I grew up in East Africa in one of the poorest countries in the world. This is not to make anyone feel sorry, but to show that I’m familiar with this concept. I consider myself to be middle class: not poor nor rich. Back there, I thought everything was fine. When I got to the USA, I quickly realized that what was ok in Africa was not going to cut it here: life is way more expensive and a job doesn’t guarantee that you will stop leaving paycheck to paycheck.
I don’t want to discourage anyone who is having a hard time now but rather to encourage you to want more for yourself and loved ones. It is not your fault that everything, from groceries to rent, seems to get more expensive while your salary doesn’t seem to adjust. But it is your responsibility to do anything in your power to turn things around. I might take time, sacrifice, and even some tears, but with a concrete plan you can improve your financial state.
But how is it expensive to not have money? I can’t spend more if I don’t have it!
WRONG.
Not having enough money costs you money, time, energy, health, choice, etc.
Cost of Money
Because you don’t have money, you are more likely to borrow to cover your living expenses. Personal loans and credit card balance transfer add a huge burden to one’s ability to afford daily life.You pay interest on the funds you borrow. Interest is the additional cost you wouldn’t have to pay if you had your own money.
Cost of Choice
Because you don’t have money, you are more likely to take on job opportunities you are not really excited about. You don’t have a choice if you don’t have food on the table. We don’t always have a choice in life, but it’s imperative to have values and standards that you won’t compromise on.
Cost of Time
Because you don’t have money, you are more likely to spend all your time working trying to make end means. There is nothing wrong about hustling to make extra income for a season, but this should not be a lifelong journey. When you don’t have money, you sacrifice time with friends and family to work more. Relationships suffer.
Cost of Food
Because you don’t have money, you are more likely to eat junk food often. It’s not a secret to anyone that this is not the healthiest choice in the long run. Any medical condition that develops, as a result, will cost more to treat than it would have to prevent it.
Plus, you are not able to take advantage of bulk purchases offered in stores such as Costco. Buying wholesale saves money.
Cost of Health
Because you don’t have money, you are more likely to stress. This affects your mental health as well as your relationship with others. It can be draining to feel helpless. According to APA, 72% of American stress about money every month.
Cost of Ownership
Because you don’t have money, you are more likely not to buy a car. Unfortunately, public transportation costs a lot of time. You are not able to run as many errands in a day using public transportation.
Because you don’t have money, you are more likely not to buy a house. Mortgage interest can be at the lowest level, but you are not able to buy because you can afford a down payment. Renting costs more over time because you are not building any equity in the house.
Ownership is how people build wealth. You become rich by owning assets that generate income and value over a long period of time.
Conclusion
It is extremely hard to move from poverty to middle class mainly because of the environment. If poverty is all you have ever seen around you, it’s hard to imagine another way of living. But you can be the cycle breaker for your family (mindset is more powerful than hard work and you will need both).
Unfortunately, it’s not as difficult to move from middle class to poverty. A lot of people are one incident away from becoming poor. That’s why it is so important to save and build some financial security now (when you can) because you don’t know what tomorrow will bring. Ideally six months of leaving expenses would give you peace of mind but if you can do one year, go for it!
“Poverty often deprives a man of all spirit and virtue, it is hard for an empty bag to stand upright.” Benjamin Franklin
