Personal Finance

Poverty Rates Up: How to Avoid Poverty

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Last updated on July 22, 2019 Comments: 25

According to the 2010 Census data, the poverty rate for Americans is up to 15.1 percent, matching the rate from 1993. 46.2 million people are living below the poverty line, a level delineated by earning less than $22,314 a year for a family of four or $11,139 a year for an individual. 22 percent of children under the age of 18 are living in poverty.

It’s easy to say that a family of four earning $22,314 a year can’t have it all that bad. After all, in developing countries, families get by on much less. That’s not always a relevant analogy because living in a developing country has little bearing on a person’s experience living in the United States.

Poverty is a societal problem, and it needs societal solutions. These problems tend to be ignored when the middle class is concerned with their own suffering, however, and the upper middle class and the wealthy are concerned with investments accounts losing value. Assuming equal economic opportunity for all in the United States, it comes down to individual decisions to avoid poverty. The rags-to-richest stories of the family who beat the odds to break free from poverty to thrive in the middle class are always popular, but it’s not that common.

Here are ways that individuals and society as a whole can reduce poverty at home or across the country.


The key to reducing poverty is not particularly education itself, it’s the idea that education is something to be valued. Requiring quality education from grade school through high school is only part of the solution. Parents need to be equipped to continue the learning at home. For families in poverty, the parents may not be able to support their children’s cognitive development. It’s not necessarily that the parents are uneducated, but they might be unavailable to be there for the children because they are stuck in low-paying jobs with schedules that conflict with their ability to help the kids with homework.

From a societal standpoint, more needs to be done to support education in poverty-stricken areas, but the answer isn’t just giving money to schools for more materials. Schools need to attract highly-qualified teachers. Many individuals who could be great teachers don’t even consider teaching as a profession because talented people are in demand in the private sector and can find better-paying jobs in their field.

There need to be more programs that help kids develop into professional young adults. A financial company with which I’m familiar offers an intern program in a city with one of the lowest socio-economic profiles in the state. For two months, high school students had the opportunity to see what it was like working in an office (well, a cubicle). Some may have been scared away from the middle-class corporate job, but others will see the possibility to earn a living and be mostly financially independent.

There should be some type of encouragement or assistance for parents who for whatever reason can’t assist their children with learning outside of school, including affordable or free after-school programs. Most importantly, there needs to be instilled in the public the idea that education is one thing that can practically ensure a life above the poverty line.

Money management

Families considered working poor might receive a paycheck or might receive their pay in cash. Either way, there’s a general mistrust of the financial industry. Rather than banks, many families living in poverty visit check cashing storefronts or payday lenders. Depending on where they live and the transportation available, these operations may be all that’s convenient, making banking as in its middle-class form all but impossible.

Sometimes the difference between living in poverty and not is having savings. Establishing savings is hard enough for people not living in poverty; it’s even more difficult for those who are. The idea is simple: manage to put 10% of your earnings aside. It’s not so easy when all you can afford is food for your family. The key is to start as small as possible and to make saving a priority.

Avoiding debt may seem impossible as well. Families living under the poverty line may not have access to mainstream credit options, like credit cards and mortgages, and instead need to make use of payday loans and short-term advances. To say that debt is slavery minimizes the true horribleness of real slavery, but there are certainly some aspects in common. For example, when your life is consumed by interest payments, the work you do doesn’t result in money for you and an increase of wealth, your work exists only to pay back your creditors and you have little to show for it at the end of the day.

Finally, we should be encouraging more participation among the poor in mainstream financial institutions like banks and credit unions. The finance industry won’t go for it for a variety of reasons, mainly due to the fact that these customers would not be profitable in the way banks like their customers to be profitable. They don’t make large deposits and they don’t qualify for credit cards. Many mainstream banks follow in the footsteps of payday lenders offering similar products at severely high prices when allowed.

Find better jobs

Leave the minimum-wage or just-above-minimum-wave jobs for middle-class teenagers who need a job to buy their first car. With a high school education, even someone living in poverty can find a new opportunity that pays better. If you can earn enough so that you can afford food and put money into a savings account or pay off debt, it will be much easier to move out of poverty. I know what it’s like to feel trapped in a job, and when you’re counting on every single cent of income, it can be difficult making any changes that might upset the pattern.

Life choices

Beyond valuing education, completing high school, managing money, and using mainstream savings vehicles, poverty is often the result in life choices that end up making all of the above more difficult. Having children at a point when a family is not equipped to do so is one way to increase the chances that life will be difficult. A high school child having a baby of her own will face difficulties completing education, particularly if the family is already within poverty. This isn’t The Secret Life of an American Teenager, this is people already struggling somehow needing to find a way to make life work with a new set of responsibilities and expenses.

It’s easy for someone on the outside to look at poverty and see the possibilities for improvement. It’s easy to say that we live in a country where everyone has an equal opportunity and the fact a family lives in poverty is that family’s own fault. There are societal and cultural pressures that make class mobility difficult, though. Many families appear to be fully functional in poverty, but there is untapped potential.

You can’t just tell someone that they can take control of their financial life to improve their condition and place in the world and expect it to work. Families in poverty must see the opportunities for themselves and find a way to break through. It helps to have an a philosophy based on an internal locus of control, but if there’s nobody to guide a family through this realization, it’s unlikely to happen.

To summarize, here are some keys to moving past poverty:

  • Belief that everyone has an opportunity to succeed, despite their upbringing and community.
  • Philosophy that anyone can control his or her own outcomes.
  • Recognition of the value of education and the support for learning outside the school.
  • Ability to save even a little bit of income and trusting that saving to a bank to earn compound interest.
  • Desire to eliminate debt, especially patterns of repeat debt like payday loans.
  • Opportunities for jobs beyond minimum wage.
  • Rejection of having children too early.

Article comments

Anonymous says:

I have many thoughts about this topic. As I’ve re read the article, Flexo, I see your bullet points as the basis for an educational program – integrated into high school level “Living Skills” programs. Something for you to think about. I can expound, if you like. I believe you have my email.

Anonymous says:

Another thought. There has to be a food chain. It’s a law of physics. If the lowest rung were altered to a higher elevation, it would still be the lowest link.

Anonymous says:

There are so many variables in life. I wonder if a person’s capabilities doesn’t have something to do with their economic station. Things happen that are beyond a person’s control, as well. There are many people who feel college is a waste of earning years. These are focused individuals – from an early age. I have friends – he is a janitor at the local school system, (worked his way up to management) she now works in the junior high kitchen. They live a low key life. They raised one child. Their account has 7 figures, ones they never talk about. Nothing has ever happened in their lives. Just solid and catastrophic free folks. They were smart and fortunate. Perhaps divinity is also a factor in poverty.

Anonymous says:

I agree education is a big part of being able to avoid poverty, but being financially smart doesn’t necessarily reflex a school or college education.

However I think marketing plays a big part in causing poverty 3000 ads every day if you’re in the US telling you to buy this product because it will make you beautiful or this product will give you a six pack.

In fact in the UK, Marketing to kids is now causing a lot of parent into poverty.

Parent are buying their kids products as a substitute for spends time with them because they are too busy working. But they are only too busy working to get there kids consumer goods (superficial happiness) to make up for the fact they are too busy working. MADNESS! Pity we can’t teach marketing blindness in school.

Anonymous says:

I worked in an inner city welfare office for five years. The biggest obstacle was definitely psychological. And there was a great need for mentors. If all a person knows is poverty, they can benefit greatly from the mentorship of a person in the middle class. Basic financial skills were absent. Knowledge many of us take for granted wasn’t there. Schools could help—-teaching basic financial management, to me, seems a lot more important than advanced algebra.

Anonymous says:

I definitely agree that schools should teach basic financial mgmt. They may be better at it now, but a few years ago when my daughter graduated, she went off to college not knowing how to balance her checkbook. I was flabergasted – and taught her myself of course.

She made good grades in high school, passed all the required math classes and was heading off to learn small business mgmt. Yet, she seriously did not know how to balance a checkbook, open a bank account, fill out wihholding forms at work or anything practical. I do think our local school has a “life skills” class now that does teach this type of thing. I hope all schools do.

Anonymous says:

I agree that education in general and in financial matters is key to helping those in poverty improve their situation. But in reality I would guess that some are actually doing better than their “income” suggests. For instance, if a family of four earns only $22000/yr, they undoubtedly qualify for food stamps, Medicaid, HEAP, WIC, school tuition assistance, HUD home improvement programs, free school lunches, giant “earned income” tax refunds and numerous other programs.

I personally know one family that, although they make very little money, they pay for almost nothing. Their house has had improvements (new furnace, insulation, roof) done to it, paid for by a county program for low income families, they get food stamps, medicaid and who knows what else. In the meantime, they are not suffering. What little income they get they spend on computers, flat screen tv, toys for the kids, etc. They are basically living the American dream, because by earning so little, they get everything they need for free. Although some folks desperately need these social programs, the ones who know how to make them work may not make much money, but they are not “living in poverty” as we invision it.

You have to wonder if these programs actually encourage people to remain in their current life station. Why would you go through the work and hassle of improving yourself and your financial situation when the end result is you work harder and get less because now you have to pay for things you used to get for free and pay taxes to boot?

(I am not heartless, just trying to show another side of the coin.)

Anonymous says:

Well said!

Donna Freedman says:

That’s one family. Does it automatically follow that ALL people receiving public assistance are like that?
Obviously there are people who milk the system. But to assume everyone does is a big part of the disconnect in this country. “Those” people get everything handed to them. “Those” people don’t know what it’s like to work for a living.
Well, some of “those” people are working poor: No matter how hard they work they can’t get ahead due to complicated financial, cultural and, yes, psychological reasons. I’m related to some of them.

Anonymous says:

This is well said and covers all of my thoughts on this issue.

Anonymous says:

Yes, we cannot assume that everyone milks the system. As I said, I know some desperately need help and I agree that many work very hard, yet cannot seem to improve their situation. My point was I sometimes wonder if all the programs that are available to help the working poor might not, in fact, actually hurt some by removing the incentive to better one’s station in life.

Anonymous says:

Well I guess we might be able to ask ourselves the same thing. Are higher marginal tax rates, deduction phaseouts, AMT, and the like hurting us by removing our incentive to better ourselves? Though I guess since we don’t call it welfare, it has a much different connotation, more of making a shrewd financial decision rather than accepting government money.

Anonymous says:

A bit off course, but, if poverty families do not know how to escape because of small details, why are they still not taught in school? We teach sex ed, but not how to balance a check book or use the proper fork. When I was in school the basics were taught. Home Ec was just that. It included child care, cooking, sewing, and any of the survival skills. (an easy ‘A’)

My background is upper middle class, but these things were taught in all of the schools. The deal is in the details.

Anonymous says:

I agree with all of your suggestions and agree that the choices you make determine your outcome. I come from a family that lived in poverty. We were one step away from being on the street sometimes, lived on food stamps and free lunches all my childhood. I got an education, did not have kids from my own choosing, work my way up the ladder till I am fairly comfortable. Yet, I also know that I am one illness away from being in the same place as my parents. I also know, first hand, the subtle differences that society dishes out to those born and living in poverty. I would not get the first hand attention of teachers while in grade and high school, I did not get the ear or promotion due to lack of proper dress attire and proper manners. Let’s face it a child is not going to realize how important it is to lean the proper fork and the other side does not know that they should not discriminate due to the same. But is was always there and I saw and felt it. I am not sure that society will ever be any different.

But on the whole, IF you want to and you have good luck you can change your standard from poverty to middle class. But it is tough.

Anonymous says:

I’m always curious how much of a ‘choice’ people think poverty is. To some anyone poor has clearly chosen to be so through ‘bad decisions’ like dropping out, or taking a low paying job, yet to others they see poverty as inevitable, you might as well say that someone falling off a building is ‘choosing’ to fall down, rather than flap her arms and fly. (Mental health is another big area where this ambiguity comes in as well how much is someone ‘choosing’ to be depressed?)

To me I think much of it is decided when we’re very young (did you choose to be born in America?), but personal effort can really win the day. Yet all too often I think there’s a double standard between middle class and poor. For instance, if someone raised in a poor family ends up poor as well and in the same situation, they’re bad and have failed and made poor choices. Whereas I, from a middle class family, end up as a middle class guy, I am doing well and have made ‘good choices’.

But in each case we’re no better than our parents. So relatively me and a poor guy have put the same amount of effort into surpassing our heritages. He has to put in the extra effort to rise to an acceptable level, whereas I can skate by and still get accolades. To me that means I’m rather wary of casting stones about people making bad choices landing them in the poor house, after all my house is made of quite a bit of middle-class glass.

Anonymous says:

krantcents, I agree with you. Education is critical.

What I can’t get over is the poverty line itself. $11,000 a year for a single person seems low by any standard, especially in this era of hugely increasing consumer prices just for the staples- food and shelter.

Anonymous says:

People make a lot of bad choices to find themselves in poverty. The first is education, too many people do not finish high school for various reasons and end up in dead end jobs. They continue to make bad choices bby buying on credit things they do not need but want. Staying in school is ahuge first step to success!

Anonymous says:

I have come to realize that not everyone has the genetic capability to make ‘wise’ decisions. We can only draw from what we have learned or what we ‘go’ after. The variables are expotential.

I consider myself and my family blessed that we have high IQs and desires to advanance. Not everyone has these benefits.

Anonymous says:

My God, I sound like a snob here. It was not intended to sound that way.

Anonymous says:

This makes it overly simplistic to suggest that doing these steps will surely avoid poverty.

I tend to agree that education is important in improving your life, especially financially, Access to banking is relatively new. Pawnshops were more common for lower class and middle class people 50 years ago.

Many things in life are out of your control. Look at the employment situation nowadays. McDonalds had it hiring day last April for 65000 jobs. It drew over a million applicants. That meant the ratio of landing a job was less than what it was to get into any Ivy League institution. People from all educational backgrounds were seeking jobs. You can’t control your parents or how they raise you.

Anonymous says:

those are good points but we are such an ignorant society that either doesn’t value education or can’t afford higher education with the economy being what it is and scholarships/grants being cut. I do wonder how much of a boost would this economy have if americans wiped out their credit card & student loan debt.

Anonymous says:

I absolutely agree with wiping out debt for a fresh start. The economic environment would flourish.

Anonymous says:

I fully agree that education is a big part of being able to avoid poverty, but I don’t necessarily know that decisions that lead to poverty are based out of a sense of rationality (as you allude to). I think there’s a real sense of the expectation of failure among the impoverished, a sense of a fatal determinism that Kurt Vonnegut alludes to when he writes sentences like “So it goes.”

For (and in) her play “Let Me Down Easy,” Anna Deavere Smith interviewed various real people, and one of those people was a doctor at a hospital in a low-income section of New Orleans directly following Hurricane Katrina. The poignancy of the interview came by showing the divergent attitudes of the doctor and the patients. The doctor, who had been raised in a somewhat privileged environment (as many who have the opportunity for not only college but also graduate school are), could not fathom that the American government would work to evacuate other hospitals in the area while leaving the low-income hospital sitting and waiting. The patients, on the other hand, just accepted it. A lifetime of being told (expressly or indirectly) that you aren’t as important as other people leads a person to start believing it.

Luke Landes says:

I agree wholeheartedly, Bryan… and that’s why what seems “simple” on the surface isn’t always “easy…” a lifetime (or generations) of indoctrination into a poverty-based lifestyle isn’t easy to overcome, and the idea that all Americans have the same opportunities at birth is a bit naive.

Anonymous says:

If fact i’d say it is anything but easy. One change that many in poverty can do to improve their situation (and everyone else for that matter) is to work harder than the next guy. Go do those things that the next guy won’t. Do the research to find a way to stand out. Hustle; out work the next guy. Read more and watch TV less. You might not be able to be the next Bill Gates (he likely had better opportunities) but we can all improve within our own areas.