Thread by @itsKostasOnFIRE

6 Reasons Why Being Poor Costs More Than Being Rich

The 5th is the most important

/THREAD/

1. Financial Services

Most people consider it normal to have:

• A checking account
• A saving account
• A debit card
• A checkbook

But it becomes complicated for low-income people

Once your account balance falls below a certain threshold (usually around $1,200 to $1,500) the bank will start charging you monthly maintenance fees

And if your balance is not enough to cover a purchase they charge overdraft fees for every transaction

Also if you withdraw from out-of-network ATMs you maybe pay a $1-$3 fee

This may not seem much if you withdraw $100s at a time

But for those living paycheck-to-paycheck with not much left in their account, that's not an option

Withdrawing small amounts every few days will incur a lot of ATM fees and charges

These add up very quickly

The basic banking services that are free for the rich, come at huge costs for the poor

That's one of the reasons low-income people avoid banks

But even that comes at a cost

They still have to pay fees outside of banks to

• Cash a paycheck
• Buying a money order to pay the bills
• Mail money orders to pay bills due soon

These services are completely free with a bank account and a mobile banking app

2. Loans

Getting a business or mortgage loan from a bank with low interest seems easy if you have a high credit score

But what about those with a bad credit history, due to missed bills, an eviction, or unemployment?

Well, their best option would be a high-interest credit card

Or even worse, a payday lender that charges interest of up to 800%

3. Food

Having many affordable options to buy food and groceries might seem ordinary in your neighborhood

But that's not always the case

Big retail chains are notorious for avoiding poor neighborhoods, also known as "food deserts"

This leaves poor people with two options

• Go by car (if they can afford one) to one of the big stores and pay more for gas

• Shop at the local convenience stores that are much more expensive

Either way, shopping costs more for low-income families

4. Housing

Paying 2 months rent in advance and giving a security deposit might seem like a no-brainer

But what about those who don't have that money set aside?

Their best next option would be to stay at a low-price extended-stay motel that doesn't require so much cash upfront

However, on a yearly basis staying at a motel will cost significantly more than renting an apartment

Besides, motels don't have all the basic amenities, like kitchen and laundry

This leads to extra costs for eating out and using laundromats

5. Inflation

The lower your income, the more your monthly expenses are affected by inflation

The reason?

Inflation has the biggest impact on:

• Food
• Housing
• Transportation

These make up the majority of income allocation for poor families

And to make things worse?

Rich people can invest in assets that can protect them against inflation

• Stocks
• Real estate
• Cryptocurrencies

On the other hand, poor people watch inflation eat away their purchasing power year by year

6. Decision making

When you have to constantly worry about

• Paying rent
• Paying your bills
• Putting food on the table

You experience decision fatigue

This does not allow you to think clearly when you make other important decisions, like taking a high-interest loan

To summarize:

Being poor costs more than being rich when it comes to:

1. Financial Services
2. Loans
3. Food
4. Housing
5. Inflation
6. Decision making

I hope this thread helps you appreciate all the things you take for granted and be grateful for what you have

/END/

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