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Do you know what Cinderella did to get ahead? She planted a tree. And watered it daily with her tears. The point is that class mobility has literally been a fairy tale for most of human history.

Why Are Poor People Poor and Rich People Rich?

In a society that’s supposedly equitable, why are some people poor, and other people rich?

Piggy and I discussed a ton of things when we first started talking about starting a personal finance blog. But one thing we didn’t talk about was our target audience. We didn’t have to! We both knew immediately that we wanted it to be for broke young folks.

Our twenties were a decade-long financial panic. It was so stressful trying to figure everything out on our own. So we spent a lot of time talking about how traditional financial advice had failed people like us.

Some advice failed simply for being too old. It relied on outdated growth models. Or ignored a rapidly changing globalized economy. Or discounted the possibilities of living in a world transformed by technology.

These failures were innocent.

Others were not.

Much advice we’ve encountered conflates the virtues of wisdom, self-control, independence, perseverance, diligence, vision, and thrift with the state of being financially solvent. Whether directly stated or merely implied, people who are poor are poor because they are therefore foolish, indulgent, leeching, lazy, idle, short-sighted, and wasteful pieces of shit.

No. What are you. No.

I do not know of a single misconception that has damaged society more. I have seen so many powerful people wield it like a scepter, a symbol of their divine right to their disproportionate wealth. And even sadder, I have seen many more powerless people use it as a cudgel against one another.

It’s embedded so deeply in American sensibilities I couldn’t pry it out with the claw-end of a hammer.

The way it’s supposed to work

The American Dream is defined by it: “through dedication and with a can-do spirit, [anyone can] climb the ladder of success.” You may transcend social and class barriers, get the life you want, own the things you need, ensure your children will want for nothing, and establish a lasting legacy for your family.


If you think I’m about to drop trou’ and take a shit on the American Dream, you’re wrong. The American Dream is a really, really beautiful idea. It represents a great leap forward in the rags-to-riches story that humans have been eagerly gobbling up for millennia.

Do you know what Cinderella did to get ahead? She planted a tree. And watered it daily with her tears. Yeah. Angels had to take pity on her financial inertia. They threw down dresses of increasing quality until she was eventually made kween.

And you know how Aladdin ended up rich?* He found not one, but TWO imprisoned genies.


Also, he snuck into Princess Badroulbadour’s bedroom and raped her, then told her it was her fault because she was just too pretty to resist so fuck that guy. Sorry, wrong Ted Talk!

The way it actually works

The point is that class mobility has literally been a fairy tale for most of human history. In moments of extreme unrest, you might get the odd up-and-comer—did you know Genghis Khan spent his youth as a homeless beggar?—but these were exceptional figures. If you give me the choice between trying to build wealth now, and any other point in history, I’d choose now.

The American Dream is a lovely thing because it promotes the idea that you have some control over your own destiny. It teaches the dreamer to value hard work, perseverance, risk-taking, and independence. And although following those prescriptions is not a guarantee of automatic success, each of those values are independently worthy. Failure can direct your steps toward new and unexpected rewards.

Like this, right?
Girl. This is not a defensible financial strategy, girl.

But there is one glaring error in the supposition of the American Dream: that the world is inherently fair.

It isn’t.

“Poor people are poor because they’re unlucky.”

This statement is true. But it’s also incomplete.

The leading cause of bankruptcy in America isn’t laziness, dumbness, or extravagance: it’s illness. 42% of Americans who filed for bankruptcy did so because they were drowning in medical bills. The ugly and ungenerous part of your heart might say “those irresponsible fools should’ve had insurance.” Welp, 78% of them did.

The second leading cause of bankruptcy is job loss, at 22%. I wonder how much of that 12% minority didn’t have insurance because they’d been laid off and couldn’t afford the massive cost of paying out-of-pocket.

Sing it, sister.

It is true that there are certain things you can do to mitigate your health risks. Eat well, exercise regularly, be kind to your body. But each of these represents a tremendous task for someone living in poverty.

“Poor people are poor because they make bad decisions.”

Imagine yourself working a twelve-hour shift at a warehouse for $7.75/hr. You are mentally and physically exhausted. Your body is strained from heavy labor and repetitive motions. You’re starving. You earned $93 that day, and there’s a babysitter at home waiting to take $30 of it. You picked up an extra shift, and it starts in six hours.

What can we realistically expect of you in this situation? Get on the bus that may not run at that time, go to the grocery store that may not exist in your food-desert neighborhood, use the knowledge of human nutrition you may not have ever been taught in school, spend $25 of your hard-earned money on kale and beans or whatever, then schlepp home to spend another hour on your feet in the kitchen? Oh, and should you hit the gym before or after all that?

A $2 hamburger from the McDonald’s across the street begins to seem like a comparatively good decision. The problem, of course, is that a poor diet, little exercise, and manual labor are independently punishing to your health. Together, they’re literally deadly. But bad decisions often make sense for people who work long hours at multiple jobs for low pay.

“Poor people are poor because they’re lazy.”

It’s easy for me to make good decisions. My life is fucking easy!

I work only seven or eight hours, and only on weekdays. If I’m sick, I don’t have to go in, and I work from home whenever I like. I sit all day, which is only hard on my body insomuch as it’s too easy. Yeah, I’m soft!

But for the most part my health is good. My desk job gives me lots of downtime to find new healthy recipes to try. And I know what’s healthy because of the nutrition class I took at my fancy private college. Children aren’t something I want; good thing I’ve always been able to afford birth control and gynecological care!

No one ever asks me to defend my choices. They’re not perfect, but they make sense for my life! Because I am not a walking cultural contradiction. Unlike a hardworking poor person.

Finally we get to the heart of the matter. It’s easy to describe all these advantages as luck, and not untrue—but when luck is so often defined as escaping systemic inequality by virtue of your birth, it’s not really luck, but privilege.

“Poor people are poor because poverty spans generations.”

You don’t need a vivid imagination to see how a few generations of poverty can become an inescapable cycle.

A parent works hard to support their family at the expense of their own health. When the medical bills inevitably arrive, deeper levels of poverty come with them. The child leaves school to take care of the ailing parent, or takes whatever job they can to keep their family afloat. They may face levels of bias based on who they are that shrink their paycheck, diminish their health, increase their odds of being prosecuted for a crime, underserve them with inadequate educational systems, underrepresent them in government, and isolate them in communities with shitty infrastructures.


I have not consistently been rich. I’ve lived pockets of my life in poverty. My mother asked to borrow money from me often, starting when I was twelve. She needed my $300 in hoarded babysitting money and birthday checks to make rent. She paid it back, but she was desperate enough to endure the shame of taking it.

And it’s probably not that strange! Many rich people have a wallet full of stories like this. Maybe you (or your family) endured a divorce, bankruptcy, business failure, or down market that wounded you financially. But this is hunger—don’t mistake it for starvation.

“Poor people are poor because they’re powerless.”

I may have lived through such crises. Being wealthy doesn’t mean my life has been butterflies and daffodils 4 lyfe. All wealthy people go through struggles at some point. Feeling like you’re suffering and struggling is a quintessential part of the human condition.

But my interpersonal challenges have never erased my fundamental advantages. I still went to a great school in a well-funded district. My parents never lost my health insurance (or their own). I never lived in a neighborhood that wasn’t safe. I was always surrounded by free and low-cost options for enriching childcare. “Spoiled for choice” is how I would describe the wealth of public parks, fantastic libraries, and wholesome Midwestern after-school activities like 4-H, Girl Scouts, church programs, and sports teams I had access to. Man, our library had a book-mobile that drove to my street corner, parked for an hour every week, and let me rent as many books and VHS tapes as I could carry home with me! That shit was the bomb!

Those are advantages that I didn’t earn, but I wouldn’t call them luck either. They’re the same advantages my middle-class family has enjoyed for generations. They’re gifts from my family, my class, my race, my country of origin, my religion, my geographic location, and my local government, like a long chain of family inheritance. It’s power derived—however removed—from white supremacy and colonialism and a host of other evils.

“Poor people are poor because they’re systematically disadvantaged. “

Bootstrapping means “getting into (or out of) a situation using existing resources.” It’s a noble thing to attempt, and entirely possible for some people in some situations.

But assuming that all people have access to the same set of “existing resources” is a destructive and small-minded folly.

It is my personal experience that one of the great virtues of Millennials is their esteem for the virtue of empathy. It can be both easy and gratifying to pass judgement on those who rely on public assistance, food banks, disability, and other such “handouts.” Mock them, otherize them, vilify them, and push their faces down into the mess they’ve made of their lives—it’s one way to feel good about yourself. But it’s pretty savage, and you will find yourself no richer afterwards, monetarily or spiritually.

“Poor people are poor because they’re invisible.”

When a fabulously wealthy person walks down the street, it’s pretty common to see cameras following them to obsessively document the minutia of their lives. When a destitute person walks down the street, it’s pretty common for people to pretend they do not see anyone at all. I think people do this because wealth is so aspirational. Subconsciously (or consciously) we think “I could be in that rich guy’s shoes one day.” So we study him, admire him, make him famous. We even vote with his interests in mind—that’s how deeply we want to become like him.

"Why are poor people poor? Idk because they're lAzY?"

And girl, can I just tell you? You won’t. The same thought, applied to the other guy, is so much nearer to the average person’s realm of possibility: “I could be in that poor guy’s shoes one day.” So many Americans live exactly one bad turn away from financial ruin. And really, what does a fabulously wealthy person gain from your respect?

Come to think of it: what does a poor person?

“Poor people are poor because they don’t have enough money. And we are too busy blaming them to ask the obvious question: WHY?”

When I was still a student, I got a freelancing gig creating a marketing video for a hunger prevention nonprofit. One of the interviews stayed with me over the last ten years. It will stay with me the rest of my life. This is what she said:

“Sometimes there’s not enough food for me and the kids, so I’d let the kids eat. Sometimes I’d get so hungry I couldn’t fall asleep. When you’re that hungry, your body just wants to stay awake so it can go out and look for food. But I had to work the next day. So I’d set a bag of flour by my bed and eat spoonfuls of flour, to try to quiet the hunger enough to get to sleep at night.”

This woman had made terrible sacrifices to provide for her children what she could not provide for herself. Parents are quick to attest their willingness to take bullets for their children, which reflects a sort of impulsive, Gryffindory bravery that’s easy to promise and statistically impossible to collect. But this woman… This woman got into bed every night and lay in the darkness with a gnawing hunger that left her physically and mentally exhausted. In the morning, she’d pulled herself up and gone to work, where she’d have to wonder if she’d make enough to feed herself this time.

If that woman sounds lazy—or selfish, or stupid, or parasitical, or profligate, or any of the other nasty judgmental words we use to describe the poor—then I have lost all understanding of what those words mean.

9 thoughts to “Why Are Poor People Poor and Rich People Rich?”

  1. Thoroughly enjoyed this detailed description of what causes the financial divide, and why. Great job, ladies. You kicked some good financial sense with this well researched article. Love it!

  2. Damn this is good.

    The success narrative in the PF community is the thing I want to change the most. We’re too blind to our own advantages. We gloss over our own privilege, focusing instead on whatever tactics we happened to use and implying (or outright saying) that those tactics are the things that brought about the success. It’s kind of bullshit.

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