Why is Being Poor More Expensive?

Too many people believe that being poor is easy. After all, the poor get profound government benefits, right?

It’s not as easy for them as you may think. Being poor is more expensive than being in the upper or middle classes in more ways than one.

If you’re above the poverty line, this article is sure to show you that you don’t have it so bad after all. There’s much contentment to be found in a decent wage.

If you’re under the poverty line, here’s some more motivation to learn a new skill and put it to use in the workplace so you don’t have to pay the “poor tax.” Let’s Explore –

Why is being poor more expensive?

1. The poor pay a higher percentage of their income to the local government.

Surprised? I was too when I learned this.

The New York Times explained results from a recent study regarding taxes:

According to the study, in 2015 the poorest fifth of Americans will pay on average 10.9 percent of their income in state and local taxes, the middle fifth will pay 9.4 percent and the top 1 percent will average 5.4 percent.

Much of this is due to consumption taxes like sales tax. Those without as much money must spend a higher portion of their income on living expenses, many of which are subject to sales tax.

Also, consider the burden that professional tax preparation places on the poor. If someone who is poor pays a professional to handle their taxes, they’re certainly going to pay a higher percentage of their income than someone who is in the middle or upper class.

There have been proposals made by various groups to simplify the tax code, and specifically for the federal tax code, there’s the FAIRtax. From their website:

The FairTax is a national sales tax that treats every person equally and allows American businesses to thrive, while generating the same tax revenue as the current four-million-word-plus tax code. Under the FairTax, every person living in the United States pays a sales tax on purchases of new goods and services, excluding necessities due to the prebate*. The FairTax rate after necessities is 23% compared to combining the 15% income tax bracket with the 7.65% of employee payroll taxes under the current system – both of which will be eliminated!

The “prebate” is a refund provided at the beginning of each month to every citizen so that purchases made up the the poverty level are tax free. This prevents an unfair burden on low income families.

If local governments can focus on similar taxation strategies, the poor would thrive because they wouldn’t be taxed on necessities.

2. The poor many times don’t have the ability to buy in bulk.

Buying in bulk can often save families money in three ways.

1. Many times products are packaged in bulk and sold at a discount to encourage more sales. Consumers can take advantage of this – as long as they have the cash to purchase in bulk.
2. It’s possible for consumers to spot a great deal on a product or service. Perhaps the deal only comes around once per year – a perfect opportunity to purchase in bulk. Again, consumers can take advantage of this – as long as they have enough in their bank account.
3. Many inner city neighborhoods where a huge portion of families live below the poverty line don’t have access to typical grocery stores. Many of these neighborhoods only have convenience stores where these families have to do all their shopping. That means they are paying convenience store marked-up prices for less food, and more processed foods. It’s tragic.

The poor many times are living paycheck to paycheck and don’t have the ability to buy in bulk. Because of this, they instead have to purchase fewer items at the discounted price and pay more over time. Or they have to buy smaller quantities of the items and therefore pay the higher price point for those items.

Not having the funds to buy in bulk can be expensive. The poor are often in this situation and are at a disadvantage.

3. The poor may buy cheaper, unhealthy food which may result in health problems down the road.

Foods in the center aisles of grocery stores are usually less healthy. They are higher in sugars, are processed, and contain very little protein and fiber. However, they’re pretty cheap food options.

Organic produce and quality meats are usually expensive and much less tempting than their sugar-filled counterparts.

When you combine addicting, unhealthy food with cheap prices, what could be a more tempting option? By the way… this is intentional.

Obesity is an epidemic in our country, and these cheap foods are certainly to blame. And, that’s just one health complication that can be very costly later in life.

The poor are certainly at a disadvantage when it comes to food choices – but nutritious, healthy food are a must-have.

Even if you count yourself among the poor, do your best to pinch your pennies and buy food that will fuel you throughout your day and keep you living longer, less expensive lives. If you haven’t already, you really should give ALDI a try. They have a huge selection of healthy and organic foods at fantastic prices.

4. Final Thoughts

Being poor is expensive. It’s easy to see why. But if you’re poor, I’d like to offer you some encouragement.

Whether you’re in debt on one income, are having trouble knowing how to budget and stick with it, don’t have much money stored up in the bank, or have an irregular income, Lauren and I want to help.

Would you consider yourself poor? What are a few more ways being poor can be expensive? Have you found a workaround? Leave a comment!