well said, so very well said. Thank you for deep diving into some of the truths that make income inequality more than just a money issue.

  17. I have never thought of it that way, thank you for sharing this perspective. This is explains why the more I have, save and invest the less stuff I want to buy.

    Do you blog anonymouslly?

    1. True – I’ve found that progression with more saving as we earn more as well.

      I blog semi-anonymously.

  18. very well said overall, i like your sociological approach to this rich vs poor mindset article which is not the usual angle

  19. A little late on the comment bandwagon but this is an awesome write up. I never really broke it down this way mentally. I always just figured people wanted to live above their means and are caught in consumerism. While that may be still the case, I definitely can see wanting to not be part of a social “class” such as the poor.

    I guess I was the same way in college subconsciously. I shopped at mall brand stores and swooned over fancy cars even though I would go into hoards of debt. This was just to give the image I was not a poor college student now that I think about it. I wanted to be like the “successful” guys.

Leave a Reply