Why It’s So Tough to Save Money When You’re Poor

by Emily Guy Birken · 36 comments

We can all agree that living paycheck-to-paycheck is not an ideal situation. And it’s just as obvious that individuals doing this still need to save their money and build a financial cushion so they can finally feel secure.

Unfortunately, the basic rules of saving money are simple but not easy – particularly if you’re already behind the financial ball.

Here are three reasons why it’s so difficult for people in poverty to improve their situation:

1. Lack of Opportunity

There’s a reason for the term “banker’s hours.” Most banks are only open Monday through Friday from 9 am to 5 pm. For many of us, that’s a minor pain in the neck, but not a big deal.

But someone struggling with their finances and also relying on public transportation will find that bankers’ hours pose an enormous problem. How do you get your paycheck cashed if you can’t make it to the bank before it closes?

This is further complicated if you have no bank at all. Approximately 4.5 percent of Americans live “unbanked,” meaning they have no bank account whatsoever. They can’t cash their paycheck without paying for the privilege, let alone set up direct deposit and remove the trip to the bank from the equation.

2. Lack of Initial Investment

Let’s say you need to move into a new apartment. You find a place where you can afford the monthly rent of $500, but in order to move in, you have to write your landlord a check for the first and last month’s rent. This is all fine and good, but they also need a security deposit, which you can’t come up with.

Alternatively, you can move into a cheap motel that charges $35 per night. You’ll end up spending over $1,000 to stay there for a month, but you don’t have to cough up $1,500 all at once. The apartment is clearly the cheaper option, but without the initial investment, you can’t take advantage of it.

This is also why fast food is so often a staple of the working poor’s diet. According to behavioral economist Dan Ariely:

“So imagine that you went to a new house tomorrow with no food and you had to start equipping a kitchen. And you wanted to buy salt and pepper and olive oil and pots and pans. You would have to invest a lot of money in order to be able to eat more cheaply. Or you can go to McDonald’s. So it’s even hard to create the conditions to live efficiently.”

David’s Note: What Emily is describing is more common than you think. We’ve had the same cleaning lady (well, actually a cleaning family) come to help us out around the house every few weeks for years now. One day we noticed that they drove over in a brand new car. We were surprised because the old one seemed brand new so we asked them about it to try to teach them that continually changing cars is a major money drain. As we talked, they shared with us that the reason why they had to change cars was that their car broke down. It turns out that they could scrape enough to lease a new car with what they can get by selling the old car that broke down but they didn’t have the money laying around to fix it. Yikes!

It’s been another couple of years and they have since changed cars again. If they only had some savings, they would have saved themselves tens of thousands of dollars just on car ownership alone.

These issues create a vicious cycle: you spend more money than you can afford because you can’t afford the investment needed to save money in the long run.

3. Lack of Time

In 2012, a Coupons.org study found that households with incomes over $100,000 were twice as likely to use coupons as households earning less than $35,000.

This seems counterintuitive since lower-income households have a greater need for coupon savings. But one of the big differences between high- and low-income households is time – which is absolutely necessary for cutting coupons.

Though Americans across the income spectrum feel strapped for time, those living in poverty may spend their time dealing with issues that could’ve been prevented with more money. For instance, if you have to choose between servicing the car and groceries, you’ll probably choose the groceries – until the car breaks down and you must deal with the problem immediately.

If you’re constantly putting out fires, then it can be difficult to find the extra time to sit down with the Sunday paper and clip coupons.

The Bottom Line

Saving money is possible at any income level, but it’s an important first step is for those in the lowest brackets to recognize the ways their situation makes saving more difficult. Only then can they start figuring out solutions, as it’s much harder to overcome a challenging situation if you can’t recognize all the ways it’s affecting you.

What else would you add to this list?

Editor's Note: Did you know about the service called $5 meal plans? For $5 a month, they send you recipes of delicious, healthy, yet cheap food that costs just $5 a meal.

Several of my friends signed up and they are able to eat at home more because the instructions are easy to follow, making everything convenient. The deal also comes with grocery shopping lists, which saves them so much time. Check it out yourself by clicking here and you too may be able to save more and become healthier at the same time.

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current Verizon FiOS promotion codes and promos to see if you can save more money every month from now on.

{ read the comments below or add one }

  • Mark says:

    “we asked them about it to try to teach them that continually changing cars is a major money drain.”

    Imagine the arrogance in thinking you’re in a position to “teach those stupid poors” just because you have more money in the bank.

  • Arminius Aurelius says:

    Poverty is a matter of personal choice . I started out in life as a lazy kid and put in minimal effort . Joined the Navy and partied for 4 years , made no effort to study and increase my rank. but I then suddenly woke up , got out of the Navy and went to the Culinary Institute of America to learn the proper way to cook, not the Navy way. From then on I only worked for the finest Hotels , restaurants and Private Clubs [ Palm Beach ] in order to learn more . Eventually I started buying bankrupt restaurants , bankrupt because of poor management . 4 out of the 5 that I bought were bankrupt . [ between 1969 – 2004 ] I succeeded in every case but ……. I put in the extra effort , working 12 hours a day , 6 days a week for 28 out of the 34 years in business. I found that a high percentage of my employees put in minimal effort including some managers . As the old saying goes , ” No pain , No gain .” Am now retired and I collect rent from 2 out of the 5 businesses I bought , $ 12,000.00 a month …….. Free Money …… No Work

    • Arminius Aurelius says:

      There is no excuse for poverty …# 1. learn a trade and strive for perfection . # 2. Work an extra 4 hours a day , 5 days a week to increase your weekly wages , then put that money in a separate savings account , build up your reserves and when opportunities arise [ stock market crash , I jump in and BUY when everyone else is selling ] [or rental properties when the market crashes ]

  • Suzie says:

    It is easy to make generalizations. There are going to be people who will confirm the bias. Unless you have been in another person’s shoes it is difficult to pass judgement. I have been on my own in the past. I never finished college. I also did a lot of temp work over the years. Helps in a pinch, frequently paying a little more than unemployment. I was fortunate a couple times, ie bought my dad’s cast-off cars for pennies on the dollar. Rented from a friend’s parents really cheap. But I stilled struggled. Must mention, never smoked, gambled, partied, did drugs or spent a lot of money on clothes or makeup. And stilled struggled. I was very blessed to first meet my now husband, then receive a little unexpected inheritance from a relative, and finally get a job that paid double the minimum wage. Amazing the difference just a couple thousand dollars can make.

    • David@MoneyNing.com says:

      Thanks for sharing your story. I’m happy to hear that you are doing much better financially now.

      And you are right that many of us just can’t fandom what it’s like to truly be struggling to put food on the table when we pass judgement.

      I’ve once been told that before you judge someone for choosing a path you don’t agree with, you should realize that everyone’s opportunities and circumstances are different and that if you had the exact same life as the other guy leading up to that point, you’d probably make the exact same choice. I believe it.

      Those who can make good decisions that help their future are luckier than they likely believe they are.

  • Scr3n74pR says:

    Coupons don’t save poor people money. Likely poor people trying to not be poor are already consuming items cheaper than any coupon is going to make them… Coupons are for rich people who want to feel frugal and play ‘ money smart’ for a day.

    I support two people off of a 30- 32k a year income. I drive a new car which is almost paid off…I have a medical problem that costs me money each and every month… I am still able to save up money. It’s a SLOW process and it takes great effort on my part. I make mistakes sometimes we all do but I learn from them.

    If I can make this new budget I made work I’ll have the car paid off by the end of this year. (It might not work. Might be too hardcore and I’ll have to back off) and then I will have hundreds more each month to save.

    It’s a journey…it’s not as simple as okay now I’m doing this… It takes effort and control. I live without things many people would consider must haves. I have eased up a bit in recent months. After years of no cable no internet etc, I now have internet at home again. Sure it’s nice…but if I found myself slipping I’d cut it off in a second. I also have a cheaper plan than most people would due to speeds.

    My diet? Yeah it’s probably not healthy. Your not gonna get healthy and cheap. Maybe if you make 60-100k a year you can find ‘cheap’ healthy. The actual working class folks like myself…we buy cheap. We have to. I can’t afford nor would I want to afford the luxury of trends and fad diets.

    Sorry if this is coming off as rude but I am so sick of seeing over paid people complain about money when they make 3 or 4 times what I do. Then they say stuff like ‘Oh you bought x? That’s why your broke! You shouldn’t do that! Meanwhile their x y and z cost more than my x once in a great while ever will. They don’t know my business but they like to think they do.

    Old rich people out of touch with reality. “I’m not rich!” They say. Sorry it’s 2019. 50k and up to me heck even 40k your rich. I have many friends and family making 80k 100k a year. “It’s rough ” they say… they don’t have a clue about rough. They could never live the way I and so many others do.

    They’d literally fall apart. The almighty dollar is their god. Without it they are empty shells devoid of life. Don’t get me wrong I love money too, but I think I have the better seat. If I ever get to their level of income I’m so used to be poor and saving and not wasting as much as I can…I can invest that money. Not go on cruises and sky dive…

    Rich people SMH

  • David @ MoneyNing.com says:

    In the old days, those minimums bank require to maintain a fee-free account must be a huge barrier for many. Luckily, there are many alternatives these days that don’t carry fees for that section of the population who wouldn’t otherwise open a checking account.

  • Suzie says:

    There are a lot of things that can factor into being unable to save. Most would in some way probably fall into the above general categories. When you don’t have the money it is hard to take proper care of yourself by going to the dentist or doctor when you need to. I had to have a root canal in February. Thank goodness for health insurance, but it still cost me hundreds. I lost my job back in September and have been working temp jobs, mostly low wage manufacturing assignments. The one agency does not have direct deposit. All employees are paid with a debit card. Trying finding a convenient ATM that doesn’t charge you a fee to get your own pay. If you can barely afford to live on what you make, it is very difficult to try to get ahead with additional education. The older you get the hard it gets all the way around.

    • David @ MoneyNing.com says:

      Many people take for granted all the free services they’ve become accustomed to that some other people have to pay for. Your compensation offered in a debit card is a great example because our society is so used to not paying an outright fee for these financial transactions.

      It can be tough, and thanks for sharing.

  • Jonathan says:

    It’s such a diffiicult thing to do, however it is possible to save even on a low income, the question is about how quickly you save money.

    • David @ MoneyNing.com says:

      Absolutely. Everyone just needs to start no matter how little the savings seem, as the first step is always the hardest to make.

      • Ruth Cooke says:

        The main difficulty with saving money on a low income is that in order to save money, you need to have excess income. If all of your money goes to rent, food and transportation (or if, like many poor people you even run a deficit on these basic items), saving isn’t difficult, it’s impossible.

  • Shepherd Moon says:

    @denise rich people, and middle class people, for that matter, also “waste money like crazy. they buy junk food, have pity parties, smoke cigerettes etc. ” It’s just that they usually have more of a money buffer as a smokescreen for their bad judgment. I think the article was a well-balanced description of why things are hard for poor people without letting poor people off the hook for taking charge of what little money they do have. I don’t think your judgment of poor people as any more “stupid” than other groups of people is very helpful.

  • JD says:

    Been there, done that. We’ve had money and we’ve been broke, and I can tell you it’s hard to get back up to speed when the money is tight. The times we could have scored a fabulous deal (relative selling a great car for a very low price, super deal on very usable lumber leftovers, etc.), that would have saved us money in the long run and kept us from having to take a more expensive option (car payments, buying lumber full price a little at a time, etc.) but didn’t have the money to take advantage of the deal, really hurt. Scraping up $1500 when your pay is non-existent or very low is about impossible. We live frugally and always have, but it’s always been painful to see the opportunities we’ve missed due to periods of very low or no income.

    • David @ MoneyNing.com says:

      It is hard, which is why an emergency fund is so important to build during good times. You’ll always feel like that chunk of money isn’t earning enough, but the small price you’re paying in missed extra returns is well worth the insurance you are getting in the long run!

  • Joe says:

    The one about coupons is super interesting. I love coupons, but that aside I think you make a really good point! I think the use of coupons speaks to how conscious a person is with money. Using coupons is just one of the ways that a wealthy individual is smart with his/her money as opposed to a not-as-wealthy person.

    • David @ MoneyNing.com says:

      I thought it was an interesting stat when I first heard it as well. But still, coupons aren’t miracles. You are still paying 50% when something is 50% off!

      • Ruth Cooke says:

        Not to mention that for the most part, coupons are only on highly processed overpriced items anyhow. I do understand that American couponing is quite different from just about everywhere else, but everything I’ve read seems to indicate that if you’re going to really profit from it, you have to invest an amount of time on the order of having a second part-time job. From what I’ve read, doing it to full effect takes a car to travel to the different stores to get the best bargains.

        Not having reliable transportation is a huge problem keeping people poor. In our city, you can’t take anything other than a day job if you rely on public transportation, and it can take an extra two hours out of your day just to ensure you get to work and back on time! That’s two hours you’re not earning money, saving money, banking, or doing much of anything. A car cuts that commuting time from an hour each way to less than ten minutes.

        Lack of reliable internet access is also a problem in this day and age. There is so much available on line, and it’s all cheaper than in bricks and mortars store, but if you don’t have private access to the internet and a printer (for coupons), you don’t have access to those bargains. Not to mention that all but the most basic jobs have online applications, there are many ways to earn income with internet access, and there are many, many online opportunities for upgrading education and skills. But if you can’t afford the connection in the first place, you lose out.

        Item #1 shows how badly the American banking system is broken. In Canada, I bank with President’s Choice. It’s entirely online, and you sign up when you go to the grocery store. I do almost no banking at the “normal” bank where I’ve had an account since I was 19, but when I do, the bank is open Saturday mornings.

  • Gary Kerr says:

    I agree with your article. Yes it is really tough to save money when we have low income. But have to make possible to save money. Thanks for sharing

  • Eugene says:

    Re: Number 2. My family was in this cycle. 8 kids, 1 working parent (my mom). It literally took the kids becoming teenagers and getting jobs to help our family. To the commenter up there ^^ who wrote ” they are just stupid and also feel like they have less options.”, your bias is well-noted. However, my mother is rather intelligent, and being left by your husband doesn’t seem to qualify as making one “stupid.” (She’s also now a great manager for Wal-Mart, one of the few women in her district to move up to her position). Thank you for writing this article, its great to share this info. As for my wife and daughter, we are not in this cycle, because of my experience. We live within our means and have a written budget. Its needed, because we’re paying for grad school right now with cash, no loans.

    • David @ MoneyNing.com says:

      Thank you for sharing your story.

      Moving up the ladder from the bottom is no easy feat, so congratulations to your mom for all the hard work that she’s put into her career and in raising the family!

  • Ingrid says:

    We’re living poorer by choice. Several years ago we were buried in debt and in order to be debt free and build some form of emergency money (to not having to use credit again) we had to really tighten and down size our life.
    Most of our money used to go for entertainment, eating out and shopping was the family hobby.
    Now we never eat out (maybe 2x a year) and haven’t set foot in a Mall or any other wasteful retail store in years, with the exception of Lowe’s to buy screws to repair the yard fence.

    It’s tough, and sometimes I want to throw the towel, but when I log onto our bank account and see the Savings we’ve accumulated to far, it keeps me going.

    Btw, people that suggest having an organic garden and growing their own veggies to save money = garden is expensive, seeds aren’t cheap and getting the soil ph and other growing conditions just right to even get fruit/veggies actually costs more than the veggies would from the store.
    We’ve spent around $ 500-600,- over the last 4 years to get it right, because Idaho soil sucks in every aspect and nothing grows here without some help.
    This goes back to the initial investment money…#2

  • threadbndr says:

    Re the investment cost. This is huge – my women’s professional group supports a program for women and children to transition from homelessness/shelter to stable home and one of the things that we provide is a ‘kitchen in a box’ and household linens. It’s a big investment for the gear, never mind the staple foods.

    And a lot of people just don’t know HOW to cook anymore. It’s better to cook at home, but if you don’t know how and food money is tight, you don’t want to risk using the time and ingredients for a meal that might fail. I’d like to find a decent entry level cookbook with frugal receipes for our boxes.

    • Nancy says:

      Kitchen in a box is a great idea–could you give some examples of what you put in the boxes, and how you implement the program? Thanks!

    • Amy K says:

      I love the kitchen in a box idea. A group I used to volunteer for, the Wish Project of Lowell, MA does a similar thing with cleaning supplies,


      They also take donated pots/pans/dishes/silverware and match them up to people in need, many transitioning from homeless shelters to that new home.

    • Amy K says:

      I’d like to suggest “Recipes and Tips for Healthy, Thrifty Meals” as the entry level frugal cookbook. It’s a publication of the USDA, the full cookbook is available here to view in pdf format,
      and … Oh shoot, you used to be able to buy the cookbook.

      Well, barring that, I would still recommend a collection of WIC friendly recipes such as printing from the pdf of that cookbook or a similar resource such as the Minnesota collection of WIC recipes.


      • David @ MoneyNing.com says:

        Great resources Amy,

        Thanks for sharing the recipes and also the Wish Project. It’ll give us all some ideas on how to help out.

    • David @ MoneyNing.com says:

      I’d like to know about the kitchen in the box idea as well. I’m actually talking with a group that serves the homeless in our area and I would like to pitch this idea to them.

    • Ruth Cooke says:

      Love this idea! I too would like to know what you put in it.

      And this is just one more prod for me to work on the cookbook I’ve started, which I’m hoping will have basic recipes which use mainly ingredients one would most likely get from a food bank. I’ll let you know when it’s done!

  • Gayle says:

    There is another reason that poor people don’t use coupons as much: Have you ever seen coupons for potatoes…rice…onions…beans….eggs…store-brand macaroni, etc.? And many times I have found that the coupons seldom bring the cost of an item below what the store brand would cost anyway.

  • denise says:

    I am not poor now but I have been and i have been surrounded by poor people and this may be generalizing but I see how wasteful people are and i am teased or criticised for being frugal.

  • denise says:

    I think poor people waste money like crazy. they buy junk food, have pity parties, smoke cigarettes etc. They make bad choices and also feel like they have less options.

    • David @ MoneyNing.com says:

      The reality is that many rich AND poor people waste money like crazy. We can always find faults with any group of people that we categorize. The key is to change the mindset, which is why sites like ours exist!

    • emtmomvt says:

      Denise – Have you ever had to live on one small income and feed three children? Have you ever tried to stretch that paycheck to buy healthy food? I have. And I can tell you that i spend twice as much at the market to buy fresh health food than to buy the boxed unhealthy choices. So, do you buy the fresh food that will last you five days or buy the boxed unhealthy food to last you 10 days. So, it is not that poor people make “bad choices”, they make SURVIVOR choices. And as for pity parties, when you don’t know how to keep your child fed since you cannot find a job and your husband is already working two – then yes, you can cry and beg for help. So, Denise, until you been there I would re-evaluate your opinion.

  • Property Marbella says:

    Skip your TV watching an hour each week and then you get the time to clip coupons and save money.

Leave a Comment