Does being poor give you a better understanding of the value of money?

[greentea]

Do you think that those who were poor at some point in their life have a better understanding of the value of money? Does being poor at some point give a perspective that those who have always had money can't understand?

[disneysteve]

I think it really depends on the individual. I know poor people who are very wasteful and I know rich people who totally get it, appreciate everything they have, and do a lot to help those who are less fortunate. I don't think you must be poor to understand poverty.

[hamchan]

Absolutely. You realize how quickly small problems can have a domino effect and turn into larger problems. Here's an example:

Get sick or injured (major enough to require medical care, but not disabling). Miss a week of work, and no sick pay. Cannot afford health insurance so medical bills are very high, or you have insurance but the deductible and coinsurance is still too much. But right now your priority is to have enough to eat and pay the rent. Your lost pay leaves you short on being able to pay rent so you get a payday loan you can't really pay back. You get trapped in a cycle of taking out more loans and paying more in fees. The medical bills go to collections and are reported on your credit. Your credit takes a nosedive. You spend a few months barely staying afloat, maybe you finally pay off the payday loan, but have not been able to save any money. You blow the engine in your car. You don't have money or credit to repair or replace it. Your job requires you to be there outside of the times the bus is running. You lose your job because you can't get to work. You fall more and more behind on rent and still no working vehicle. You get evicted and your landlord sues you for back rent and for breaking the lease.

So maybe you find someone kind enough to allow you to live with them until you find a job, and you gradually begin to scrape your life back together. You owe thousands of dollars in medical bills, judgements, and various other things you could not pay while unemployed, but your host's goodwill has expired and you need to get your own place again, requiring deposits, and you have to replace everything because you could not afford to store it. Maybe a year or two later you are actually doing ok, and starting to put a little money aside, and starting to get those bills paid off. Then you wake up one day to find your bank account has been seized, and rent is due in 3 days. Your credit is still crap, so you have to take out another payday loan to avoid getting evicted again. You could file for bankruptcy, but it will cost you over $1000 and you have nothing. Maybe you don't even make that much in a month's time.

This kind of poverty is extremely difficult to escape from.

[ua_guy]

I'd say the understanding of the value of money exists independently from having wealth or a lack thereof.

[bjl584]

I think it's unrelated.

It depends on a individual's attitude and approach toward life and finances.

[Destind4]

I can speak from personal experience and say that it definitely does. I was dead broke back in 2012. I was in a very dark place in my life, I was laid off of two jobs in the same year, I couldn't seem to find the light at the end of the tunnel. I remember telling myself that I would never be broke again.

[dawnwes]

It depends on the person, just as it is with anyone managing their finances.

[Drake3287]

I think for many of us (me!) it comes from how our parents valued money. I came from a large family that never had any extra money for fancy vacations or nice cars and such. Just a normal Beaver Cleaver type family.

I've done much better financially then my parents but I still follow their basic financial principles. That's why some of us have money while others don't.

[Reggie]

Nope!! I know families that have been poor for generations not learning a thing about the value of money.

[MonkeyMama]

I'd say no correlation.

I know a number of people who grew up poor and live as adults like they were born with a silver spoon. They had no financial education and mistakenly believed that material things and being in debt up to their eyeballs would make them happy. Throw in an unhealthy fear of frugality, which would make it hard to save.

On the flip side, my friends with wealthier parents have more financial sense than anyone I know. My two bffs did not have to buy their first car or pay for their education, they received trust funds, etc. There is no one else I relate to on a financial level, though I put myself through college and my parents never handed me anything. (I moved out completely on my own financially when I Was 18). But we relate because we all had exceptional financial educations and are on the same path financially. The money they have been given is not a prerequisite to their success. They had the know-how to get their regardless.

I don't think either is a rule of thumb but is just a lot of what I have seen. Individual personality, attitude, personal experience and financial education will be a lot of it. In our family there is a pretty prevalent savers gene. I don't know if any amount of outside influence would change that.

[hamchan]

Just to clarify my response, I think your childhood has little to do with it. What you experience as an adult does.

[JoeP]

The value of money is more pronounced when you have to go without an essential due to its lack.

Some live paycheck to paycheck. If a payroll company is late issuing checks or making deposits, the people who depend upon that money being there Thursday morning to buy food or prescriptions that day may find its absence very critical.

Even those who are not poor and don't have to worry about those situation may end up short on retirement funds if they didn't understand the value of money during their younger years.

[elessar78]

There's a lot of factors to poverty. Some of it self imposed and some of it beyond one's control.

If it's the self-imposed type, then no. I think the poor realize the value of money, but don't understand how to make it work for you (and not be controlled by the lack of it). To be fair, there are many high-income individuals and families who don't know either—they just have more of it to burn through.

[bmatthews]

There's a lot of factors to poverty. Some of it self imposed and some of it beyond one's control.

If it's the self-imposed type, then no. I think the poor realize the value of money, but don't understand how to make it work for you (and not be controlled by the lack of it). To be fair, there are many high-income individuals and families who don't know either—they just have more of it to burn through.

This, pretty much. I think the vast majority of people who are not wealthy almost certainly do understand the value of having money and the despair of not having it.

However, this understanding can become perverted to a point where people lose the ability to take risks with their money when opportunities arise. Which is something virtually all self-made entrepreneurs have been able to do.