Romanticizing poverty and learning financial independence
Published on - January 3rd, 2013 (by Kristin Wong) In high school, I babysat a kid whose parents were pretty well off. And by “well off,” I mean they were crazy rich.
One day I decided to take the kid out for ice cream — my treat. When we got to the ice cream shop, I only had enough money to buy him the small, and he wanted the large. What then followed wasn’t exactly a temper tantrum; it’s probably better described as a communication breakdown. He was legitimately confused as to why he couldn’t have the larger size.
He truly couldn’t understand the concept of “not enough money.” Price was not a matter of quantity to him, but simply a choice — it was like asking whether he wanted vanilla, strawberry or chocolate. The idea that his options were limited because of cost was beyond him. He also didn’t understand that I was treating him. From his perspective, the ice cream was always there for him to begin with — it didn’t matter who happened to be forking over the money.
I recently recounted this story to my mom, complaining about how this kid probably wouldn’t grow up to learn the tenets of financial independence like I did, because he was privileged, and I grew up so poor.
“We weren’t that poor,” my mom said, dryly. “You exaggerate.”
She then reminded me that she truly grew up poor. She had dreams about her next meal. She shared a single room with seven brothers and sisters. My mom reminded me that she lived in a remote village in Hong Kong, for crying out loud.
My own mother was one-upping me in the impoverished childhood department. And she definitely won.
But thinking about this situation, and my mom’s response, I’ve been pondering a couple of things:
1) Are privileged kids at a disadvantage when it comes to learning the lessons of financial independence?
2) Have I romanticized being poor to facilitate my financial goals, and what are the implications of doing this?
“There is no success without hardship”
Sophocles said this. In my case, I’ve found it to be true. Growing up “poor” forced me to learn the tenets of hard work, responsibility and resourcefulness — qualities that have helped me find success in my endeavors. My mom had even less money, and she learned those lessons even more thoroughly. To this day, I’ve never seen anyone more frugal or with more self-control than my mother.
So I grew up believing that wisdom comes with adversity. But thinking in terms of financial independence, what does this mean for those who grow up privileged? It’s usually a parent’s goal for their children to grow up without financial hardships. Consequently, can those children learn the lessons of personal finance just as powerfully without going through all the tough stuff? Can we be wise without having to endure adversity?
How much can you learn with a safety net?
Of course it’s possible for the privileged to learn to be industrious and diligent and all of that, but I feel like the lessons are much different when you have to learn them. Here’s a somewhat nerdy example.
In The Dark Knight Rises (spoiler alert) Bruce Wayne must escape his prison by climbing to the top of a deep pit and leaping out of it. He tries this a few times while secured by a rope — his safety net. He’s unsuccessful each time. Then, he decides to try the escape without the rope — the motivation is, if he doesn’t succeed, he’ll fall to his death. Of course, Wayne finally succeeds without the rope. His will to survive leads him to accomplish his goal. He succeeds when there is no other option but to succeed.
I know it’s just a movie, but it’s also a parable. So I ask myself: How successful can you be in learning the lessons of value, responsibility, etc., when you’ll be totally fine if you don’t?
The problems with romanticizing poverty
I plan to have a safety net for my own kids. In fact, I don’t plan on having kids until I can afford to have a safety net for them. Does this mean they’ll grow up at a disadvantage when it comes to financial independence? Will they have less success because they have less adversity? How do I teach my kids to be financially independent when I plan to give them a financial safety net?
Second, even though I finally have some financial elbowroom and am able to live comfortably, I still have this “impoverished” mind-set. I discussed this a bit when I wrote about not buying a new computer because I didn’t feel like I’d suffered enough to afford a new computer. This mind-set has kept me from enjoying the fruits of my financial independence. Exaggerating my poorness has worked in my favor in the past, especially when I needed to save money to pay off my student loans. But these days, it’s given me a false sense of insecurity. And why else have I worked so hard for my financial independence if not to feel secure?
Another issue I have with romancing poverty is that it’s kind of condescending.
Like a lot of lower-middle-class families, in our household, we always had this subtle resentment of people who, as my dad would say, “had everything handed to them.” I have a friend who’s embarrassed by the fact that he’s had everything handed to him — there’s this unspoken shame you feel when you tell people you didn’t pay for your own lifestyle.
And that’s not really fair. Why should there be a sense of haughtiness for people whose parents provided for them?
My mom also pointed out that it’s about perspective. What I considered “poor,” many people in the world would consider incredibly wealthy. It’s insulting to call it “poverty” and say that I grew up poor when, really, we may have struggled to pay utility bills, but we always had food.
At any rate, I’ve been mulling over these thoughts in the past few weeks, especially in wondering how I’ll teach my own children financial independence. So I have a few questions:
Do you think impoverished kids learn the tenets of responsibility and hard work more intensely or effectively than privileged kids? Basically — is there a personal finance advantage to growing up poor?
How do I go about teaching my children the importance of finance, responsibility and self-sufficiency when I plan to give them a safety net?
Does an impoverished mind-set keep you from enjoying the freedom of financial independence?
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Boy, this has spawned a lot of discussion. For that, good job, Kristin!
I’ve often admired many new (middle class) immigrants’ flexibility with money. Work hard, be generous with your time in your community and be financially mobile. Many adapt to living well but can also adjust easily (i.e., no whining) to living well below their means when necessary. Something I need reminding on occasion.
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Growing up in a small town in India. My family was middle-middle class, so I always had funds for education/books but never for vacation etc. In my 8th grade I meet a boy his dad was one of the richest person in town but he still used to come to school on his bycycle (unlike other rich kids who would come on MotorBike or car). I once asked him why he comes on a cycle. He replied…”my dad worked hard to make all the money…he does not think I should get it any easy”. Years later I meet him again….He runs his father’s business now and his son is learning the same lesson from him.
Rich or poor, role of parents cannot be ignored.
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Are privileged kids at a disadvantage when it comes to learning the lessons of financial independence? I think it depends on how their parents brought them up. If these privileged kids were spoiled and given everything they ask for, definitely they will not learn the value of money, savings, and spending. However, if their parents explained to them how money is earned and how it should be spent, I think they will understand what financial independence means.
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Kristen…I love your articles. They are so thought provoking that I find it difficult to believe you are still a “young person.” You need a bigger audience.
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You can grow up in privilege or poverty. If you are never taught the basics of personal finance, you’re going to be at a disadvantage.
Rich people can spend themselves into debt just as quickly as poor people – they just buy more expensive stuff.
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You can grow up rich or poor or middle class like me and still learn about hard work.
You can grow up rich or poor or middle class and think that you are ENTITLED to whatever you want without working for it. It is all in how you are raised.
Did your parents teach you to work hard?
Did your parents teach you to take what you want even if you don’t deserve it and even if it hurts someone else?
Did your parents work hard or were they takers? Welfare cheats or work place bullies or slum landlords or thieves. Children learn by example. What did you learn from your parents?
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Growing up in the midwest taught us things like shoveling snow or cutting grass to make our money. We never had money given to us except for birthdays and Christmas time so we had to work to make that money to save up to buy a car and for insurance. I think growing up with your parents having money has a huge impact on kids and how they value money or even understand the mechanics of it. We had to learn the hard way, most kids now seem to expect it and actually have a harder time growing up and getting out on their own. Why move out when things are so good at home. So yes, I think if a kid is from a richer home they should expect them to work for things and limit the material items so when someday they grow up and do not have mom and dads money they will understand how to make a buck on their own.
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I think that parents who have a great deal of money certainly have a big challenge in teaching their children regarding finances and responsibility. However, this is certainly possible. For example, in the case of the child you baby-sat, just because his parents had the means to give him whatever he wanted doesn’t mean that they had to. They certainly could have given him a budget and taught him at a young age about making financial choices. However, I think many families that have a great deal of money choose the easy route, and simply give their children their desires because they can, rather than teaching their children responsibility.
I didn’t grow up in a family with a lot of money, and certainly learned to be financially responsible because of it. I have a doctorate, and my parents did not save any money for my education. There have been times when I wished that they would have set up a college fund for me. Yet, I don’t know that I would value my education as much as I do if my parents had paid for it. I do recall that in college, those of us who had to pay for college ourselves certainly put a lot more effort into our studies than many of the students whose parents were paying their way. Perhaps I’m a romanticizer as well?
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I wrote a post for Midlife Finance that talks about this issue:
http://midlifefinance.com/2012/12/letter-to-our-children/
How you grew up — and how your parents responded to those times — affects you. You can’t help that. What you CAN do is realize why you’re feeling that way…and deal with it. You often can’t directly change a situation (or especially other people) — but you can change how you deal with it. And more often than not, your attitude can actually have the long-term effect you were wishing for, all along!
Sounds a little Miss Suzy Sunshine, but I’ve seen it happen, over and over.
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My thing is that a lot of the things that we think we need we don’t actually need. For example, my computer is old but it works very well. Furthermore, if new computers only do the same thing that my computer does why would I throw money away on a new one? This makes no sense. If you stop spending your money on things you really don’t need you can do amazing things. Like I’m about to buy my first house cash, which of course is usually unheard of. But, instead of a new computer that does the same thing I just kept my money and invested it.
Another example is the new Iphone. My phone is old and the screen is cracked so I went to get a new one. So, I asked them what do these new phones do and he told me they do all the same things that my phone does and nothing new. They’re just a little bit faster. Why would I throw my money away for nothing, when again they do the same thing.
Same thing with the new Iphone, I hear everybody saying they need to buy it but, again other than being a little longer and a little faster it does the acsact same thing as the old iphone. Sometimes I just want to say come on people.
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In response to this question you asked:
“How do I go about teaching my children the importance of finance, responsibility and self-sufficiency when I plan to give them a safety net?”
I believe that you can provide a safety net for your children without telling them – at least until they are young adults (and no longer a financial dependent of yours). Ideally by then (because it would be too late otherwise) you will have already taught them ‘stick-to-it-iveness’ and ‘perseverance’ and any other lesson you wanted them to learn.
For example, make your children ‘earn’ their spending money – whatever ‘earn’ means to you. I’ve seen ‘earn’ mean doing chores and helping around the house. I’ve also seen it mean getting good grades; and I’ve read about a dad who only paid their children to read books – period. After all, they were expected to get good grades and do their chores – rewarding them for what he expected them to already do seemed counter-intuitive. And the knowledge, language skills and worldliness they learned from reading books of all kinds is irreplaceable in life.
As they are growing up – teach them the pride of a job well done, and that the consequences of not doing so aren’t always just monetary (privileges taken away works very well when done right), seems wise to me. As they are growing up, teach them that if they want something (a new video game, stylish shoes, a popular jacket, etc) they need to spend their own money on it – money they ‘earned’ from you and money that they received from other family members as gifts throughout the year can really add up for a young’un. I have found that when I didn’t offer to buy my son what he wanted (video games are the worst), and instead told him that if he really wanted it then he could use his own money on it – a strange thing happened…more than half of the time he decided he didn’t want/need it that bad. That still cracks me up!
Most importantly, in preparation for the gift of your safety net, teach them that every time they get money, they should divide it four ways: invest some, save some, donate some, and put some in a ‘free to spend’ bucket. That’s what we do in this house. This way, they will understand the difference between those 4 choices and will learn that they are all equally important – when you get a windfall (an extra big birthday check from grandma for a milestone birthday, for example) you will have already taught them what to do with it, while they were still malleable in your home.
When the time is right, as they are exiting your house (moving into their own apartment or home, going out of state for college, getting married, going into the military), tell them that you have worked hard and saved and that you wanted to provide for them, but you didn’t want it to be a crutch that would keep them from learning how to handle money. You wanted to teach them the financial lessons of responsibility, long-term and short-term investing and charitable giving. And that the rest is what you get to spend. It will be second nature to them. They will take the safety net and divide it four ways and only be at risk for ‘blowing’ ¼ of it. And if they do blow it, that will be a valuable lesson for them, but one that won’t break the bank, so the speak.
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My mom saved some unknown amount for my college education. I paid for my own car, insurance, phone, books, groceries, etc and was given free rent at home in exchange for going to school. I transferred a lot of community college credits and so my education came in $10k under budget. Here is what my mom did: first made sure that I had health insurance (we met with the agent together, my first employer didn’t provide a plan). Second, we met with a financial advisor and we opened three accounts with the $10k of college funds that remained: 1/4 went into a Roth IRA, 1/4 went into a traditional IRA, and half went to mutual funds. Then she said, I’m no longer your emergency fund, this is your emergency fund, you are on your own now. The meeting with the advisor was pivotal because he was an new, neutral voice and gave sage advice. He told me to read D. Bach’s “Smart Women Finish Rich” (which I did), and gave me some advice on thinking about how to negotiate and think about my salary throughout my career.
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Speaking from personal observations, I think it’s confirmation bias that makes people think that poor people have better financial literacy. You hear about people who started out poor and then overcame (which requires learning financial literacy at some point), because it makes a good story. Also, those people are more likely to feel like they’ve accomplished something, and therefore go around telling everyone else about it.
What you don’t hear about are poor people with terrible financial literacy (and believe me, there are probably just as many or more of those than the opposite), or more wealthy people with great financial literacy (there are plenty of those, too). Neither of those situations makes a good story.
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I believe growing up poor played a major influence in my passionate focus on achieving financial independence. It caused me to be more deliberate with my career and savings goals. I do worry about whether or not my own children will have the same drive.
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How did we ever get to this point? I’m teaching my 16-year old to focus on the things that matter most in life and to identify the things which matter more than money. That said, I’m also teaching her that it’s OK to be rich.
- Mark
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I definitely have experienced the impoverished mindset keeping me from enjoying financial freedom. It makes it feel nicer to feel like you have earned what you get. In our brains, our reward system is probably still wired the same way that it learned to be wired during our childhood. It is hard to change that, so that’s why we experience being held back when we don’t need to be.
It can definitely be helpful, like you mentioned when paying off student debt. For me it is helpful because I have just moved and started graduate school again, and will be living on a smaller income than before. I think I’ll try to make small concessions along the way though.
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It absolutely depends on the family dynamics. You don’t have to be poor to learn the value of money. Parents have a responsibility to teach this to their kids. It will lead to more grateful adults. And, having well-adjusted (not entitled) adults is insurance for our future.
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Poverty is relative. I had a similar experince growing up and feeling poor but virtually everyone that feels poor in the west is really well off. If you have time watch http://www.ted.com/talks/hans_rosling_reveals_new_insights_on_poverty.html
Most people in the world live on less than $10 a day so I now feel blessed that we were so “rich”. Once you realize that what is the difference between one rich and more rich.
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i think it depends how “poor”…because too poor in this country often means people were often raised to resent those with money while at the same time enjoyng the handout afforded them from the government. It too breeds a sense of entitlement and therefor lack in responsibility and hard work. Its a fine line.
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I don’t quite agree with the author. I grew up in a well-to-do household. I realized early in life that money(as in chasing the almighty dollar) wasn’t everything. I think I grew up to appreciate having money to spend on really important things. I intentionally left home at 18 and moved 800 miles away. I wasn’t enamoured with the lack of love and attention that I received as a child. Their (‘rents) answer to “love” was to throw some cash at me and tell me to go to the mall. I figured out how to go my own way and make a living on my own. – no college.
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I’m agree with amanda!
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