The Rich Get Richer

[starshard0]

Originally Posted by flipchick1127

@moon02 While I agree that the poor today are better off than the poor people of a century ago, I do not believe that all poor people have all of the things you listed. There are many, many poor families without cars and even more without TV's. I also think that it is easier for a rich person to get richer than it is for a poor person to get the same amount richer.

Why do poor people need cars or tvs? If you can afford food for your family and you're worried about cars and tvs I don't think you're as poor as you think.

[andryia]

When you look at wealth and poverty in a relatively rich country like the U.S., you have to consider the effects of generational poverty. The sad fact is that we have pockets of America in which families have been poor for many generations, and I don't see any sign of that pattern changing.

Think of it this way. You live in an area where almost everyone is poor. Your whole family is poor. Nobody expects anything different from you. Your school system is likely to be subsandard because schools are funded locally (less tax dollars in the community means less money for schools) and it's hard to recruit and retain teachers into poor school districts.

Being a poor kid, you are much more likely to suffer from child abuse or neglect. You are more likely to have untreated medical or dental problems. Your friends are likely to make fun of you if you try to do well at school. If you do want to attend college, you won't be able to afford test prep classes like middle class kids do. If you have unreliable transportation, even just visiting a college to understand what it's like can be a challenge. This is assuming you haven't fallen into drug or alcohol abuse or gotten pregnant--both of which are more common among poor teens.

People can and do rise out of poverty, but it takes a huge amount of stamina and determination to overcome all these obstacles. Even relatively small advantages like having a reliable car, or parents who encourage and belive in you, can make a really big difference.

I don't have any great answers here--welfare has mostly failed IMHO. Maybe the take-away lesson here is to find somebody who wants to break the cycle and act as a mentor and support system for them.

[hermione]

Originally Posted by starshard0

Why do poor people need cars or tvs? If you can afford food for your family and you're worried about cars and tvs I don't think you're as poor as you think.

She's not saying that poor people need cars and TV's, just that there are a lot of people who cannot afford cars and TV's, which are things most people view as a regular part of modern life.

The average American family probably has at least one car and one TV; therefore, those that can't afford them could be considered "poor" (remember, rich and poor are relative terms) because it's below average.

[ValL]

I agree, the richer can accumulate wealth faster than the poorer. This may not be a popular thing to say, but having too many children, too early, really doesn't help raise a family out of poverty. Correct me if I'm wrong but it seems that richer people generally have less children then those that are poorer. It's definitely true in third world countries.

[FinanciallySMART]

The mindset of the poor and middle class individuals will always see it this way. The rich expand on their wealth and so they will become richer. They have less liabilities and more assets. While the poor and middle class will always acquired liabilities. Growing up I heard this but since reading Rich Dad Poor Dad and listening to the Secrets of the Millionaires Mind I come to realized that the gap between the Rich and the Poor is our mindset. Once we change our mindset then we can become rich as those who are in this category. Stop acquiring liabilities and spend more time on acquiring assets.

[Steve Weaver]

While all the above replies contain truth, there are other factors that I do not see mentioned. If you have enough money to seriously invest, there are investments that allow taxes to be avoided. You can also save a LOT of money on taxes if A)You can itemize deductions, B)Make sure to do one business transaction during your vacation to make it deductible & C)Have part of your income funneled through other countries (This keeps the income from being taxable in the US and many countries will charge you no tax just for showing it in their banking system!) Taxes eat up a disproportionate amount of the poor persons income. Consider you only pay SOcial Security taxes on the first 60k of earnings.
The wealthy are also considered more credit worthy so can leverage credit much better than poorer people. Where a wealthy person can get a home loan or credit card for rock bottom interest rates, a poor person gets penalized for not making more money and pays a much heftier rate.
It's easy to say,"Just make more money". It's not so easy to do when you are already working one or more jobs but barely making enough to pay for food and shelter. If you don't have a car, that also greatly reduces your job options. If you don't have a car and are barely scraping by, even a few extra expenses like a sick kid or even a minor illness that costs the main bread winner a few days work, can lead to homelessness. It seems to me that most of the other people replying to this post either have no idea what it's like to be poor or were lucky enough to escape poverty so believe anyone can do it.

[dNide]

I believe that the "truth" behind "the rich get richer and the poor remain poor" statement is due to how the systems supporting money accrual plays in favor of the rich and how those same systems end up exploiting the poor.

Those systems have such a high of a barrier of entry for poor people where they need to work hard to go against the "stream" to earn enough capital and be able to take advantages of opportunities that the rich are able to take for granted. In addition to that, even if a poor person eventually earns enough capital to take advantage of an opportunity, it becomes a greater risk for him/her than it would of someone who is rich. The unfortunate investment of someone who is poor would result in them having to work long and hard to earn enough capital again to take advantage of the next possible opportunity, where a rich person can fail multiple times without the worry of changing his/her lifestyle. A metaphore for this example would be where a rich person gets 100 lottery tickets in 100 different lotto games where a poor person only one ticket in a single lotto.

I think this is the biggest factor in why the poor remain poor, but this is still only one. You still have the people in power who control wealth and discriminate against the poor (i.e.- banks and other financial institutions), the missed opportunities that can lead to wealth, less experience which can lead to a lack of understanding of a bigger picture of the practical principles of investment, ect.

Look at Ronald Trump, he came from a well to do family where he was able to use that name to get banks to invest in his ideas. He failed many times, but those opportunities that worked in his favor helped to bolster his name (+value), forge relashionsips with other wealthy and powerful people (+value), allowed him to take more risks without having to dramatically alter his lifestyle (+value), and most importantly he was able to take advantage of the many opportunities the presented themselves to him (++value).

If I was to boil it down to a simple sentence on why the rich get richer and the poor remain poor then it would be, "That the rich get to see a dollar as an opportunity, while the poor are forced to see that same dollar as a choice."

[EastcoastMan]

It is true that the rich get richer because they know how and understand how to make money work for them instead of them working for money. Let's face it most of us are taught to go to school get a good job and live the good life but to the best of my knowledge not many people get rich this way not to mention that you are always at the mercy of your employer.

The things we need to know to become rich are not taught in school and most of the general population have no clue either. I think that it is truly a mindset that you must learn along with gaining knowledge from people who are already rich and learning to do what they did to get there.

Read Robert Kiyosaki book Rich Dad Poor Dad because that book will really help you understand the mindset of the rich and the poor.

[money blogger]

Originally Posted by EastcoastMan

Read Robert Kiyosaki book Rich Dad Poor Dad because that book will really help you understand the mindset of the rich and the poor.

Thank you,

I haven't filtered through every other post, but I don't remember seeing the very important word you mentioned here... MINDSET.

Would you all agree that wealthy individuals think differently than the have-nots?

What would it take for someone who considered is poor (again this is relative), or even broke, to start changing their mindset and begin a journey to wealth and freedom?

[Vytautas]

You mention mindset which is absolutely true, but people tend to get the impression is that all you need is mindset and ignore how to get there. People born into wealthy or middle class families are taught from an early age how to view the world and form the mindset you refer to. On the other hand people in poor and lower middle class families are never exposed to that mindset, and in addition, are exposed to predatory tactics from financial institutions which make it even more difficult for them to gain this mindset. The chances are arrayed against them but it is common for people to think that the poor have exactly the same chance even though they don't.