Why It's More Expensive To Be Poor

It’s not just a matter of having less money. For many people below the poverty line, some goods and services can actually be MORE expensive. How can that be?

Two Cents on Twitter: @twocentspbs

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Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.

Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Andrew Matthews
Executive Producer: Amanda Fox
Produced by: Katie Graham
Edited & Animated by: Dano Johnson
Images by: Shutterstock
Music by: APM

SOURCES:

[justinmiller]

Again, should be required as part of high school education class.

[georgerivello]

I work as a doctor in a rural health clinic. Working closely with an underserved population. This is such an honest look at predatory business practices. I truly admire 2 cents for approaching this topic.

[digital_down]

The hardest jobs I have had in my life have paid the least, while the easiest have paid the most… maybe just my experience, but poverty for me always seemed to make make me work much much harder for much less money.

[purtnellus]

I'm reading a book called "$2.00 a day Living on almost nothing in America" and the stories in the book about the impoverished families from that book are just heartbreaking. This video really does shed light on the failing war on poverty.

[kosaragolemshinska]

Wish more people would understand this. When I was growing up, we were so poor I was malnourished and we regularly had to choose between food, a utility bill or a loan payment, so I hate it when I see people who have never struggled say things like "Just stop being poor" or "Poor people only have themselves to blame". Unbelievable.

[qxweiii]

Honestly, I've learned more watching YouTube videos than the actual education system

[Lilpeepever]

I lived in a Motel for a year and waisted $25, 000 because I wasn't making 3x the rent to get approved for an apartment. I finally found a room for rent but this video is 100% accurate. When your born into poverty you don't have many options. My mother was poor her mother was poor. It's hard to climb out of that when your own family doesn't know how to save money and lives paycheck to paycheck your whole life. That's all I know so it's not so easy to just get rich

[jasonl]

I used to have to live like this, and let me tell you, it's hard to escape poverty. When I did, It took me at least two years to recover financially. It sucks

[TitsMcGeester]

Shout out to all the low income parents doing all they can to give their kids the best life possible🧡

[TheNobleBard]

I've lived below the poverty line. When I was in college, I lived with three other guys and we all paid about $300 p/m for rent. Two to a room, scraped by with barely enough to eat. I now do much better for myself financially. What's really interesting is how the rules change in either direction. When you're very poor, the system essentially steps on your neck so you need to claw your way out (see the years of my life between 2015-2018 where every meal I bought for myself was from a discount grocer and consisted of mostly salt. Also, at one point I was sleeping in my car because I couldn't find a place I could afford to live.) You REALLY gotta work for it.

What's equally interesting is once you hit that threshold, it becomes INSANELY easy to avoid taxes and a bunch of new rules apply. E.g., I started a side hustle doing dogsitting. The money isn't very much, but it puts miles on my car so I can expense part of my car on my taxes. Since I use the car partly for business, I get to write off repair expenses. I had to fix my transmission to get to dogsitting appointments and that cost me about $6, 000. It became a write off. So that job that maybe pays me $100 became worth significantly more since it allows me to write off part of a transmission repair (depending on what percentage of the car is used for work). I can write off almost $30k in income between a 401k, a traditional IRA and an HSA.

Basically, the name of the game in America isn't "How much can I make?" It's "How much can I keep?"

[Casey-summer]

Since Biden took office, there seem to have been more unfavorable results in America. These results include effects on the markets, such as price declines and sharp increases in inflation, as well as bank failures. I wonder if the sudden increase in interest rates will help value investors or if it would be wiser to stay away from the stock and financial markets for the time being.

[StartledSloth]

The best analogy to describe poverty for me was starvation. People often look poor people and wonder why they just "throw away" their money on lottery tickets, scratch-offs, etc. But when you don't have the cash to support basic amenities for yourself, your perception is totally different. It's the same feeling you get if you've ever gone an entire day, or even half a day, without eating. After a while, your stomach hurts and all you can think about is food. You can't enjoy anything, you can't pay attention to anything, you just need to satisfy that hunger. Poverty is the same way, only with money. If you don't have it, you *constantly* feel the stress of not having it, and you'll do pretty much anything to satisfy that need for financial security.

[betsyconyers]

My parents opened a credit union account for me when I was 8 years old, encouraged me to get a job as soon as I could (age 16) & wouldn't let me get a loan for my first car. I had to pay in full (even working minimum wage part-time it only took about a year to save $4, 000 for a reliable used sedan since I was just a teen living at home with no real expenses). I left home with a used car that I fully owned & a bank account. I'm 27 now with a little family of my own. I've struggled at times but I always had a debit card & a car to get to the cheapest stores. I now realize those two things were the best things my parents did for me.

[RedMageGaming]

I’ve tried to explain this to people with even relatively modest incomes who aren’t rich, but aren’t struggling either, and it’s hard for people who are even just two missed paydays away from being in this situation to understand how tough it really is to claw out of it.

[Scarface_]

Watched my pops live this kind of vicious cycle after divorce, completely heartbreaking as a teenager to realize it was too big of a hole for him to dig himself out of in his 40s, then he died of cancer and the hospitals barely tried much because no insurance or money. I vowed to never let myself get in that trap, and today I am far away from poverty but I had to become so good at what I do and jump many different jobs in my industry and still drive many hours a week to keep this lifestyle. It sucks having the commute but I know the alternative is far worse.

[garycooper]

When I was a kid growing up poor, it seemed like my family was the only poor one in the city. Now that I'm an adult, I realize how many people were actually just living "for show"...

[mariawesley]

I'm so glad you also mentioned how time consuming being poor is.

[Michael-G-]

I’m probably in the upper end of the lower class scale. Not wealthy at all and have several financial troubles, but do have some wiggle room. Can only imagine what it’s like to live like that. Anyone who is experiencing this right now. Stay strong!

[Millixxxxxx]

I'm glad I didn't grow up in poverty. I always had enough to eat, my clothes were clean and I even had my own room in my family's home with a garden. So it really wasn't bad. However, I remember my parents struggling to pay our bills as they had to pay back the mortgage for the house. Because of that my sister and I didn't have fancy clothes, a trampoline or things like iPhones. We also ate out about 3 to 4 times a year as a family apart from vacation which, fortunately, my parents always saved money for. Every year we went to our neighbouring country Italy and spent 5 to 7 days on the beach. There, we ate out every evening which was always very special.

My parents did their best at getting us everything we wished for. They scraped every penny to pay school fees for me and my sister for us to receive an advanced level of education. Thanks to them my sister and I were both able to go to college and graduate.

I'm incredibly thankful for my parents' sacrifices. However, my childhood will forever be a reminder not to have children myself unless me and my partner can provide them a more or less carefree childhood. Because that's something my sister and I didn't fully have as we witnessed money troubles all our lifes until we finally got reasonably paid jobs ourselves.

[taylorb.]

Wow. This is your first video that made me sad. Still great content that most avoid talking about.