You would think that being poor was hard enough but for many businesses not having a lot of money is just the excuse they need to increase their prices. Sometimes it is not even what you are paying for that might be the most expensive, rather it is the things you don’t pay for that end up really hurting your finances.
Hidden costs crop up everywhere and strike where you least expect it, often silently and without notice. For example, if you live in a poverty-stricken area you might be paying extra for the same amount of food and have less variety than in higher income areas. Additionally, with typically higher healthy food costs and lower variety this often leads to junk food as being the only viable snack of choice. A diet that is made up mostly of sugar can lead towards major health problems down the line.
That feed’s neatly into the next hidden cost, or rather something that is often first on the chopping block for reducing expenses, Health Insurance. If you work in a low-income area chances are your employer will not provide health insurance for you and you either must pay gut wrenching monthly premiums for insurance or just go without it. Neither are good options, but it certainly pays to have insurance if you need medical care or medicine. But the hidden costs do not stop there. Insurance companies know that, on average, low-income area’s are more prone to sickness and injury and so even if you do decide that it is in your or your families best interest to get insurance you might be paying more for it.
The next, not so hidden, cost are all the predatory lending businesses. These companies work as cash advances, check cashing, payday loans, rent-to-own stores, or pawn shops. Often a last resort as it is, particularly payday lenders, often charge interest that no sane person would agree to if they could avoid it. Sometimes reaching as high as 400% per year, that would mean if you got a loan for $250 you would owe $1,000 by the next year, assuming you didn’t take more loans out to pay for the first one.
Even worse still, if you manage to get a legit bank to sit down with you to talk about a personal loan you are likely to need a co-signer or put something extremely valuable like your car as collateral in order for them to agree to the loan. Then, because it is likely that low-income individuals will often have poorer credit, they will have to pay higher interest on said loans.
Banks sometimes have minimums that must be in their accounts to avoid monthly fees moreover. Some banks have ‘relatively’ easy minimums like $100, others can be $1,500 or higher! Things like this add up, especially over time.
Unfortunately, there is not a whole lot many can do about their situations due to family or other dependencies. Outside of getting a higher paying job and moving to a better off area with less predatory pricing, your best bet to combat these injustices is to start saving and start slashing. Save every penny you can by any means you can. Even if it’s only a single dollar a week, put that dollar into a savings account (not in a jar, nor under the mattress) and promise not to touch it unless life, limb or your ability to work are in danger. $52 dollars a year may not be the kind of savings that get you the keys to a mansion but $50 might partially cover the cost of a new tire if you have a flat. If you can put away $5 a week that adds up to $260. That might be an entire paycheck for some. When that next problem arises and you need $200 it will be infinitely better that you put away the cost of a couple of soda’s or a pack of smokes per week towards shielding yourself from all those who would take your last dollar and think nothing of it.