Poverty is a complex issue that affects millions of families worldwide. While external factors like economic downturns and natural disasters can play a role, many causes of family poverty are rooted in internal dynamics and personal choices.
Understanding these factors can help us address poverty more effectively and create strategies for families to build lasting financial stability.
How do we define “poor families”?
Forget those boring statistics for a moment. Here’s how we define a poor family: they’re dealing with basic issues like food and education, and they feel stuck in a situation where things just can’t get better. Even if they work hard, their lives don’t improve.
There could be many reasons for this—war, illness, and more. As a reader, you might feel like there’s nothing you can do about it.
That’s why this article focuses on what’s happening within families themselves.
Even in developed countries, many families struggle with poverty1. It’s not uncommon for someone to go from being well-off to being poor.
Let’s dive deeper…
By the end of this article, you might realize that you or someone you love could be part of the problem when it comes to poverty.
The Roots of Family Poverty
1. Family Discord and Disharmony
A harmonious family environment is crucial for financial success. When family members are constantly at odds with each other, it becomes challenging to focus on financial growth and stability. As the Chinese saying goes, “There has never been a prosperous family without harmony, nor a failing family without discord.”
Poor families often face a common issue: they spend most of their time dealing with “bad vibes” at home, which is clearly a big problem.
Even basic logic tells us that if everyone focuses their energy outside and brings money home, that’s the key to making a family wealthier.
But if our home is filled with anger, silent treatment, and arguments, we end up using our limited energy to manage family relationships instead of making money.
Yes, the family’s productivity gets drained from within.
Have you ever seen a country in civil war become wealthy?
Action step: Foster open communication and conflict resolution skills within your family. Regular family meetings can help address issues before they escalate.
2. Lack of Strong Family Values
The values passed down through generations can significantly impact a family’s financial trajectory. Take the case of the Pei family, which maintained its wealth for 16 generations2. Their family motto, “It’s better to leave virtue to your children than wealth,” emphasizes the importance of integrity and kindness over material possessions.
In contrast, families that prioritize short-term gains over long-term values may find themselves struggling. For example, a young man raised in a wealthy family where money was used to solve all problems eventually turned to crime, unable to distinguish right from wrong.
Quick tip: Regularly discuss and reinforce positive family values with all members, especially children.
3. Laziness and Bad Habits
Indolence and destructive habits can quickly erode a family’s wealth. The character Fugui from Yu Hua’s novel “To Live” squandered his family’s fortune through gambling and idleness, reducing them from landowners to peasants.
Similarly, a real-life middle manager destroyed his family’s finances through an addiction to sports betting, accumulating debts that would take 20 years to repay.
Warning sign: Be alert to family members developing addictive behaviors or showing signs of chronic laziness.
4. Undervaluing Education
Education is a powerful tool for breaking the cycle of poverty. Families that prioritize short-term gains over long-term educational investments often find themselves trapped in low-paying jobs.
A few decades ago, several countries in Asia, such as China, South Korea, and Singapore, rose to prominence at a nearly unbelievable rate, and the biggest commonality among these countries was: education and hard work3.
And the reason why Europe and the United States are the richest places in the world now is also because these countries value education and objective reality.
Did you know? According to the U.S. Bureau of Labor Statistics, in 2020, workers with a bachelor’s degree earned about 67% more per week than those with only a high school diploma4.
5. Neglecting Health
Health is wealth, quite literally. Lower-income families often neglect their health due to financial constraints or lack of awareness, leading to more severe and costly health issues in the long run.
A BBC documentary, “The Truth About Health,” found that people in lower socioeconomic groups are more likely to consume unhealthy foods, exercise less, and skip regular health check-ups5.
The book The Truth About Poverty offers a deeper look into this issue. Here’s a summary:
Illness reduces people’s ability to work, and high medical costs can trap poor families in a cycle of debt. This is a big part of the poverty trap. However, the author found that in many cases, the negative impacts of illness could be avoided with simple, low-cost solutions. For example, many poor children die from diarrhea, which could be treated with just a mixture of salt and sugar in water. Additionally, vaccines can help reduce the risk of serious diseases and the high costs associated with treating them later on. Yet, for various reasons, many poor people aren’t interested in these cheap and effective options. Instead, they often end up spending a lot or even going into debt when a family member’s illness becomes severe6.
Health tip: Prioritize preventive care and healthy lifestyle habits, even on a tight budget. Many communities offer free or low-cost health screenings and exercise programs. Also, always go for healthy eating rather than extravagant eating.
6. Limited Knowledge and Perspective
Sociologist Barbara Ehrenreich’s experiment, detailed in her book “Nickel and Dimed,” revealed that poverty is often perpetuated by a lack of knowledge and limited perspective rather than just financial constraints7.
For instance, a couple running a breakfast stall in Beijing missed the opportunity to invest in property when prices were low, not realizing the long-term benefits of such an investment.
Trying to change your perspective doesn’t need to cost tens of thousands of dollars, and you can start with these books:
- “Poor Economics” – Abhijit V. Banerjee and Esther Duflo
- “Thinking, Fast and Slow” – Daniel Kahneman
- “Outliers” – Malcolm Gladwell
- “Rich Dad Poor Dad” – Robert Kiyosaki
- “The Richest Man in Babylon” – George S. Clason
- “Freakonomics” – Steven D. Levitt and Stephen J. Dubner
- “The 7 Habits of Highly Effective People” – Stephen Covey
- “Mindset: The New Psychology of Success” – Carol S. Dweck
- “How to Win Friends and Influence People” – Dale Carnegie
- “The Millionaire Fastlane” – M.J. DeMarco
- “Factfulness” – Hans Rosling
- “The Alchemist” – Paulo Coelho
- “Atomic Habits” – James Clear
- “Educated” – Tara Westover
- “The Undercover Economist” – Tim Harford
Food for thought: Continuously seek to expand your knowledge and perspective. Libraries, free online courses, and community education programs can be valuable resources.
7. Lack of Frugality
Even wealthy families can fall into poverty if they don’t practice financial discipline. Imagine a family that has enjoyed the luxuries of extravagant vacations and high-end cars for generations. They own a sprawling estate complete with a home theater and a personal gym. At first glance, everything seems perfect; however, beneath the surface, a different story unfolds. This family has become accustomed to their lavish lifestyle, forgetting the importance of saving and budgeting. The children, raised on the principle that money is limitless, are unaware of their family’s precarious financial situation.
When the patriarch loses his high-paying job due to corporate downsizing, the cracks begin to show. The once-thriving household, now living beyond their means, struggles to maintain their lifestyle. They continue to dine at gourmet restaurants and shop at exclusive boutiques, convinced that their previous wealth will cushion them. But as their savings dwindle, the reality sets in: without financial discipline, even the wealthy are not immune to poverty.
The harsh truth is that in real life, most wealthy families are more disciplined. They buy insurance, keep their spending in check, and manage their finances well. On the other hand, poorer families often spend their money on lottery tickets and gambling, chasing after false glory and easily dropping hundreds of dollars. With low income and reckless spending, it’s just not possible for a family to get rich.
Budgeting tip: Implement a family budget that includes savings and investment goals, regardless of your current income level.
Q&A Section
Q: Can a family break out of poverty in one generation?
A: Yes, it’s possible, but it often requires significant effort and strategic planning. Focus on education, skill development, and creating multiple income streams. Many successful individuals, like Oprah Winfrey and Howard Schultz, have risen from poverty to great success within one generation8.
Q: How can families start saving money when they’re barely making ends meet?
A: Start small. Even saving $5 a week can make a difference over time. Look for areas to cut expenses, such as reducing energy usage or finding cheaper alternatives for regular purchases. Consider side hustles or selling unused items for extra income. Most importantly, make saving a family priority and involve all members in the process9.
Q: Is it true that rich families always stay rich?
A: Not necessarily. Maintaining wealth requires financial education, strong values, and good management across generations. That’s why focusing on more than just money – like education, health, and family values – is crucial for long-term prosperity.
Conclusion
Poverty is rarely the result of a single factor but often a combination of various elements. By addressing these root causes – fostering family harmony, instilling strong values, encouraging education and health, expanding knowledge, and practicing frugality – families can build resilience against poverty and create a foundation for long-term prosperity.
Remember, change starts with awareness. Identifying these factors in your own family dynamics is the first step towards breaking the cycle of poverty and building a more secure financial future.
Trusted Sources
- https://openknowledge.worldbank.org/entities/publication/40d87ffe-db7d-5dd6-a2fd-faa0a6e94f53 ↩︎
- http://www.dangjian.com/djw2016sy/djw2016wkztl/wkztl2016djzzwk/201708/t20170808_4374577.shtml ↩︎
- https://www.business-sweden.com/contentassets/c5d9f4d114f14219a3f0be9c3ac80145/the-rise-of-the-southeast-asian-tigers.pdf ↩︎
- https://www.bls.gov/careeroutlook/2021/data-on-display/education-pays.htm ↩︎
- https://www.bbc.co.uk/programmes/b07dxmyk ↩︎
- https://cn.ceibs.edu/new-papers-columns/19537 ↩︎
- https://en.wikipedia.org/wiki/Nickel_and_Dimed ↩︎
- https://www.forbes.com/sites/clareoconnor/2014/03/19/oprah-partners-with-billionaire-buddy-howard-schultz-for-her-own-starbucks-tea/ ↩︎
- https://americasaves.org/resource-center/insights/four-easy-ways-to-make-saving-a-family-affair/ ↩︎
