Have you ever felt like you were in a minority and that the odds were stacked against you? You're not alone. Just about everyone faces inequality at some point in their life. Whether you are treated differently because of your gender, your race, your age, your background, your education, your skills or any other reason, chances are it affected you financially.
Inequality can lead to gaps in pay for employees, or give job opportunities to some people over others. It can determine those more likely to fall into poverty, and can create big divides within society. Those who fall on the wrong side of the unequal balance find themselves worse off, and this is never more clear than when you look at the effects of financial inequality across society. The income gap between the top and bottom of US employees holds a 16:4 ratio – rich families take a quadruple share of the total national income, leaving poor people struggling to make ends meet.
How being poor costs more: inequality's economic effects
Economists theorize that poor people are regularly 'taxed' in their daily lives. The more money you have, the less you need to spend – this is true all over the world. Being poor is expensive, because there are lots of ways that living costs and debts can spiral and accumulate. Even shopping for food can be more expensive for poor people than richer folk. A Harvard University researcher recently revealed that prices are more likely to rise on basic low-cost products than they are on premium brands - where competition is at its peak. Consequently, less wealthy shoppers end up paying much more for their groceries. “The absence of new products for poorer consumers allows retailers to increase the prices on old products,” the study concludes.
The grocery store is just one of a number of places where poorer people receive higher charges for the same service or product. May forms of credit and hire purchase buying are popular with those on low incomes, because they allow the cost of purchases to be stretched over time. However, the interest charged makes items bought this way cost a lot more than their retail value. A $200 dollar TV could cost as much as $500 through a credit purchase. Equally, payday loans are designed to accrue huge amounts of interest – many poor people rely on these short term loans for everyday budgeting, but they end up costing much more in the long term.
Cutting spending and making savings
When things cost more and money is tight, what can people do to make their paycheck stretch a little further? To offset those higher prices at the grocery store or to allow the purchase of premium brands, many poor people have turned to coupons as a way to save money. Technology has made it easier than ever to find amazing deals and discounts: online coupon suppliers like Frugaa.com are great places to start looking if you want to grab a bargain.
Cutting back on unnecessary spending is a crucial part of any good savings plan. Even on a low income, there are usually one or two areas that people can reduce their outgoings. For example, you might have a few less nights out or spend less on new clothes, in order to put away some extra cash. Alternatively, you might take on overtime or a second job to pick up some additional spending money. However, for the 10-15% of US citizens who fall below the poverty line and who have already stretched their budgets to the limit, can anything be cut back?
According to research by the Bureau of Labor Statistics, the top ten percent of citizens spend 31% of their money on housing, and 11% on food. However, those in the bottom income band (a far larger group, it should be noted) spend 42% of their cash each month on housing, and 17% goes on food. Poor people have far less disposable income and they pay a far higher price for goods and services. This discrepancy makes it much harder for poor people to save up, and instead leaves them relying on other methods of frugal living.
Making the most of a tight budget
Sometimes it may just seem that the odds are entirely stacked against you, and that you are destined to remain in poverty. If this sounds like you, don't lose faith. Keep making those little savings where you can, and grab every opportunity that comes your way. Even if you find yourself in a more comfortable part of the wealth spectrum, it never hurts to be a little more frugal and to take care of your money. From coupons and discounts to high yield savings bonds, you can always find a way to cut the cost a little further and get yourself a great deal.
