I Grew Up Poor: These Are the 7 Money Habits I Swear By Now
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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Poverty is a condition that nobody would wish on themselves or others. As of 2021, the official U.S. poverty rate, according to the Census, was 11.6% or around 37.9 million people living in poverty in this country. Not having enough, constantly scraping for money and struggling to afford basic necessities can have a lasting emotional impact on a person’s life and shape how you handle money. However, in some people, it leads to good money habits out of necessity.
GOBankingRates recently reported how many self-made millionaires actually started out poor and took their circumstances as motivation to do better for themselves in life. Now, we’ve spoken to two people who grew up in poor or low-income circumstances about the money habits they swear by. Tim Toterhi, a chief human resources officer and the founder of Plotline Leadership and Frano Grgić, a software engineer and Forex trader who offers investment advice at GetKnowInvesting, gave their insights into the habits they keep.
Make a Budget
Toterhi remembers growing up poor in the ’70s when, “You couldn’t fake a certain lifestyle with an iPhone, credit cards, and social media. The reality of government cheese, paper food stamps, and hand-me-down clothes made your situation readily apparent. And it motivated you to change it.”
It was harder to get a credit card then, he said, so he was forced to create a monthly budget. “I wrote checks for all standard bills like rent, utilities, etc. in advance. This made the reality of what was left for food, gas, entertainment, etc. hard to ignore and. It also clarified a choice. If I wanted to advance and avoid debt I’d have to work more hours or find different work.”
Substance Beats Style: Invest In Yourself
Another lesson Toterhi learned is “Don’t be fooled by flash. There are poor people at every income level.” In other words, you can spend beyond your means no matter how much you make.
“It’s tempting to keep up with the Joneses-to lease a luxury car, mortgage a McMansion, or drop an insane amount on fancy clothes. But those things don’t advance your situation. When you live below your means you can save more, invest more, and have security from the unknown pitfalls in life. The choice adds up quickly,” he said.
Don’t Live Beyond Your Means
For example, he suggested that instead of leasing a new car every three years, buy a modest one and keep it for 15. “Then instead of making payments to a dealer…enhance your retirement savings or start a 529 for your kid(s). It might feel like you’re missing out at first, but as the college fund grows, that old car becomes a point of pride. The habit takes a would-be status symbol and turns it into a sign of future prosperity.”
Pay What Is Mandatory First
Frano Grgić knew a very unique kind of poverty — his family was forced to flee Bosnia Herzegovina in 1990 to escape war. His parents and two other siblings came to the U.S. “without property and money in our pockets,” he said.
So he knows the importance of paying your bills first. “Do not buy everything you see-buy what you need, and if you have extra money then buy one thing [for yourself] per month.”
DIY When You Can
Even after his family had reached a more stable level of income, his parents did not have the money to pay a big contractor to build a house. “My parents tried to do it all by themself. Not using a company under contract because it was expensive. And calling our relatives to help us.”
Build Emergency Funds
Coming to this country with nothing, Grgić knows better than others the importance of having financial padding. “Always have at least several months’ total living cost saved just in case something happens,” he urged. People in poverty know better than anyone else just how frequently unexpected costs can crop up.
Give Back to Others
Despite many hardships in his life, Grgić is grateful for all the help he and his family have received along the way and believes in giving back. “If you have extra money after you have done all the above then give money to others who also need money, like a church, the homeless etc.. It will be returned to you in some way.”
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