Being poor is expensive, sounds like an oxymoron, right? But, it’s not; It’s a fact in financially challenged communities.
Being poor relates to more than having a lack of money. It is also limited access to transportation, healthy food, affordable health care, and so much more.
Living in a community where the cost of living is high and the means to achieve financial stability are scarce can exasperate the non-monetary costs of being poor. Hopefully, this information helps educate people on what it really costs to be poor in America.
What are the Costs of Poverty?
Because financially challenged communities are often low-income, high unemployment areas, goods and services are overpriced. For example, since people with less money are less likely to own cars, fewer grocery stores open in these areas because they won’t make enough profit off sales volume.
High food prices increase food insecurity in the U.S. and unfortunately those high prices are found in the communities that are already struggling. It's a vicious cycle you can read more about in the AAEA Journal.
In contrast, a community might have several new fast-food restaurants that sell cheap food at affordable prices — but that food is typically not as healthy as home-cooked meals.
Access to more affordable health care is also important for people who can’t afford insurance or who live paycheck to paycheck. Studies show that people who receive free checkups regularly have lower health care costs than people who only visit doctors when they're sick.
Affordable Health Care Costs
It’s estimated that the lack of affordable health care costs America more than $300 billion per year. If you are part of a financially challenged community, even paying full price for healthcare might not be feasible for you. In addition, many individuals in poverty may not have access to a job with benefits.
If your employer doesn’t provide coverage, then you can go through your state marketplace and apply for subsidies. If your employer does provide coverage, but it costs too much for you to afford (because of your income), then check out: Healthcare.gov.
Transportation Costs
For financially challenged communities, most residents rely on public transportation. And because more than 50 percent of households in economically distressed neighborhoods are renters, people typically own cars that are ten years old or older.
Many families actually spend more on transportation than they would if they lived elsewhere. For example, living in low-income neighborhoods may mean longer commutes to work because there aren’t as many jobs nearby; it could also mean taking public transportation instead of driving a car.
And when families don’t have cars, that means paying for public transit or taxi rides—costs that many people take for granted when making housing decisions.
Another factor is that poor communities have fewer retail stores and spend more money on food. Many Americans eat out twice a day and order takeout meals prepared by others. But for those living in poverty, eating at home can be cheaper. According to research from the U.S. Bureau of Labor Statistics, households spent at least $60 per week on eating meals outside the home.
Quality Food Costs
Though a food-insecure family will spend less on food than an average, non-poor family, they’ll still spend more than just about any other group in America.
When you factor in transportation costs (to reach better grocery stores and farmer’s markets), quality food costs more for low-income families than it does for higher-income ones.
One reason poor people are more likely to be obese: they can afford junk food at a lower cost than healthier alternatives.
Limited Access Costs
When you’re poor, your access to many opportunities and resources is limited. Everything costs more, so even if something doesn’t cost much money outright when you factor in transportation costs or other fees it can become prohibitively expensive.
Take a few minutes and think through these questions:
What are some other things that you couldn’t afford if you didn’t have a lot of money? Think about what factors increase your cost for essential items like health care, food, and clothing.
How does having limited funds affect how you live your life? How does it limit what you can do or where you can go?
If you could change one thing about your financial situation, what would it be?
Have you ever had a job that paid less than minimum wage? If so, did anything stop you from applying for another job with better pay? Why or why not?
The truth is, it's simply expensive to be poor. Don't just take our word for it. Bored Panda recently published 30 ways being poor is expensive based off of shared experiences from the unemployed on reddit. (Read the collection of experiences here)
Finding Solutions
Lacking adequate income to pay for basic needs can create a cycle of financial problems.
If you’re in a financially challenged community, think about ways you could give back to that community by providing opportunities and resources like affordable healthcare and healthy food. You might even consider volunteering or donating to a non-profit organization or charity in your community that offers these resources.
In addition, examine what other barriers might exist for low-income families in your area, like no transportation system, or limited internet access—there may be ways you can help bridge those gaps as well.
Finally, don’t forget to look at local schools. They need funding from local businesses too!
These are just some ideas on how you can get involved with solutions to fix the cost of poverty issues in your neighborhood. But don't stop there! Keep brainstorming solutions and remember: it takes a village!
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