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There's a huge difference between being first world poor, and third world poor. Just my experience, but my first world poor friends, without exception are all

There's a huge difference between being first world poor, and third world poor. Just my experience, but my first world poor friends, without exception are all bad with money. They have little understanding of how money actually works, have terrible spending habits, are incredibly risk averse, and carry a "money is evil" mindset. If it's possible for you to live within your means (edit: putting aside illness, addictions, felonies etc), you can build wealth at a good rate in the first world. You may never be a multi-millionaire, but you can be financially secure and stable.

macintux 8y ago
> If it's possible for you to live within your means, you can build wealth at a good rate in the first world. There are a significant number of exceptions to this idea. If you dig a deep enough hole (drug problems, felonies, etc) it's hard to just keep a roof over your head. And sure, "it's their fault", but for a lot of people the die was cast when they were very young. (Update: I should clarify that this may be a U.S. problem vs a first world problem. The safety net here is abysmal, speaking as someone who has spent way too much time and money helping a friend manage.)
- soulnothing 8y ago
  [removed]
  - distances 8y ago
    Are you sure you mean upper six figures, and not five? With high six figures your one month's salary would dwarf your savings, which sounds quite implausible.
    - hermitdev 8y ago
      I think the GP probably meant upper end of the [100k, 200k) range. If they truly meant upper end of the [100k, 1M) range and they're still in the same state of having a mere combined 11k saved...they're doing something horribly wrong with their finances and should take a step back and reevaluate their personal finances. I'm in the [100k, 200k) range, and I've had to reevaluate my finances. I used to live pretty comfortably on less than half my income. I had no credit card debt, my $50k car was paid off. Student loans were paid off a decade ago. Then, I got married and now have 2 step children. Between moving into a larger place to accommodate the new family and all the costs associated with getting married, moving & furnishing a larger place, I'm just now about to start to get our heads above water. I had to take money out of savings before we could get outflow to be less than inflow.
      - soulnothing 8y ago
        Replying here, because I had no time to reply here earlier due to meetings. Anyway yes between 150 - 200k range. My prior comment before removed was 5k savings, 11k 401k. I had more, but life events. For me, it's a variety of things. Largely summed up as I bought a house at 25. Had health issues that were in remission, then came back. And have been trying to get above water since. I know a number of software engineers, who are in it just to pay the bills. As the pay increases so do the responiblities you hold.
- retrac98 8y ago
  Apologies, I wasn't clear. The "If it's possible for you to live within your means" qualifier was for these sorts of things. Depending on their severity, addictions, felonies, learning difficulties and health problems (and many other things) could all be legitimate limiters on wealth building.
  - macintux 8y ago
    Sorry, I interpreted that as "if you're disciplined enough". Carry on.
  - deleted 8y ago
    [deleted]
rubidium 8y ago
I agree... assuming no health/personal catastrophes for you or your family, stable employment, and good training in financial planning. Those are some big assumptions.
- djrogers 8y ago
  > Those are some big assumptions. Not really, the vast majority of those living in first world nations don't have catastrophic events that ruin them financially. Also, you don't need 'good training in financial planning', you just need the same amount of common sense my grandparents had - spend less than you earn, and set something aside for a rainy day.
  - supernovae 8y ago
    I was laid off in 2008, couldn't get work, had to move to a different state, cashed out my 401k and sold my house 80 grand under what i paid for it and couldn't buy a new house for several years because of law. Then my hands started hurting and I found out i had vikings disease... i type for a living. first process cost about a grand, insurance doesn't cover much of it. Now both my hands are worse off and i'm looking at another surgery which will cost more that insurance won't cover. My wife got into a car accident and we need two cars since i work and she home schools. My parents are assholes and don't give a shit about myself or my family and my wifes immediate family is all dead. We inherited nothing. Raised 2 kids by ourselves, no grandma/no grandpa, no aunts, no uncles. The world is trying hard to really fuck people over, and i've managed to stay on top of it. Now my kids need jaw surgery and another needs teeth work - dental coverage is a joke. The jaw surgery is going to cost 5 grand and the others dental is 1700. My property taxes are going up year over year. Maintenance costs are going up year over year, salaries have gone up but not as quickly and the tax relief was a joke. spend less than you earn sounds esier on paper than reality of living. we downsized our homes, we don't have cable tv, i use a company phone for cell phone, i'm always having to reduce my 401k contributions and even when i try and rollover my prior 401ks that shit is perpetually frozen and no matter where i turn or what I do it seems something is trying to stop me or block me. it's not as easy as people make life out to be
mustacheemperor 8y ago
>my first world poor friends...are all bad with money This is a well documented phenomenon.[0][1] The state of being in poverty has a significant effect on your cognitive processes evaluating risk and reward and future planning. For people who grew up in poverty, those programmed biases can be extremely challenging to overcome and limit their upward mobility. There's also the aphorism that it's "expensive to be poor." The boots metaphor and all that. As to building wealth at a good rate, doing that from a state of relative stability vs a state of relative poverty are two entirely different scopes. "Escaping poverty requires almost 20 years with nothing going wrong." When 5 years of savings can be wiped out by a car repair that means you can't get to your job, you can lose 5 years of progress in one bad event.[2] The problem with that statement is whether it "is possible to live within your means." It can be exceptionally challenging and complicated to live within your means while impoverished but still move upwards and respond to emergencies and disasters. And it's doubly much to ask that kind of complex planning from someone affected by the deleterious cognitive effects of poverty documented above. [0]http://behavioralscientist.org/can-neuroscientists-help-us-understand-fight-effects-childhood-poverty/ http://behavioralscientist.org/can-neuroscientists-help-us-u... [1]https://blogs.scientificamerican.com/sa-visual/this-is-your-brain-on-poverty/ https://blogs.scientificamerican.com/sa-visual/this-is-your-... [1]https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/ https://www.theatlantic.com/business/archive/2017/04/economi...
- simonsarris 8y ago
  That's interesting because its also well documented that "Poverty decreases IQ" studies are contentious and not well replicated. > Mani et al. (Research Articles, 30 August, p. 976) presented laboratory experiments that aimed to show that poverty-related worries impede cognitive functioning. A reanalysis without dichotomization of income fails to corroborate their findings and highlights spurious interactions between income and experimental manipulation due to ceiling effects caused by short and easy tests. This suggests that effects of financial worries are not limited to the poor. Comment on "Poverty Impedes Cognitive Function" (PDF Download Available). Available from: https://www.researchgate.net/publication/259207757_Comment_on_Poverty_Impedes_Cognitive_Function https://www.researchgate.net/publication/259207757_Comment_o...
- deleted 8y ago
amorphid 8y ago
>> If it's possible for you to live within your means, you can build wealth at a good rate in the first world. That's true if you're well insured, never become disabled, can find & maintain regular employment that pays a living wage, have access to a reasonable cost of living, and are savvy enough to figure all that out.
ddebernardy 8y ago
Aren't about half of US personal bankruptcies (or were, before Obamacare) because of medical debt? It might be just me, but I was under the impression that having negative net worth in the US has a lot to do with which cards you're dealt in life.
- sol_remmy 8y ago
  And there are plenty of slackers who never accumulate any money but don't have catastrophic medical conditions. They will never declare bankruptcy. OP is referring to those.
  - ddebernardy 8y ago
    But even then, labeling them as slackers strikes me as callous to some degree. Where I'm from, and in the various countries I've lived in (including the US), I've met plenty of people who for one reason or another couldn't - bar sheer luck - get a job that pays anything decent. Be it lack of connections, no idea how to build those connections, lack of ambition, lack of education, whatever. There were good reasons, and probably not so great ones, but in practice I seldom got the feel it was about good spending habits or slacking. If anything, and anecdotally, I probably met more people with terrible saving habits when interacting with segments of the population that were rather well off to begin with - that is, they had excess cash or the potential for it. The "worst" example I can think of was a patent attorney who charged $500/hour, worked a single client per month to make ends meet, and enjoyed life the rest of the time. $10/hour or $2/hour people just don't do that insofar as I've interacted with them - and I did quite a bit while traveling. The "worst" I've encountered on their end were people deciding to work less hours after they got a raise because, you know, they only need so much to make ends meet and were happy with earning just that; and no assets/low income folks getting subprime loans just before the housing crisis. Admittedly it's only a small unrepresentative sample at the end of the day, but I honestly never got the impression the low wage earners I interacted with were slackers or spending like there was no tomorrow. Mostly (if only potentially) mid- to high wage earners were, and they oftentimes had some savings or could earn money in a heartbeat if they really needed to. They're far from the majority of the population.
BadassFractal 8y ago
Any advice on how to learn to not be "bad with money"?
- chillingeffect 8y ago
  research purchases extensively, comparisok shop, buy used, learn to sew and solder, cook plant-based food, exercise outdoors, value down time and low cost entertainment like board games, reading, drawing and making music.
- tastyfreeze 8y ago
  There are plenty of resources available. The personal finance subreddit is a good place to start. If you are looking more for the wealth building side of personal finance I recommend Rich Dad, Poor Dad or Dave Ramsey to start changing your ideas about money. https://reddit.com/r/personalfinance https://reddit.com/r/personalfinance
- nickjj 8y ago
  A lot of it is self control and that doesn't necessarily mean living with the least amount of money possible. It just means understanding how much you make and how much you can afford to spend. The first step is to track your incoming / outgoing financials. Just like programming, in order to fix the problem you need to understand what the problem is and tracking your $ for a few months will show you exactly what's going wrong.
- the_gastropod 8y ago
  A book that changed my life, Your Money or Your Life, by Vicky Robin and Joe Dominguez, was recently re-published with some updated info. If you're the reading type, you should pick up a copy at your library. It guides you through making peace with your past, figuring out your real income and spending, tracking your savings/spending every month, thinking about expenses in terms of hours of your life, etc. If you get an older copy, just don't take the investment advise too seriously—it's pretty out-of-date. Everything else is gold.
  - mi100hael 8y ago
cascom 8y ago
I think people are using different definitions of poor here. The article references NET WORTH not INCOME e.g. a doctor earning $200k a year but with $200k of medical debt is "poor." over 50% of households make >$50k a year in the U.S. but many of them have very little net worth...some of them are unlucky, but many of them make decisions that keep them with very little money in their pocket...
- Symmetry 8y ago
  Honestly we should be looking at consumption rather than income. Of the ten poorest communities in the US by income half are college towns. Most college students have low incomes but I don't think it's right to consider them poor either given that this is generally a temporary state and they're frequently living better than their age-mates who aren't are working full time instead of attending college and thus have higher incomes.
  - tasuki 8y ago
    What about people who earn lots but choose not to consume much? Are they poor?
    - Symmetry 8y ago
      They're not poor but I think there are few enough people voluntarily consuming less than $12,140 a year when they could live better that I'm comfortable ignoring them in the relevant statistics.
rosser 8y ago
“Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed.” ― Herman Melville
jk2323 8y ago
"There's a huge difference between being first world poor, and third world poor." True. "but my first world poor friends, without exception are all bad with money." ROTFL. What about your third world friend? This may give you an idea. Read this: https://news.ycombinator.com/item?id=17218250 https://news.ycombinator.com/item?id=17218250
notheguyouthink 8y ago
> risk averse I'm confused what you mean here - isn't a degree of risk aversion good? I feel like "most people" are incredibly not risk averse, in that they recognize that they have little savings to no savings, emergency funds and etc but still behave like they are not at risk. I however, keep a 4-6mo fully liquid because I'm terrified at the thought of only having 1mo in liquid. Tbh, I'd love to have 12mo, but anything beyond 4-6 and it starts feeling obscene not investing the extra.
diogenescynic 8y ago
Most people in America are one medical trip away from financial ruin. That’s a bit different from other developed counties.
jamesb93 8y ago
You are assuming they are poor because of choice and not because of systemic abject poverty. Yeah its easy to save 60000 dollars a year if you make 200000 p/a but the likelihood of someone in a lower-class robo job saving significant amounts of money is very low.

macintux 8y ago

> If it's possible for you to live within your means, you can build wealth at a good rate in the first world. There are a significant number of exceptions to this idea. If you dig a deep enough hole (drug problems, felonies, etc) it's hard to just keep a roof over your head. And sure, "it's their fault", but for a lot of people the die was cast when they were very young. (Update: I should clarify that this may be a U.S. problem vs a first world problem. The safety net here is abysmal, speaking as someone who has spent way too much time and money helping a friend manage.)

soulnothing 8y ago
[removed]
- distances 8y ago
  Are you sure you mean upper six figures, and not five? With high six figures your one month's salary would dwarf your savings, which sounds quite implausible.
  - hermitdev 8y ago
    I think the GP probably meant upper end of the [100k, 200k) range. If they truly meant upper end of the [100k, 1M) range and they're still in the same state of having a mere combined 11k saved...they're doing something horribly wrong with their finances and should take a step back and reevaluate their personal finances. I'm in the [100k, 200k) range, and I've had to reevaluate my finances. I used to live pretty comfortably on less than half my income. I had no credit card debt, my $50k car was paid off. Student loans were paid off a decade ago. Then, I got married and now have 2 step children. Between moving into a larger place to accommodate the new family and all the costs associated with getting married, moving & furnishing a larger place, I'm just now about to start to get our heads above water. I had to take money out of savings before we could get outflow to be less than inflow.
    - soulnothing 8y ago
      Replying here, because I had no time to reply here earlier due to meetings. Anyway yes between 150 - 200k range. My prior comment before removed was 5k savings, 11k 401k. I had more, but life events. For me, it's a variety of things. Largely summed up as I bought a house at 25. Had health issues that were in remission, then came back. And have been trying to get above water since. I know a number of software engineers, who are in it just to pay the bills. As the pay increases so do the responiblities you hold.
retrac98 8y ago
Apologies, I wasn't clear. The "If it's possible for you to live within your means" qualifier was for these sorts of things. Depending on their severity, addictions, felonies, learning difficulties and health problems (and many other things) could all be legitimate limiters on wealth building.
- macintux 8y ago
  Sorry, I interpreted that as "if you're disciplined enough". Carry on.
- deleted 8y ago
  [deleted]

rubidium 8y ago

I agree... assuming no health/personal catastrophes for you or your family, stable employment, and good training in financial planning. Those are some big assumptions.

djrogers 8y ago
> Those are some big assumptions. Not really, the vast majority of those living in first world nations don't have catastrophic events that ruin them financially. Also, you don't need 'good training in financial planning', you just need the same amount of common sense my grandparents had - spend less than you earn, and set something aside for a rainy day.
- supernovae 8y ago
  I was laid off in 2008, couldn't get work, had to move to a different state, cashed out my 401k and sold my house 80 grand under what i paid for it and couldn't buy a new house for several years because of law. Then my hands started hurting and I found out i had vikings disease... i type for a living. first process cost about a grand, insurance doesn't cover much of it. Now both my hands are worse off and i'm looking at another surgery which will cost more that insurance won't cover. My wife got into a car accident and we need two cars since i work and she home schools. My parents are assholes and don't give a shit about myself or my family and my wifes immediate family is all dead. We inherited nothing. Raised 2 kids by ourselves, no grandma/no grandpa, no aunts, no uncles. The world is trying hard to really fuck people over, and i've managed to stay on top of it. Now my kids need jaw surgery and another needs teeth work - dental coverage is a joke. The jaw surgery is going to cost 5 grand and the others dental is 1700. My property taxes are going up year over year. Maintenance costs are going up year over year, salaries have gone up but not as quickly and the tax relief was a joke. spend less than you earn sounds esier on paper than reality of living. we downsized our homes, we don't have cable tv, i use a company phone for cell phone, i'm always having to reduce my 401k contributions and even when i try and rollover my prior 401ks that shit is perpetually frozen and no matter where i turn or what I do it seems something is trying to stop me or block me. it's not as easy as people make life out to be

mustacheemperor 8y ago

>my first world poor friends...are all bad with money This is a well documented phenomenon.[0][1] The state of being in poverty has a significant effect on your cognitive processes evaluating risk and reward and future planning. For people who grew up in poverty, those programmed biases can be extremely challenging to overcome and limit their upward mobility. There's also the aphorism that it's "expensive to be poor." The boots metaphor and all that. As to building wealth at a good rate, doing that from a state of relative stability vs a state of relative poverty are two entirely different scopes. "Escaping poverty requires almost 20 years with nothing going wrong." When 5 years of savings can be wiped out by a car repair that means you can't get to your job, you can lose 5 years of progress in one bad event.[2] The problem with that statement is whether it "is possible to live within your means." It can be exceptionally challenging and complicated to live within your means while impoverished but still move upwards and respond to emergencies and disasters. And it's doubly much to ask that kind of complex planning from someone affected by the deleterious cognitive effects of poverty documented above. [0]http://behavioralscientist.org/can-neuroscientists-help-us-understand-fight-effects-childhood-poverty/ http://behavioralscientist.org/can-neuroscientists-help-us-u... [1]https://blogs.scientificamerican.com/sa-visual/this-is-your-brain-on-poverty/ https://blogs.scientificamerican.com/sa-visual/this-is-your-... [1]https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/ https://www.theatlantic.com/business/archive/2017/04/economi...

simonsarris 8y ago
That's interesting because its also well documented that "Poverty decreases IQ" studies are contentious and not well replicated. > Mani et al. (Research Articles, 30 August, p. 976) presented laboratory experiments that aimed to show that poverty-related worries impede cognitive functioning. A reanalysis without dichotomization of income fails to corroborate their findings and highlights spurious interactions between income and experimental manipulation due to ceiling effects caused by short and easy tests. This suggests that effects of financial worries are not limited to the poor. Comment on "Poverty Impedes Cognitive Function" (PDF Download Available). Available from: https://www.researchgate.net/publication/259207757_Comment_on_Poverty_Impedes_Cognitive_Function https://www.researchgate.net/publication/259207757_Comment_o...
deleted 8y ago

amorphid 8y ago

>> If it's possible for you to live within your means, you can build wealth at a good rate in the first world. That's true if you're well insured, never become disabled, can find & maintain regular employment that pays a living wage, have access to a reasonable cost of living, and are savvy enough to figure all that out.

ddebernardy 8y ago

Aren't about half of US personal bankruptcies (or were, before Obamacare) because of medical debt? It might be just me, but I was under the impression that having negative net worth in the US has a lot to do with which cards you're dealt in life.

sol_remmy 8y ago
And there are plenty of slackers who never accumulate any money but don't have catastrophic medical conditions. They will never declare bankruptcy. OP is referring to those.
- ddebernardy 8y ago
  But even then, labeling them as slackers strikes me as callous to some degree. Where I'm from, and in the various countries I've lived in (including the US), I've met plenty of people who for one reason or another couldn't - bar sheer luck - get a job that pays anything decent. Be it lack of connections, no idea how to build those connections, lack of ambition, lack of education, whatever. There were good reasons, and probably not so great ones, but in practice I seldom got the feel it was about good spending habits or slacking. If anything, and anecdotally, I probably met more people with terrible saving habits when interacting with segments of the population that were rather well off to begin with - that is, they had excess cash or the potential for it. The "worst" example I can think of was a patent attorney who charged $500/hour, worked a single client per month to make ends meet, and enjoyed life the rest of the time. $10/hour or $2/hour people just don't do that insofar as I've interacted with them - and I did quite a bit while traveling. The "worst" I've encountered on their end were people deciding to work less hours after they got a raise because, you know, they only need so much to make ends meet and were happy with earning just that; and no assets/low income folks getting subprime loans just before the housing crisis. Admittedly it's only a small unrepresentative sample at the end of the day, but I honestly never got the impression the low wage earners I interacted with were slackers or spending like there was no tomorrow. Mostly (if only potentially) mid- to high wage earners were, and they oftentimes had some savings or could earn money in a heartbeat if they really needed to. They're far from the majority of the population.

BadassFractal 8y ago

Any advice on how to learn to not be "bad with money"?

chillingeffect 8y ago
research purchases extensively, comparisok shop, buy used, learn to sew and solder, cook plant-based food, exercise outdoors, value down time and low cost entertainment like board games, reading, drawing and making music.
tastyfreeze 8y ago
There are plenty of resources available. The personal finance subreddit is a good place to start. If you are looking more for the wealth building side of personal finance I recommend Rich Dad, Poor Dad or Dave Ramsey to start changing your ideas about money. https://reddit.com/r/personalfinance https://reddit.com/r/personalfinance
nickjj 8y ago
A lot of it is self control and that doesn't necessarily mean living with the least amount of money possible. It just means understanding how much you make and how much you can afford to spend. The first step is to track your incoming / outgoing financials. Just like programming, in order to fix the problem you need to understand what the problem is and tracking your $ for a few months will show you exactly what's going wrong.
the_gastropod 8y ago
A book that changed my life, Your Money or Your Life, by Vicky Robin and Joe Dominguez, was recently re-published with some updated info. If you're the reading type, you should pick up a copy at your library. It guides you through making peace with your past, figuring out your real income and spending, tracking your savings/spending every month, thinking about expenses in terms of hours of your life, etc. If you get an older copy, just don't take the investment advise too seriously—it's pretty out-of-date. Everything else is gold.
- mi100hael 8y ago

cascom 8y ago

I think people are using different definitions of poor here. The article references NET WORTH not INCOME e.g. a doctor earning $200k a year but with $200k of medical debt is "poor." over 50% of households make >$50k a year in the U.S. but many of them have very little net worth...some of them are unlucky, but many of them make decisions that keep them with very little money in their pocket...

Symmetry 8y ago
Honestly we should be looking at consumption rather than income. Of the ten poorest communities in the US by income half are college towns. Most college students have low incomes but I don't think it's right to consider them poor either given that this is generally a temporary state and they're frequently living better than their age-mates who aren't are working full time instead of attending college and thus have higher incomes.
- tasuki 8y ago
  What about people who earn lots but choose not to consume much? Are they poor?
  - Symmetry 8y ago
    They're not poor but I think there are few enough people voluntarily consuming less than $12,140 a year when they could live better that I'm comfortable ignoring them in the relevant statistics.

rosser 8y ago

“Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed.” ― Herman Melville

jk2323 8y ago

"There's a huge difference between being first world poor, and third world poor." True. "but my first world poor friends, without exception are all bad with money." ROTFL. What about your third world friend? This may give you an idea. Read this: https://news.ycombinator.com/item?id=17218250 https://news.ycombinator.com/item?id=17218250

notheguyouthink 8y ago

> risk averse I'm confused what you mean here - isn't a degree of risk aversion good? I feel like "most people" are incredibly not risk averse, in that they recognize that they have little savings to no savings, emergency funds and etc but still behave like they are not at risk. I however, keep a 4-6mo fully liquid because I'm terrified at the thought of only having 1mo in liquid. Tbh, I'd love to have 12mo, but anything beyond 4-6 and it starts feeling obscene not investing the extra.

diogenescynic 8y ago

Most people in America are one medical trip away from financial ruin. That’s a bit different from other developed counties.

jamesb93 8y ago

You are assuming they are poor because of choice and not because of systemic abject poverty. Yeah its easy to save 60000 dollars a year if you make 200000 p/a but the likelihood of someone in a lower-class robo job saving significant amounts of money is very low.