Romanticizing poverty and learning financial independence

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?

More about...Frugality

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others

103
Leave a Reply

avatar
newest oldest most voted
Anne
Anne

I believe finances are about balance and educating your children. People with means should not always give their child the largest ice cream. If the child wants something bigger or more, they should be encouraged to save for it. People with financial security need to teach their children the value of money rather than overindulging them. I point out to my children that coupons are just like money. I have them do the math to find out how much we will save. They understand the value of a dollar. I also believe hard work deserves a reward. My parents had… Read more »

TC
TC

Having grown up in a family where we had living necessities but not too much else (we took the occasional long weekend to stay at an uncle’s beach house for vacation, summer camp or activities beyond girl scouts were out of reach financially), here is what I learned: -You can’t really get ahead -There’s no point or possibility of planning for better things in the future (you’ll retire when you die) -There’s never enough money -You do your job because you need to put food on the table, you don’t choose your job it chooses you, if you happen to… Read more »

Tricia
Tricia

I think it is less about how much money you have and more about how you educate your children about money. Whether you are poor or rich your children will tend to learn you attitudes towards money. If you manage money well and let them see you do it, they are more likely to manage money well themselves. However, if you are ‘rich’, you do need to be aware of not overindulging your children and consciously teaching them the value of a dollar. Give them an allowance and expect them to buy some categories of purchases for themselves so they… Read more »

Michael
Michael

Some great points – thank you! I think it can be very hard for parents to teach “the value of the dollar” since if you’re affluent a dollar really isn’t worth much. Value is about how much things mean to you individually and I don’t believe you can define a universal value for something.

Karen
Karen

You can do all the right things for your kids by making the safety net invisible. That money should be sitting in various investments, not to be touched. The safety net is not so there will always be ice cream, but so there will always be healthy food on the table. It’s not so they can buy their favorite electronic device with one week’s allowance, it’s so they don’t have to babysit to help pay rent. Some possible ways to teach: make them earn their allowance with chores, limiting the allowance so they have to choose between small item immediately… Read more »

AMW
AMW

I grew up in a middle class neighborhood and we were on the lower end of middle class and many of my classmates were on the higher end, sometimes the way higher end. As a teenager this was not always an easy thing to navigate when your friends could not understand why you had to work every day after school or why your parents just couldn’t buy you a plane ticket to go with them on spring break to some tropical island. What I find most interesting from growing up in this scenario is how people react to it. I… Read more »

adult student
adult student

I think that just goes to show how little parenting controls how kids grow up in some ways! I have two siblings as well, and we’re all completely different (I’m financially independent but don’t make much, one still lives with the family because he spends more and wants a higher paying job before moving out, and one is a good steward with his money but can’t earn much or be totally independent due to disability). I think kids can take lessons from their families and environment and interpret them in totally different ways.

Jane
Jane

Whoa — can I make a suggestion to the editors of GRS? Don’t put Kristin’s articles right next to Honey’s. It only emphasizes the problems with the latter. This was truly a great exposition on money and how your upbringing influences your perspective on finance. I loved the comment about your competition with your mom in the “impoverished kid department”. On a smaller scale, my mom and I play that game. I can’t tell you how many times she has mentioned how she and her brother essentially shared a closet with a bunk bed throughout their childhood. This puts any… Read more »

Pauline
Pauline

I grew up privileged but was always taught about money. I had a small allowance and my parents gave me a savings account at 12 to learn about money responsibilities. My friends had crazy allowances or just daddy’s credit card, but if I wanted more I had to work for it. So I babysat, gave piano lessons and so on from age 13 and was lucky to be somewhere parents were able to pay for tutors and nannies. I still have friends who have no idea about money and have always lived off their parents or now husbands but most… Read more »

Karen
Karen

Really interesting, thought-provoking article. It sort of reminds me of a moment in my high school English class. We were practicing writing college essays, and we were paired for a peer review, assigned by the teacher. I was paired with the richest girl in school–the girl who drove a Hummer, who had tennis courts in her backyard, and whose parents were both doctors. I wrote a story about how our finished basement flooded over the summer, and how it ruined furniture I’d had my entire life, and how hard it was to watch my Mom, divorced and a school teacher… Read more »

Meaghan
Meaghan

But Kristen, you romanticize poverty right here: “His will to survive leads him to accomplish his goal. He succeeds when there is no other option but to succeed.” This idea that growing up poor means you’ll be scrappy and street-smart instead of rich and spoiled is erroneous (http://www.economist.com/node/15908469). Instead, growing up poor means that you have limited access to resources like education, credit, capital, and professional networks, making it all the more difficult to succeed, however desperate the situation. Of course, we all know anecdotal evidence of people who grew up rich and are now adrift, and people who grew… Read more »

kdice
kdice

Yes, yes, yes. The Economic Mobility Project by Pew Research shows us that 65% of individuals born into the bottom fifth of incomes stay in the bottom two fifths (and 62% in the top fifth stay in the top two fifths). http://www.pewstates.org/projects/economic-mobility-project-328061 Many individuals who are truly wealthy don’t have to know how to be frugal. They are on a life path through private schools, connections to wealthy individuals to find jobs, and inheritance that make it unlikely they will ever need to know. Sure, you hear anecdotes about this or that wealthy individual burning through their trust fund, but… Read more »

Jonathan
Jonathan

kdice says – “The Economic Mobility Project by Pew Research shows us that 65% of individuals born into the bottom fifth of incomes stay in the bottom two fifths (and 62% in the top fifth stay in the top two fifths).” However, looked at the other way, this statistic tells me that fully 35% of the poorest people are able to work there way up to at least the mid-percentiles of income. To my mind, that is GREAT odds, especially since I would guess that at least 65% of those born into the lowest levels of income demonstrate little initiative… Read more »

Katie
Katie

“I would guess that at least 65% of those born into the lowest levels of income demonstrate little initiative to climb above that”

And how many people born into wealth (or even the middle class) have the “initiative” to climb higher or even just maintain their status completely on their own, rather than just relying upon established networks and familial safety nets?

Poverty affects your life in so many ways from the time you’re very young, and often produces lingering effects that can never be fully erased, no matter the interventions.

LS
LS

Those are terrible odds! Think about it — ability and luck are on a bell curve, with most people clustered around the average, and with extremes rare on both sides. Now imagine that you’re born in a family that’s in the lowest fifth economically. If your life depends just on your ability and your subsequent choices, there’s a 20% chance that you’ll stay in the same place socioeconomically that you grow up in, and a 40% chance that you’ll be in the bottom two-fifths (and so on). So if outcomes were based only on ability and merit, we should expect… Read more »

Curby
Curby

“Of course, we all know anecdotal evidence of people who grew up rich and are now adrift, and people who grew up poor and ‘succeeded because they had no other choice,'” Exactly. You know how you hear about the once in a million incident of a plane crash, but not the thousands of drownings that cause a lot more loss of life? The everyday just isn’t exciting enough to make the news. The underdog beating the odds makes a great story, as does the high and mighty brought low. We say beating the odds because odds are it won’t happen.… Read more »

Kristin
Kristin

“Instead, growing up poor means that you have limited access to resources like education, credit, capital, and professional networks, making it all the more difficult to succeed, however desperate the situation.” Good point! And I’ll add to it. My mom is one of those anecdotal examples of rising from poverty, and she definitely used what you call “scrappiness” to get to a comfortable place. Which is great, but she never really learned much about investing, retirement accounts, professional networks or anything like that. When I was little, her savings account consisted of a shoe box in our closet. So, anyway,… Read more »

Sheryl
Sheryl

It all comes down to how parents, whether they are affluent or impoverished, teach the children to relate to money and things. It’s certainly possible for parents to have all the money they could want and at the same time teach their child what the value of a dollar is, and that things and treats all cost money which is a limited resource.

Spend money on your children if you have it, sure. But do it in a way that actually enriches their lives and helps them understand the world.

Elizabeth
Elizabeth

Love your comment 🙂 I’ve taught well-off kids you wouldn’t guess came from money and kids from struggling families you’d think were rich based on their attitude and belongings.

IMHO, you can give people financial tools like how to save and budget, but personal finance is also about values. Growing and managing one’s wealth requires patience, gratitude, humility, contentment and generosity. I think you can find those qualities (or a lack thereof) at all income levels.

Jen from Boston
Jen from Boston

I whole-heartedly agree with this! It comes doen to how the child was raised, regardless of the family’s wealth! I went to a boarding school on financial aid, so I was a kid from modest means surrounded by rich kids. I was also with kids who came from families with much more limited resources than mine – think a family of 5 in a 1 BR apartment in NYC vs. my family of 4 in a 3 BR house in MA. Yes, there were rich kids who obviously didn’t have a care in the world and regularly went on lavish… Read more »

JC
JC

“It all comes down to how parents…,” Limiting the outcome to a single party, i.e. the parents (i.e. teacher) and not the child (i.e. learner), is limiting the explanation of the outcome. You can take any family with the same parents and a very similar upbringing of the children, and wind up with very diverse children due to various external forces and each child’s inherent nature. It likely has much more to do with the individual learner (i.e. child) than the teacher (i.e. parent). Think back to 30 of us in the 3rd grade learning our times tables from the… Read more »

Jane
Jane

“And now, one of us can afford plenty of large ice creams, but won’t even go to the ice cream shop for a small, one of us can afford plenty of small ice creams, and enjoys going to the ice cream shop for a small, and the last one of us can’t afford a small ice cream, but enjoys going to the ice cream shop for a large.”

What a great use of Kristin’s anecdote! Thank you for the laugh and the insights. May I ask, which one are you? The middle one?

Jeff
Jeff

Jane says: 03 January 2013 at 12:41 pm “And now, one of us can afford plenty of large ice creams, but won’t even go to the ice cream shop for a small, one of us can afford plenty of small ice creams, and enjoys going to the ice cream shop for a small, and the last one of us can’t afford a small ice cream, but enjoys going to the ice cream shop for a large.” What a great use of Kristin’s anecdote! Thank you for the laugh and the insights. May I ask, which one are you? The middle… Read more »

Elizabeth
Elizabeth

I think the role of the learner is really important. I saw it all the time when I was teaching. Some learners will brush off what they learn or think it doesn’t apply to them, and some will take lessons to heart. Personality plays a big role, not just environment.

Sheryl
Sheryl

Adjusting the delivery of the message to the audience is important, but the core idea of teaching kids about how money works stays the same. A parent (ideally) isn’t teaching one child how to have a healthy relationship with money and their other child that they are entitled to everything.

Julie
Julie

Also many kids grow up in the same house and turn out differently because the concept of money wasn’t actually “taught.” The kids just observed their parent’s behaviour and each learned a different lesson.

Kristin
Kristin

“But do it in a way that actually enriches their lives and helps them understand the world.”

Love this; it’s something that’ll stick with me for sure.

BC
BC

I grew up one of 3 kids in a single-parent household so money was always very tight but we always had what we needed and then some. My mom was extremely frugal but she never taught us about money and so as a result we did not appreciate her frugal habits at all and my brothers and I have had our own issues with money as adults. Now that I’ve finally got my own head on straight I see that growing up that way made me understand the connection between hard work and having a better lifestyle, and the benefits… Read more »

Rail
Rail

I like the direction and outlook that you have BC. I grew up in solid middle class small town Iowa, not rich but not poor. My folks have always been tight with money because they definatly “lived hard” in the 40s and early 50s. No running water or electricity on the farm for Dad untill he was 12. I have written before how my Parents and Grandparents have greatly influenced my monitary habits and like Kristen was always told by Mom/Dad that it could always be worse, just ask anyone who lived through the Great Depression and WWII. This is… Read more »

RLQ
RLQ

I babysit for a really wealthy family occasionally and they teach their daughter financial responsibility. Their daughter wanted an iPad for the longest and they could easily buy her one. She was required to save her money and she did just that. She goes to an elite private school and they vacation for several weeks at a time but she has to save up her money to buy these items that aren’t necessities.

Courtney
Courtney

When I was a kid (only 10-15 years ago) it would have taken almost 4.5 years of my allowance to save up enough money for an iPad!

JED
JED

This was a great, thought-provoking article. My parents were married during the Depression; basic necessities were scarce and not always available when they grew up. They had the impoverished mentality and were always afraid to spend any money, a fear which was compounded by the heavy burden of enormous medical bills due to a catastrophic illness during their marriage. I am still trying to adjust my own attitude toward money to one that is healthier, all these years later. I was taught nothing about handling money; neither was my husband. As witnesses to the crash of ’29, our parents taught… Read more »

Katherine
Katherine

I didn’t grow up poor or wealthy. I had what I consider to be a a middle class upbringing. I know now that it really is all about perspective but I also think its all about hard work. My grandfather took a mediocre, small, family business and over 60+ years refined and honed it into a still small but still existing business. The hard work isn’t in his business but in his personal life where he invested one-third of his paycheck, saved a third and lived off a third since his first day of work in 1950. My parents worked… Read more »

Jezna
Jezna

I agree with this-to an extent. I’ve grown up “poor”- with my parents barely affording the basic utilities (but always had food). I’m currently at an Ivy league institution for my graduate degree and the differences in mindset between me and my colleagues is always really interesting. I think one of the big mental differences between growing up poor versus growing up financially provided for is what makes you proud. I’m proud of my success and how far I’ve come. Some of my wealthier friends are proud that their new car that was given to them is nicer than everyone… Read more »

Roberta
Roberta

Generalizations are fraught with peril. Donald Trump’s father was a millionaire many times over. Regardless of your opinion of Donald Trump, he certainly has succeeded; thinking of your Socratic quotation, however, how much “hardship” did he face? Many other examples probably could be shared of people who faced little to no hardship succeeding and, conversely, people who endured tremendous hardship NOT succeeding. Your ice cream ancecdote aside, plenty of rich people are tight and track their money ruthlessly, which helps them to preserve their wealth.

Rowan
Rowan

I grew up in a family that lived beyond its means. We always had enough, I was never denied anything, but there was always this underlying tension about it all crashing down around us. It played a big part of why I always have been careful with my money and always have an emergency fund. I’m pregnant with my first kid now and have started to think about this. We have plenty (not extremely well off but doing well). Our plan is when he or she is old enough (5 maybe?) we’ll start an allowance that corresponds to his/her age.… Read more »

Brett @ wstreetstocks
Brett @ wstreetstocks

I really do believe that to succeed you must endure hardship. Many of our leaders hard to overcome numerous obstacles to get were they are today.

CCB
CCB

Warren Buffett nor Bill Gates ever endored hardship and they both seem to know the value of money.

Phoebe @ http://allyouneedisenough.blogspot.com/
Phoebe @ http://allyouneedisenough.blogspot.com/

Great article, very thought provoking. I grew up in an upper class community. We certainly weren’t the wealthiest, but we had many luxuries in my family and never worried about money. My parents paid for college, but since I elected to stay for a summer semester they made me pay for that and I came out with student loan debt. I was angry with them at first because I felt like they could have paid for that, but in reality the stock market had plummeted and my family was in dire straights. I am now very grateful that they made… Read more »

Mom of five
Mom of five

My husband and I grew up first world American poor but had families who valued education. We do worry about teaching our upper middle class kids that they need to work for a living. Some kids are hard wired to be workers and un-entitled. Others are going to sit around waiting for things to be given to them. Obviously, it’s harder to do that when your parents don’t have anything to give you. However, I have seen some of the biggest couch potatoes from wealthy families get off their duffs because they *want* what their wealthy parents won’t just hand… Read more »

Davelli0331
Davelli0331

Been reading GRS for years and generally enjoy the content, but this article left me a bit perplexed. Merely asking the question “Can privileged children learn the tenets of personal finance” romanticizes poverty because you’re beginning from a skeptical standpoint and asking for evidence/advice/proof to the contrary. The question itself, and many of the assumptions made in the first half of the article, do not state openly but still inherently buy into the romantic notion that the poor and impoverished will generally be better with their money than those well off. Anecdotal evidence aside, many people who are well off… Read more »

Mrs PoP @ Planting Our Pennies
Mrs PoP @ Planting Our Pennies

I think so much of it depends on how much of a mental safety net you have, whether or not your parents have a lot of money. I grew up not insanely poor, but definitely lower middle class with parents who never really had a whole lot of job stability (and still don’t) and for whom savings was not really a concept that got much attention. In contrast, Mr. PoP’s parents had nice stable tenured state jobs, tons of savings, and were decidedly upper middle class for his area. Both of our families have one sibling who has “failed to… Read more »

Mom of five
Mom of five

I agree with you. Here’s an anecdote from our family. My sister in law borders on poor while we are upper middle class. One Saturday morning she was yard sale-ing in our neighborhood and stopped in to say hi. She informed us that one of her sons had dropped out of college and three months later still hadn’t gotten a job. My husband told her he couldn’t believe she was putting up with that. She asked my husband what he would do. Without a moment’s hesitation, he responded, “I’d kick his ass to the curb. He can go to school,… Read more »

BD
BD

I wonder what mental problems he has that have gone undiagnosed . Most healthy adults do NOT want to live with mommy and daddy once they are adults, especially males. If you’re a healthy adult male, you’ll naturally want to be *out* of your parent’s house, with a job and a place of your own. Face it, any potential dates are not going to be impressed if you’re 25, jobless and living with your parents. Which means there is a high probability that he has some sort of disorder that no one bothered to check into, and just wrote the… Read more »

Mom of five
Mom of five

No question our nephew is mentally ill – he suffers from an anxiety disorder and OCD. The question for my husband and me is how much of this kid’s mental illness was exacerbated by coddling parents and/or used as an excuse to baby him. They also have not forced him into therapy. I’m reluctant to judge other people’s parenting because I don’t want someone questioning my own, but this is one of those rare times where I can say with certainty that we would have taken a completely different approach.

BD
BD

So you are aware of his problems. Well, “kicking his ass to the curb” probably wouldn’t work. He’d just end up another homeless statistic. Being homeless is something I’m terrified of, personally. I have several mental disorders too (including severe anxiety), and have been on a variety of medications to try treat them. Still working on finding the right mix. I’ve also been jobless for 7 years now after a failed graphic design career and am living with parents (although I have gone back to school at this point). I’m also middle-aged. If my parents had shown tough love and… Read more »

SLCCOM
SLCCOM

Or join the military.

betttylion
betttylion

Your experience with the kid is VERY familiar to me since I grew up with a single mom on the verge of poverty, but went to an elite private boarding school on scholarship. Me and the other regular/poor/scholarship/whatever-you-want-to-call-it kids ended up gravitating towards one another because most of the girls at the school were very rich and they just had a different way of looking at the world, a different set of values. They would spend their Friday evening shopping via J.Crew catalog and get mountains of packages each week, while I was scrounging for enough quarters to do laundry… Read more »

partgypsy
partgypsy

My parents got most stuff right. Growing up we started out as working class (Dad working as a waiter), which as time went on maybe hit upper middle class (moved to restaurant manager and then a series of his own restaurants). We moved from an apartment in the inner city, to a duplex, to a free standing nice home, but my parents were not ostentatious in their purchases, and we all had to work at my Dad’s restaurants during the summer, when often other families were going on nice vacations. I always knew at some point I would have to… Read more »

Sam
Sam

I think there are a wide variety of experiences and lessons. Those that grow up poor, some do better at managing money and saving because they don’t want to be poor or because they worried about their next meal as kids. But, I think there are also poor kids who wind up growing up to be spendthrifts because when they have money they want to spend it due to being deprived as kids. On the other side of the coin, many very privileged children grow up to be smart with money, give to charity and do appreciate the great start… Read more »

Anni
Anni

This article gave me an unpleasant reminder. My family was always very judgmental. We criticized people with money, as if they were greedy and haughty. Of course, that was a teaching of our religion. Materilism was a big no-no. One man was actually talked to by the church elders for having gotten a big promotion and making a “showy display of one’s means of life” by buying a new car for him and his family. He was shamed into selling the car. People with money were “blessed by Satan”. I have gone through a lot of “recovery” after getting out… Read more »

Tyler Karaszewski
Tyler Karaszewski

You don’t need a whole article to figure out whether rich people’s or poor people’s kids do better. It is 100% entirely obvious, and it’s the opposite of the article’s clearly ridiculous proposition. No, seriously, go poll some doctors and engineers for their parents salaries when they were growing up and then do the same for Walmart and gas station clerks. The notion that growing up poor helps you become rich is ridiculous.

Kristin
Kristin

Tyler, I wasn’t particularly asking if being poor helps you become rich. You’re right; common sense (and stats) tell us it’s easier to become rich if you grew up rich. But I suppose the question I was posing had less to do with having a ton of money in the bank and more to do with learning the tenets of financial independence and what the effects of having an “impoverished mind-set” are. But perhaps I could’ve made that clearer.

Tyler Karaszewski
Tyler Karaszewski

Clearly, in the real world, the effects of an “impoverished mind-set” are usually continuing to live in poverty, just like your parents did. Meanwhile, ask the Kennedys about growing up with rich parents. We don’t need to wax philosophic on what *might* happen in these situations. We can easily look at the real world and see what *does* happen. Fun story: for Christmas my sister-in-law and niece were visiting, and I took my niece outside to feed the chickens. I told her we could pick an apple off the neighbor’s tree and feed the chickens. Well, in addition to feeding… Read more »

Albie D TalkingCents
Albie D TalkingCents

I think that this starts with the parents. Those of ample means have a choice, and it depends on what they feel is best for their children. They can: A) give their children everything because they don’t want them to ever go wanting. Or B) teach them how to take care of themselves, the value of work and money, and prepare them for independent adulthood. I’m not going to get into what is right or wrong. Just that wealthy parents have this option. “Poor” parents do not. The frugal lifestyle will be illustrated throughout their children’s lives, likely ingraining frugal… Read more »

Daniel
Daniel

I grew up just like that kid – no concept of what money is worth, no concept of “we can’t afford it.” Then I moved out on my own and continued just buying whatever I wanted, paying no attention to whether I could afford it. Only now, I was doing it on credit. Now I’m 35 and digging myself out of that hole. Thank God I read The Total Money Makeover or I don’t know whether I’d have learned my lesson even now. That said, it’s important to note that most of the kids I went to school with, some… Read more »

krantcents
krantcents

Unfortunately, people who are poor spend their money on frivolous things. Whether you are rich or poor, you still need to learn to save for things you want.

Elaine
Elaine

My ex-bf worked through college and took loans, because his parents couldn’t pay. My college was paid for, and I worked a little for spending cash. He said he wouldn’t want to pay for college for his kids since people that had that wasted it. However, I felt extremely indebted, and I feel the obligation to pay it forward to my kids. I got high grades for it, pursued a practical major (though not my parents choice), and finished with no debt (the extra savings to one day be applied to grad school). As for the boy in the story,… Read more »

Edward
Edward

I grew up middle-class (two frugal teacher parents). My bestfriend grew up poor as dirt. He’s become an IT professional since, has made loads more over his career than I have, but he hasn’t got a penny to his name. He’s as dumb as hell with money. He never had any growing up, so whenever he gets it he doesn’t know what to do with it, so blows it on totally ridiculous things. I watched once in a music store as the manager came down the stairs with a pair of scissors to cut up his credit card. (The cc/cash… Read more »

Sophie
Sophie

This comment reflects my experience! Not that I was ever out of control enough to have massive credit card debt. The people I know who grew up poor (or first world poor, more accurately) – including myself and most of my friends – tend not to have learnt any money management skills whatsoever. I know I didn’t. You either make a conscious choice to change and learn or you end up having massive debt and not understanding why you’re broke all the time. On the other hand, my partner grew up in a financially stable household and he almost takes… Read more »

WWII Kid
WWII Kid

Ah, a wonderful story. Someone I know’s daughter recently had her Sweet Sixteen party. 150 people, DJ, photo booth, a “court” of like-dressed friends, a pink limo, a gown, a tiara. It is referred to as the “wedding rehearsal”. Two Christmases ago, the poor girl had to spend Christmas morning on a plane to their vacation home. It was quite upsetting to her mother that the only flight they could get was for that day. What will it be for high school graduation? A BMW? Mercedes? Ferrari? And she is a helicoptered kid – Mom and Dad monitor and handle… Read more »

Jen from Boston
Jen from Boston

And many will crumble at the first hard knock life gives them :/

Peg
Peg

I think this is one of the best posts I’ve ever read on this blog. Very thought provoking. I do believe that children who don’t have everything handed to them more readily adopt a practical lifestyle. However, I know one example in which a person, the middle child in a family of 11 kids, has kind of gone the opposite way. Maybe because this person didn’t have much of anything while growing up.

Stacie
Stacie

I think that your parents’ attitudes and treatment of money teaches you more about financial responsibility (or not) than how much they make. While we grew up (lower) middle class, my parents were a little embarrassed to discuss money/finances, so we were never really given a chance to learn financial responsibility. My parents always told me they wanted better for me than they have – but figuring out how to do that was all up to me. Luckily, I became interested in finances on my own in college, so I didn’t make many of the common mistakes (or I stopped… Read more »

ChezJulie
ChezJulie

I know a lot of rappers and industry people (long story) and many of them grew up excruciatingly poor. When they came into money, some of them just blew it on cars, clothes, etc. I think this was partly because they were young and foolish, partly because they thought their careers would always be hot, and partly because they didn’t know how to handle their finances or have people in their immediate circles who could give them sound advice about managing the money. So they have a lot of regrets now that they are older and have families that they… Read more »

Lib
Lib

I know people who also grew up in extreme poverty (though not rappers 🙂 who share this mentality. To many who don’t understand money well or who have never had it, wealth is demonstrated by conspicuous consumption.

I know a man who was a childhood runaway who worked hard to attain middle class status and now he always has the best cell phone and has to have a new car. To him, those items show that he has made it because he went so long without having anything.

Melissa
Melissa

You can still have money and provide for your children while teaching them “delayed gratification” and discipline. In my opinion, children definitely need to learn delayed gratification.
Read the book The Road Less Traveled by M. Scott Peck for some insight. Great book 🙂

Joanna @ Our Freaking Budget
Joanna @ Our Freaking Budget

Very thought-provoking post… my husband and I have discussed this topic a lot since being married. I think it’s important for kids to be aware of money and that having it takes hard work. I think its all about how a kid is parented. A lower income child and be taught to work hard or to expect handouts from those who have more than they do. A high income child can be taught to work hard or to expect handouts from their parents.

Lib
Lib

I disagree that people who grow up closer to poverty have a better view of how to handle money. I think it all depends on how you are taught and what you see. In many cases families who are wealthier have gotten there by managing their money better. I grew up in an upper-middle class family with what I like to call a “Great Depression” mentality. My parents struggled in the beginning of their marriage but by the time I was school age my family was probably the most well-off of all of my friends’. Even so, my mom scrimped… Read more »

SavvyFinancialLatina
SavvyFinancialLatina

I grew up poor, and I completely understand your mentality. I think very similarly. Actually, all of your points of behavior are mine. My hubby on the other hand grew up well off. I grew up in a house 1/10 of his house. While he had multiple Christmas presents, we only had a couple small presents. I’m still extremely surprised at how his family celebrates Christmas. While my family only does a small gift exchange (one present at the most), his parents spend so much money. It baffles me. I’m not sure how to react. I do feel myself feel… Read more »

Carla
Carla

I grew up “old school” middle class: beautiful modest sized home, two cars, “modest” vacations (usually a road trip to LA from northern California to visit family or a week in Yosemite), clothes from modestly priced retailers – you get the picture. I certainty didn’t get what I wanted outside of what I needed. Everything I had it was determined and decided by my mother. She was frugal in her own way, always had impeccable credit and savings. With that said she never, ever taught us budgeting and what it means to be financially responsible. In her defense, she was… Read more »

Ramblin' Ma'am
Ramblin' Ma'am

I don’t think there’s a personal finance advantage to growing up poor, exactly. I think there is an advantage in not having everything handed to you, regardless of how much your parents make.

Lots of people say, “In retrospect, I was poor growing up, but never realized it at the time.” I bet some wealthy kids had the same experience. They didn’t realize they were rich because their parents lived below their means and didn’t buy them everything they wanted.

Mom of five
Mom of five

When people say they never realized they were poor growing up, I assume they weren’t really that poor or they had a heck of a safety net, like rich grandparents, which really just means they had poor parents but their own childhoods weren’t ones of deprivation. Being poor means bad teeth, seasonally inappropriate clothing, a cold home because you can’t afford heat, etc. Even the most obtuse child generally can figure out he’s poor by the time he’s 12 or so.

Ramblin' Ma'am
Ramblin' Ma'am

Well, not necessarily “poor” as in “below the poverty line,” but let’s say “low income.” For instance, the official poverty line for a family of three is only around $17K, but a family could make quite a bit more and still be struggling.

Kevin
Kevin

My dad’s side of the family grew up poor. When they married someone rich, they decided that lifestyle inflation was their path to success. As a result, I grew up in a middle income household. During that time, my father started having gambling problems. I started realizing this when my mom cannot afford to pay the bills needed to keep the house. When I came back to my home country to visit my mom’s side of the family, I realized that my mom’s side of the family had a lot of money (one of the wealthy elites in their town)… Read more »

Kathleen, Frugal Portland
Kathleen, Frugal Portland

I think it’s true what they say, that a child’s concept of the world is defined by their own home. And if romanticizing your roots helps keep you close to your financial goals, then by all means, don’t change that!

Nina
Nina

When I was reading about microlending, I was so surprised that over 90% of those in the developing world are able to grow their businesses and thrive. I then thought about a few of my side endeavors and how they really didn’t take off, and how small businesses here fail easily. I talked to a friend about it who said that when you’re in absolute poverty, you have pretty much little choice: you *have* to succeed. Whereas for me, I’m comfortable, don’t really need the side income, so it’s easier for me not to hustle since it doesn’t mean my… Read more »

jim
jim

Being poor doesn’t automatically teach you good finances. There are a lot of poor people who teach their kids poor financial behavior to their kids and this gets handed down generation to generation. There are a lot of well off people who teach their kids good finances. I agree it may be easier to learn the value of the dollar and frugality if you don’t have much versus if you’ve got a lot of money, but I don’t know that this is the general trend at all.

Jen Y
Jen Y

First question – not necessarily. Just because you do or don’t have money doesn’t mean you learn how to budget it. I think learning how to handle your money follows many things parents should teach their children like learning to budget time or other responsibilities. I’d love to see a study on this though! Second question -There are so many good ways to do this but my top two (having raised financially stable son) are these. 1)Teach them that time = money. For ex. when my son wanted something, even at a young age, I helped him figure out how… Read more »

Shannon
Shannon

With my children, I hope to teach good financial habits as many have already mentioned: having them work for things they want, teaching the value of saving and investing, etc. We are saving for their college educations, but they will not know this “safety net” is there. My husband and I want them to figure out on their own how they will pay for college – then successfully complete their coursework – and only then, we will discuss repayment of their loans or compensating them for what they may have already spent. I think it’s also important to teach their… Read more »

Anna Haugen
Anna Haugen

I’ve seen rich kids with very good financial literacy and rick kids with very poor financial literacy. I’ve seen poor kids with very good financial literacy and poor kids with very poor financial literacy. The main factor is not the amount of wealth in the family *but rather the amount of time and effort the parents took to teach their children about financial matters*. That, above all, makes the difference. Assuming two young people whose parents took the same amount of trouble to teach them, the rich kid will (in my experience) be better off because chances are his parents… Read more »

catherine
catherine

Ok, I just want to state at the outset that I’m spending exactly 5 minutes responding to this great, provocative post because, although I’ve been up since 5am writing a report to hand it in on deadline, I still have work to do and I must get it done. I must deliver. I must make my customers happy. So works the brain of a PhD (Poor, Hungry, Driven). So, to make it quick, I do think people who have had to either sink or swim learn to swim really well–and quickly. I also think that one of the psychological downsides… Read more »

shares