8 Things Poor People Spend More Money on That the Rich and Middle Class Don’t
Written by
Cindy Lamothe
Edited by
Molly Sullivan
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We all spend money differently, according to the socioeconomic class we belong to — these are unique behaviors that often guide how we allocate our money.
“For those grappling with poverty, accessing even basic necessities often comes at a higher cost due to limited resources and a lack of affordable options,” said Tom Bruzek, owner of Selling Land Fast. “Think about expenses like transportation, healthcare, and child care — essentials for staying afloat and engaging in work. For [poor people], every dollar spent carries weight, often forcing tough choices between essentials and sacrifices. It’s a constant balancing act, where financial strain is ever-present, shaping daily decisions and opportunities.”
Here are more ways those in poverty spend money differently from those of other classes.
Housing Fixes
“Quite often, the cheap housing is available in those neighborhoods that are more crime-infested but have fewer resources,” said Allison Montgomery, real estate investor and owner of Buy My House. “This may result in the buildings themselves to be aging and also, more problems can occur like leaky faucets and broken windows. These can be really expensive, especially if you get them when you already have few savings.”
“Then, perhaps it is harder to get rid of them in some districts where there are many pests, like cockroaches or mice, so you may need to spend some extra money to get rid of them,” she added.
Transportation Problems
“The car seems like one more necessity, but for families with low income, it can be a money-losing case,” Montgomery said.
She noted that with age and the decreasing number of years in which a car can be driven, old, cheaper autos tend to fail and repairs may result in a substantial payment.
“Insurance can be costly, and it can be only a vehicle mishap for it to even be so disastrous financially,” she said. “Public transportation could not be sufficient or punctual, [requiring] you to call a cab or hire UBER which you will need more for trips that are many in a day and that will become that costly.”
Healthy Foods
“Healthy food is very important but the thing is that healthy food is very expensive,” Montgomery said. “Fresh fruits and vegetables are usually more costly than processed goods which are rich with sugar and deficient in healthy essential fats.”
She said this is particularly the case in “food deserts” which are communities featuring a dearth of grocery stores within their spatial boundaries.
“At the end of it all, this may involve commuting longer distances or paying more for merely healthy options.”
Predatory Lenders
“Their main activity is the financing of payday loans and rent-to-own offers which are used by people with low incomes,” Montgomery said.
She said debt arrangement loans might look like a simple solution at the moment but are often accompanied by astronomical interest rates and fees.
“Not only do interest payments pile up, but you might end up owing money beyond your ability to pay, which in turn, locks you in a vicious circle of debt,” she added.
Car Title Loans
These title loans are provided against a car’s title, Montgomery explained.
“If you sometimes fail to pay, they can take away your car, which you won’t have left to take to work, to take your family, or just enjoy your free time,” Montgomery said.
Minimum Payments
“Simply paying the minimum payment on your credit card or other types of debts can make all the difference in your budget every month,” Montgomery said. “It does not feel like you are actually making a splash, but rather, you are merely surviving.”
Ideally, you would keep debts like credit cards paid off so that your funds are able to be put elsewhere, like in an emergency fund.
Dreaded Unexpected Expenses
Compared to other classes, those living in poverty have no safety net to fall back on.
“A busted car radiator or a visit to the hospital can appear as a potential financial catastrophe for you,” Montgomery said. “If you don’t have any savings, chances are that you’ll be using a credit card, or getting a loan that will just make your debt burden even bigger.”
For instance, she said you might charge a credit card for an emergency expenditure like the above, and then find that you cannot make a full payment next month.
“The end-of-month late fees are added to this, just when it’s hard to pay back.”
Purchases To Help Alleviate Stress
According to Liz Hutz, owner of Cash Home Buyers Georgia, individuals experiencing poverty often allocate their limited resources quite differently from those who are affluent or middle class.
“It’s crucial to understand that some expenditures by the poor, like on cigarettes, alcohol, or lottery tickets, might appear nonessential, yet they often serve as coping mechanisms amid the stress of financial struggles,” she highlighted. These purchases offer fleeting moments of relief, albeit at a cost, providing a brief escape from the harsh realities of poverty.”
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