Building Wealth personal finance

    Redefining Poverty

    August 27, 2015
    Redefining Poverty

    The government defines poverty based on income. These are the 2015 income levels that the US Federal government uses to define poverty:

    chart

     What Is The Problem With This Definition?

    The problem with this definition is that income changes. You can be within the federal poverty guidelines, raise your income above and fall back below. But do you ever really escape poverty? Professional athletes are an excellent example of increasing your income, but not building wealth.

    I have lived in poverty, based on the government guidelines. In fact, I spent many years moving in and out of poverty. But that was just a temporary state. My income changed and I was no longer considered poor. There are many people that choose to live a lifestyle of less consumption and income (hello minimalists) but don’t identify themselves as poor.

    “There is a difference between being broke and being poor. Being broke is a temporary economic condition, but being poor is a disabling frame of mind and depressed condition of spirit.” (John Hope Bryant)

    A New Definition of Poverty?

    Poverty is not an economic status. A new definition of poverty encompasses the many characteristics of poverty. According to Operation HOPE,

    “The HOPE Doctrine on Poverty says that there are three things that define poverty and struggle more than any other set of financial numbers ever could; self-confidence, self-esteem, and belief in oneself; role models and environment; aspiration and opportunity. Or the lack of the things.”
    (John Hope Bryant, How the Poor Can Save Capitalism pg. 30)

    Self Confidence

    Think about it. Were you raised in an environment where your self confidence was nurtured. Did your parents and teachers give you self confidence? Or did they tell you that you weren’t good enough? That you would never amount to anything? What did society tell you about yourself?

    If you don’t have self confidence, you do not have a chance of being sucessful. We live in a society where we are constantly bombarded with images of what we should look like, how we should dress, how we should live.

    “In this country, if you wake up in the morning and don’t know who you are, by dinnertime someone will tell you who you are.” (John Hope Bryant)

    Role Models and Environment

    What kind of role models did you have growing up? I grew up in a family that was solidly middle class by the income guidelines, but I did not have strong role financial models. My parents did not know how to manage their finances well. They did not teach me about money. I was the first person in my family to attend university and had no idea what to do and what opportunities were available to me. In fact, I dropped out after my first year and took a minimum wage job. It was several years later that I went back and earned a MBA. I probably would have gone on and pursued a PhD if I had not made so many mistakes when I was younger.

    In contrast, Mr. Tre grew up in poverty in a 3rd world country. His parents were not educated but they gave him self confidence. They taught him about managing money and creating his own businesses. They learned what successful people in their country did and taught their own children so that they would be successful and break the cycle of poverty.

    Aspiration and Opportunity

    Self confidence and role models are meaningless without opportunity. Opportunity to move out of the economic cycle you were born into. Opportunity to follow your dreams. Opportunity to start your own business..

    How Do We Perpetuate Poverty?

    We perpetuate poverty by separating our children into haves and have nots. We define people by their economic status. Have you visited a school in a low income district?  It’s easy to blame the parents for their children’s failure, but have you ever asked yourself how we as a society are failing those children?

    Education is a way out of poverty, but we also have to give those children role models and opportunity. If you grow up in a family where your parents do not have bank accounts, how are you going to learn about banking and access to capital? Who is going to teach you about about the world outside your community?

    I have been fortunate because I have lived in poverty and worked with high wealth individuals. I have seen both sides of society. The way they educate their children is polar opposites. Children of wealthy families grow up learning about access to capital and making the right connections. Life is full of opportunies for them.

    What Can You Do?

    What can you do to help eliminate poverty? Get involved! If you are knowledgeable about personal finance, help educate children in low income families. Volunteer and build the self esteem of a child. Expose them to the world of finance and business. Open their minds to the opportunities available to them.

    Start a discussion in your community about poverty.

    Want To Learn More?

    I strongly recommend reading How the Poor Can Save Capitalism: Rebuilding the Path to the Middle Class by John Hope Bryant.

    How do you define poverty? What environment did you grow up in?

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