Why are some people poor?

Julia · 12 September 2006

Sultan of Swing said:
From a newbie....

Some of it comes down to 'delayed gratification' and lack of planning.

Some people have high incomes and spend it all thinking the income will last forever and others may have a far lower income but put a portion away for later 'just in case'.

Who's going to be better off in the long term.

Others just want and 'need' everything NOW! They think there's plenty of time later to 'save' for retirement or think the government will look after us cos 'We've always paid taxes and now they 'owe' us a pension'. (They never do the sums and work out that the little tax they've often paid would equate to just a few years of pension payments.)

Just my 2 cents

I agree, Sultan. Friends of mine are highly qualified professionals with a combined income of around $250,000 pa. They are in their 50's. They own their home but have no savings or super. This is because of just the point you make that they have always had lots of money coming in, no children to spend it on, so have just "spent it". Even the fact that they own their own home is no real credit to them - they inherited it when her parents died!

To me, it's absolutely incredible that people with such a capacity to be in the best financial position will probably end up being on a government age pension.

I guess if I had to narrow it down to a couple of factors, I'd go for role modelling and education. As a very small child, I was never allowed to spend all my pocket money. Half had to be saved and I had to have a defiinite goal towards which I was saving - perhaps buying a book. If your parents are good money managers, and as Tech points out, you are prepared to look for opportunities and take them, it's my bet you'll do OK financially.

Just to go back to my Couple A and Couple B discussed earlier. They had entirely different attitudes. Couple A made stuff happen. Couple B just sat back and let stuff happen. Comes down to taking responsibility for your own life and outcomes.

Unexpected sickness, though, can put a dent in anyone's plans.

Julia

The Mint Man · 12 September 2006

Julia said:
Looking around our society we see all levels of income and asset bases.

Why do you think some people never have any money while others on an apparently quite small income manage to achieve some assets?

Is it to do with our genes, the role modelling we receive while growing up,
our peer relationships, where we live, how much education we have had etc?

Or is it more a matter of attitude and ambition?

What other factors do you think come into our level of affluence?

Julia

I think that stupid decisions play a huge part for some peple that are poor.
For instance:
Having a baby to get $4000 = Stupid
There are so many more I could come up with but Im sure you get my drift.
Of course role modeling/how we are brang up, education to some extent and yes peer relationships plays a huge part in this.
I also find it amazing that so many people cant do something as simple as budgeting. I mean how hard is it? even someone that dosnt have a great education can see that, For example, Foxtel may be un-affordable if your income is $500pw but bills are $400 and shopping $100. simple math. But for some reason people insist on having/buying things they cant afford.

Hopefully some of these people will visit that website on 'understanding money' that the government set up.

Bloveld · 12 September 2006

The Mint Man said:
I think that stupid decisions play a huge part for some peple that are poor.
For instance:
Having a baby to get $4000 = Stupid
There are so many more I could come up with but Im sure you get my drift.
Of course role modeling/how we are brang up, education to some extent and yes peer relationships plays a huge part in this.
I also find it amazing that so many people cant do something as simple as budgeting. I mean how hard is it? even someone that dosnt have a great education can see that, For example, Foxtel may be un-affordable if your income is $500pw but bills are $400 and shopping $100. simple math. But for some reason people insist on having/buying things they cant afford.

Hopefully some of these people will visit that website on 'understanding money' that the government set up.

Brang up?
Jesus wept.
Pray tell us about your education and upbranging.

noirua · 20 September 2009

Julia said:
Looking around our society we see all levels of income and asset bases.

Why do you think some people never have any money while others on an apparently quite small income manage to achieve some assets?

Is it to do with our genes, the role modelling we receive while growing up,
our peer relationships, where we live, how much education we have had etc?

Or is it more a matter of attitude and ambition?

What other factors do you think come into our level of affluence?

Julia

For those amongst us, my self included, who will never be an entrepreneur and have never been left money or assets worth much; the willingness to take "RISKs", and on losing, somehow, get going again and take more and more risks. Not succeeding is due to not taking enough risks.

noirua · 20 September 2009

Julia said:
Looking around our society we see all levels of income and asset bases.

Why do you think some people never have any money while others on an apparently quite small income manage to achieve some assets?

Is it to do with our genes, the role modelling we receive while growing up,
our peer relationships, where we live, how much education we have had etc?

Or is it more a matter of attitude and ambition?

What other factors do you think come into our level of affluence?

Julia

For those amongst us, my self included, who will never be an entrepreneur and have never been left money or assets worth much; the willingness to take "RISKs", and on losing, somehow, get going again and take more and more risks - not succeeding is due to not taking enough risks.

*** Reply to post 3 years old.

dbcok · 20 September 2009

I dare say that if you were born aboriginal the chances of you being poor,by white persons' standards,are extremely high.

aaronphetamine · 20 September 2009

This is an absolutely excellent question to pose Julia, it's somewhat of a behavioural economists and demographers dream question to pose.

I'm under the presumption that life, is somewhat of a statistics play. Money, and obtaining vast swathes of money is arguably a zero sum game. So for someone to have lots of money, others can't have it. Now this is true to an extent becuase if everyone in the country had a million dollars none of us would be rich or well off. So straight away we know that in a given population in a perfectly capitalised market only a certain number of people will be able to become rich.

Other factors that I see alot from working in lending in a bank is that people, regardless of their income spend ALL of their money by next pay cheque. They live at their capacity and have little of no savings to cover them for unexpected events. They dont have the ability to accumulate savings and they beleive its their right to spend all their working money earnt so that they can recieve the aged pension when they retire.

I'm not under this train of thought though. I want to be self sufficient, and that involves saving and investing - compounding.

Basically some people are poor becuase they have absolutely atrocious money management, and an extra $10 in their account means that they have an extra $10 to spend by next pay day.

nioka · 20 September 2009

Reading posts on this subject I believe that a lot of people dont realise that you dont need money to be rich and having a lot of money doesnt necessarily make you rich.

Life is what you make of it. Sometimes money helps sometimes it is a hinderance,

Think about it !!!!!!!!!!!!

MrBurns · 20 September 2009

cogidubnus said:
My wife died last month and I am sad. You people are good to talk with Thank you

So sorry to hear that, life deals out some cruel lessons sometimes.
I wish you all the best.

MrBurns · 20 September 2009

Some people don't operate on the "money is important" level of thought , they have a different focus and are just not built to recognise opportunities and chase the dollar.

nioka · 20 September 2009

MrBurns said:
just not built to recognise opportunities and chase the dollar.

And some of us have been there ,done that and have found that recognising opportunities may mean "dont worry about chasing the dollar, there are better opportunities around that don't require you to run yourself raggad chasing the dollar.

If all one thinks about is getting money you may have run out of time on this earth by the time you think you have enough. Personally I have never met many people that "have enough" money.

jono1887 · 20 September 2009

laurie said:
It's this way because we have a system that rewards those that want to milk the system,those that work hard will be punished when retirement comes those that pissed their money on poker machines and drugs,grog,ect will be reward with a pension I have no problems with those that have a geniune need

cheers laurie

I think within the next decade, there will probably be no pension system. Or a very highly regulated one if it was to exist. Sure they will be awarded with a pension for wasting their money earlier on in life. But just talk to anyone who is trying to live on it. Its a miserable living that is barely considered survival. howver those people who have been prudent with their money are able to live far more comfortably even without a government pension with the income coming from their assets...

wayneL said:
One shouldn't underestimate the enourmous influense of luck in the aquiring of wealth.

I doubt that these things happen very often. The majority of people who acquire wealth generally do it from hard work, good ideas or inheritance...

wayneL said:
How's this for a story... bad timing, bad business, or bad luck?

I used to be in the furniture manufacturing game. One of my contemporaries was a Polish immigrant who came to OZ in the 60's and started a business making budget kitchen chairs in his father in law's garden shed.

The business grew over the years and in the mid eighties he was running a 50,000 sqft manufacturing plant in QLD... a big "small" business. He was doing very well, had the big house, latest high end merc etc etc.

The late 80's heralded in the previous housing boom which resulted in a big increase in demand for his product; he couldn't keep up with orders. So he decided to build on another 15,000 sqft of factory space, invest in more machinery, hire more people.

Well we all know what the late 80's early 90's heralded in too don't we? Those big interest rates and "the recession we had to have".

So just as he substantially increased his standing overhead, his sales dropped to below "pre" boom levels... catch 22.

He went BK, his wife left him etc.

He now lives in a humble home on the outskirts of Brisbane.. a broken man, and essentially "poor".

Bad timing, bad business, or bad luck?

Well he was naive to drown himself in debt during such a period. But then again, hindsight is wisdom : ... however, I do have an uncle that was a property developer in Brisbane during the 80s and 90s and ended up bankrupt when the boom crashed to a halt and he couldnt move any of his properties.

10 years later and he's far richer than he was before and is in the clothing manufacturing business exporting cheap clothing from china to Africa...
You can say it was bad timing or business... but resilience will get you back on your feet...

cogidubnus said:
I once owned a Milk Bar after my retirement, but kids used to pinch the lollies and break the milk bottles. After that I got fed up.

A shotgun filled with bean bags or rock salt should scare them off quite well....

Mofra · 21 September 2009

nioka said:
Reading posts on this subject I believe that a lot of people dont realise that you dont need money to be rich and having a lot of money doesnt necessarily make you rich.

Life is what you make of it. Sometimes money helps sometimes it is a hinderance,

Think about it !!!!!!!!!!!!

There was a news report on a study of the happiest countries in the world a few weeks ago. Despite being down on the GDP stakes, Puerto Rico came in at no 1. It has made the list of my holiday destinations over the next few years for that very reason.

alwaysLearning · 21 September 2009

Dr Stock said:
Some people never get a fair chance in the first place.

Stuff like getting sick at a young age, having parents that are disfunctional, all sorts of circumstances.

Totally agree with you. It's all about 'conditioning' and what you are exposed to.

888 · 21 September 2009

Julia said:
Looking around our society we see all levels of income and asset bases.

Why do you think some people never have any money while others on an apparently quite small income manage to achieve some assets?

Is it to do with our genes, the role modelling we receive while growing up,
our peer relationships, where we live, how much education we have had etc?

Or is it more a matter of attitude and ambition?

What other factors do you think come into our level of affluence?

Julia

I reckon everyone should read the book of Ecclesiastes at least once a year to put things to perspective. I first read it when I was 18 and think it's the best autobiography book ever.

RamonR · 22 September 2009

As mentioned earlier being able to delay gratification is a huge factor.

There was some study with children about getting two lollies if they could avoid touching the one in front of them.

The kids which were able to avoid gratification when followed up later in life where all much better of.

Stormin_Norman · 22 September 2009

RamonR said:
As mentioned earlier being able to delay gratification is a huge factor.

There was some study with children about getting two lollies if they could avoid touching the one in front of them.

The kids which were able to avoid gratification when followed up later in life where all much better of.

future focused people are more successful.

http://www.youtube.com/watch?v=bo4HiVetBd0

alwaysLearning · 22 September 2009

I think life sux. That's a sad story Julia

I think luck does play a part for sure. Or karma at least anyway (karma is not luck).

Julia said:
Thanks to all for thoughtful and interesting responses.

I have to agree that luck does play some part. Here's an example of two couples who are friends of mine:

Couple A: self funded retirees in their 50's. They married at around age 20, had three perfect children. She was a schoolteacher and he worked in the Public Service. They both had lifetime contributions to Super. They have both been really healthy all their lives and their children caused no problems, either physical or psychological. There are now grandchildren and all is happy and content. They have a beautiful home, travel overseas at least twice a year and within Australia another three or four times a year.

Couple B: Second marriage. Neither had much of an education and consequently didn't have high earning careers or Super. Any assets accrued during the respective first marriages disappeared in the break-up. The stress involved with both marital splits encouraged somewhat excessive use of alcohol and tobacco in both partners. They manage to get enough cash together for deposit on an old house. Large mortgage. They both get sick.
Jobs have to go. Both are on Disability Pensions. Difficulty in making the mortgage payments. More alcohol and more cigarettes. The house, being old, develops lots of problems. They can't afford to fix these. More despair.
She gets cancer. Local health system is overloaded so the cancer has spread through her body by the time she is evaluated. She dies six months later.

When all this happens with Couple B, Couple A (who know couple B), are critical and say that it's all their own fault because they haven't planned properly.

What do you think?

Julia

alwaysLearning · 22 September 2009

Stormin_Norman said:
future focused people are more successful.

http://www.youtube.com/watch?v=bo4HiVetBd0

Thanks for posting that. I forgot about those TED talks. They are usually awesome.

Glen48 · 22 September 2009

Passing grade 1 maths is a big help and knowing if some thing cost $10 and you only have $8 or $1 you don't have enough money.. Luck for some reason as well, my divorce cost us both about $1M each.. yet a mate who plays around is still married after 30 yrs. I saw a show were a Lotto winner gave his mate 20K to pay off his B/card and 5 mths later his card was back up to 20K again he came back for a second try and the winner told him no and lost a friend.

Why are some people poor?

Julia

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MrBurns

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nioka

jono1887

Mofra

alwaysLearning

888

RamonR

Stormin_Norman

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alwaysLearning

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Glen48

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