Being poor is not just about earning less money, it’s also about having low savings. Poor and middle-class people often overspend and then dig into their small savings to make up for it, leaving them with virtually no savings. This makes it difficult to invest in education, start a business or make any other long-term investments that can improve their financial situation. To break the cycle of poverty, it’s important to focus on building savings through income growth, spending habits, and financial literacy. Without savings, unexpected expenses can have a devastating impact on a person’s financial stability.
Why Do Some People Remain Poor?
Lower savings is the reason why poor people continue to stay poor. Low saving is common among poor and middle class people. First we overspend, and then to make up for these overspending’s we dig deeper into our whatever small savings. The result is, we are left with virtually zero savings.
This is a vicious cycle that traps people in poverty. Without savings, it’s difficult to invest in education, start a business, or make any other long-term investments that can improve one’s financial situation. When emergencies arise, people without savings are forced to take out loans or go into debt, further exacerbating their financial problems.
So, why do some people struggle to save money while others are able to accumulate wealth? There are a few factors at play:
It’s much easier to save money when you have a higher income. People who earn more are able to put more money into savings and investments, and they’re less likely to be affected by unexpected expenses. On the other hand, people who earn less are often living paycheck to paycheck, making it difficult to set aside any money for savings.
People who overspend are unlikely to have much money left over for savings. This is particularly true for people who live beyond their means, taking on debt to pay for things they can’t afford. To break this cycle, it’s important to create a budget and stick to it. This can be challenging, but it’s essential for building savings and avoiding debt.
Many people simply don’t know how to save money effectively. They may not understand the importance of saving, or they may not know how to create a budget or invest their money. Financial literacy is an essential skill for anyone who wants to build wealth, and it’s something that can be learned through education and practice.
Lower savings is a major factor in why some people remain poor. Without savings, it’s difficult to invest in education, start a business, or make any other long-term investments that can improve one’s financial situation. To break the cycle of poverty, it’s important to focus on building savings through income growth, spending habits, and financial literacy.
By taking these steps, anyone can improve their financial situation and create a better future for themselves and their families. It’s not always easy, but with determination and hard work, it’s possible to break free from the cycle of poverty and achieve financial success.
References for « Why do some people remain poor? »
- « The Psychology of Poverty » by Sendhil Mullainathan and Eldar Shafir
- « The Vicious Cycle of Social Exclusion and Poverty: A Review of Research and Policy Recommendations » by Chantal Zaouche Gaudron and Katja Hujo
- « Why are poverty rates so high among black Americans? » by Richard V. Reeves and Edward Rodrigue
- World Social Report 2020: Inequality in a Rapidly Changing World
- « Random Family: Love, Drugs, Trouble, and Coming of Age in the Bronx » by Adrian Nicole LeBlanc
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