The 9 People in Your Life Who Are Keeping You Poor


You don't always need any help making dumb financial choices… but these nine people might be inadvertently rooting you on. (See also: Is Peer Pressure Keeping You Poor?)

1. Your Spouse

There are many ways your spouse can hurt your finances, even if she has good spending habits. For example, your spouse has no credit history because she got a full-ride scholarship to college and paid cash for her car. When you jointly apply for a home mortgage, you might be rejected for the loan or charged a higher interest rate for a joint loan due to her lack of credit history, even if your own credit is spectacular.

The shopaholic wife driving a couple into poverty is a tired and stupid trope. In fact, hardworking spouses are often the accidental cause of financial mayhem. If a couple with kids is paying more in taxes because their double income is putting them into a higher tax bracket, they should do the math to see if it's financially more profitable for one spouse to be the stay-at-home parent. Fair warning: discovering that you're worth more to the family budget as a dependent on your husband's tax return than as a respected professional is an ego-crushing experience for wives who love their work but make less money than their husbands.

Regardless of who stays home with the kids, it's worth running the numbers to see if a double income actually makes financial sense. My friends Katie and Marc discovered a few years ago that they were spending the equivalent of Marc's entire salary on childcare, gasoline, and other related work costs. Marc, who made less than Katie, decided to quit his job and stay home with the kids. With Katie as the sole breadwinner, they fell into a lower tax bracket, no longer needed the help of a nanny, saved on gas money, and put less wear and tear on Marc's car. As a full-time worker outside of the home, Marc was only adding $2000 a year to the family's savings. As a stay at home dad, Marc adds $17,000 to the family's budget.

2. Your Kid

Based on a survey by the U.S. Department of Agriculture, the cost to raise a child born in 2013 to the age of 18 is just over $245,000. Depending on your income and where you live, this number could be higher or lower, but the fact remains: having a child is the single most costly thing that most people will do in their entire lives.

Although the high cost of having children is common knowledge to just about everyone, according to the Guttmacher Institute, 51% of pregnancies in the United States are unintended. Although many accidental parents are happy with their unintended offspring, what this statistic says is that over 50% of American families are just winging it with their finances, and that's kind of crazy. Would these same people accidentally buy a house for $245,000?

Okay, okay. Comparing the pleasure of parenthood to the pleasure of homeownership is like comparing apples to oranges, but I'm hard pressed to think of another $245,000 investment that more than 6.6 million families would fall into without foresight each year.

The best thing that parents can do to ensure the financial well-being of their family is to plan their parenthood. When you have children, how many children you have, and where you raise your children all have a direct impact on family finances.

3. Your Parents

While growing up with my parents' near pathological, Scrooge-like tight-waddery was no fun, I'm grateful as an adult to have parents who saved enough for retirement. Even though the financial downturn of 2007 knocked my parents' retirement fund down by 45%, they still have enough money to live comfortably for the next 25 years. Alas, my parents are the outliers in this scenario. Many of my friends are now faced with the financial double-whammy of supporting both their kids and their newly poor parents.

What I find shocking is the number of young people forced into supporting their financially irresponsible parents who live extravagantly with no thought to how they will pay the bills once they leave the job market.

Even if you hate your parents, in 30 states there are filial responsibility laws on the books that your mom and dad can use to force you to pay for their basic life needs, so just as it's important to have frank discussions about money with your children, it's also important to discuss financial boundaries and expectations with your parents. Instead of enabling your parents' poor spending choices by bailing them out with your hard-earned cash, you should consider asking them to meet with a financial counselor. (You can get referrals to non-profit credit counseling agencies at the National Foundation for Credit Counseling).

4. Your Cat (or Your Dog)

That FREE KITTENS sign is false advertisement. Although cheaper to own than dogs, cat ownership costs between $7,760 to $15,260 per lifetime, (and even more if you married my soft-hearted husband, who spends more on pet health care than his own health care every year). As with human children, if you even think there's a chance you'll end up with a pet in the near future, do your research on the real costs of owning an animal. Even "budget" pets like turtles cost way more than you might think. Making our indoor/outdoor cats into indoor only cats was one of the best things I've done for the household budget and for the health of my kitties.

5. Your Cleaning Lady

Oh, I know. The day after my cleaning lady comes is my favorite day of the week, too. But do you have support staff because you work long hours or do you have to work extra hard to pay for the entourage that cleans your house, washes your clothes, manages your money, etc… Do the math. The convenience of household help may be your golden handcuffs. My job pays $20 an hour, which means I have to work three hours to afford my cleaning lady. For me, this is a fine trade. Not only do I hate to clean my house and love my work, I couldn't clean my house as well as my cleaning lady does in three hours. That said, I would have to work 24/7 to afford the pet-sitter, the gardener, and the dry cleaner that would give me the "free time"… to work extra hours.

6. Your Employer

I was loyal to my old boss for way too long. He underpaid me and I let this happen because he gave me plenty of autonomy and empowered me to be the best I could be at my job. I loved my work and basked in the adulation of others who were impressed by how much I'd made out of my position. Also, I was good at living on a budget, so my quality of life outside of work was good, too.

My freedom at work cost me plenty. Had I been paid market value, I could still have lived on a budget and socked away the extra cash in my retirement fund. Don't be afraid to ask for a raise. When I left that company, my replacement negotiated a salary that was twice what I had been paid for the same job. He also loved the job, but his quality of life outside of work was considerably better than mine.

Don't be me.

7. Your Real Estate Agent

Real estate brokers are legally obligated to give information to their sellers that will help them get the best price for their home. Alas, buyers often forget that they are not their broker's only clients. In my neighborhood, the real estate market is so hot that buyers have to get pre-approval from banks. Pre-approval tells agents that a buyer who is haggling for a $420,000 price can really afford $575,000. Obviously, this can really undercut a buyer's ability to negotiate, even with the most honest of brokers.

To get around this conflict of interest, a lot of buyers hire buyer brokers, real estate agents who supposedly work only for the best interests of the buyer. Unfortunately, buyer brokers usually get the same 3% commission cut that any other broker gets when he or she gets involved in another agent's listing, so they might encourage you to pay a higher price or close a sale quickly, moves that will benefit everyone but you, the buyer.

If you are new to an area and don't have friends or co-workers to recommend a good agent, the National Association of Exclusive Buyer Agents is a good place to find a broker who can work independently from seller's agents.

If you are selling your home, make sure that you find a seller who specializes in your area and is willing to work to get you the best deal. I bought my first house for its sky-high asking price, before the home even went on the market, an hour after I'd toured it. The sellers were excited by the quick and pricey sale for exactly two hours. The ink wasn't even dry on my accepted offer when friends of mine offered $6000 above the asking price, unaware that the house was already off the market. Who knows how much money the house would have sold for had the seller's agent put the house on the market. Definitely more than I'd bought it for.

8. Your Accountant

My accountant specializes in creative industries. She is an expert on what tax loopholes exist for video game designers, and what screenwriters should never write off unless they really want to be audited. When my husband sold the house he co-owned with his ex-wife, I hired my accountant to advise my husband on the best way to invest the money from the sale to avoid taxes. As a fan of the Big Picture, my accountant asked to look at his old tax returns. She discovered $8000 in tax write-offs from earlier years that his old accountant had missed.

My accountant is on the expensive side, but she's worth the money. The year before I hired her, I went to a nationally known tax accounting chain for tax help and received exactly half the return I get with my pricey accountant. It literally pays to shop around for tax help.

9. Your Rich Friend

I credit two wealthy friends for pulling me into the middle class by giving me all their nice hand-me-downs. Thank God there are still people in my life who can afford to shop retail as a hobby. While there are obvious financial benefits to having rich friends who are happy raise your standard of living, just by cleaning their house, your rich friends can also make living on a budget that much harder.

Many people would rather struggle with credit card debt, than admit that they can't afford something. Peer pressure keeps people poor. It's why "Keeping Up With the Joneses" is still a thing. Don't be the Joneses' neighbor, and avoid rich people who care that you don't know that "summer" and "winter" are verbs.

Is there someone in your life who keeps you poor? Who is it? Please share your experience in comments!

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Guest's picture
Vukani Nxumalo

Everybody what's to have a rich friend or friends for that matter. Reading this article just made me realize that rich friend while they come as a 'Nice-to-have', the may be to the detriment of ones personal growth and success. Thanks Max, this one is a great eye opener.

Max Wong's picture

Hi Vukani! Thanks for your comment. Having rich friends who act as a benefactors because they love you is a wonderful thing. But it is a balancing act. I would never want my friends with money to feel that I expect them to always pick up the tab, so I try and spend time with them on activities that don't cost too much. Like meeting for dessert at a nice restaurant instead of dinner, or going to a free concert in the park. And, because my rich friends are also lovely, empathetic people, they would never make me feel bad for saying, "I can't afford X."

Guest's picture

Great article! Hard pills to swallow for many.

Guest's picture

How do you find that specialized tax person in a smaller or more rural community? What questions do ask? In particular I'd be looking for someone with ideas on out of state rental property

Max Wong's picture

Hi Allison--

I'm not a super expert on real estate, but I would do some online research on the area that you are shopping for rental property in. You want someone who is familiar with the real estate and tax laws of THAT area, not your own rural area. For example, if I were looking to buy real estate in Colorado Springs, I would google "moving to Colorado Springs" and look for blogs and message boards written by and for people who are moving to that city. I would ask advice about local real estate and tax people on these sites and then do further research on the recommended businesses using Yelp, Angie's List, the Better Business Bureau, etc... It's a pain in the butt to do all this work, but it's far cheaper than getting the wrong accountant or tax attorney. Or buying a bad property!

With the internet, you don't have to live close to your tax person. My husband has never actually met our fantastic accountant in person and she's been doing his taxes now for seven years! She mails him a template in January to fill out that he mails back with all his documents. She calls or emails him with questions or comments. You might try calling a few real estate companies in the closest big city to you and asking them for names of accountants who specialize in real estate and use that as a jumping off point for your search.

Here's some questions I would ask:

What services do you offer? (For example, help with an out of state rental property). What is your specialty?
When and how can you be reached?
Can I contact you after the April due date if I run into trouble?
What do you charge?
How are your fees calculated? (e.g., by the hour, project, etc. You want to make sure you know how much you'll be paying, including for any phone calls, faxes, and postage.)
What records and receipts do you need from me?
What happens if my return is audited?
Do you offer electronic filing?

Finally, without revealing too much about yourself on a public forum, you could tell the Wise Bread community where your rental property is located. Wise Bread has an international readership. Another Wise Bread reader might know the perfect tax person for you!

Guest's picture

Great article- but the common denominator in the whole thing is "YOU".. You are the one who married the spouse who is bad with money, got one too many pets, got a cleaning lady 'cause you were lazy/couldn't find the time to clean, can't say no to your rich friends when they want to go to fancy restaurants, etc. etc.

Max Wong's picture

Hi Guest!

I'm so glad someone is in on the joke.