Where Does Poverty Come From? Breaking Things Down

Despite the fact that poverty rates have been showing clear signs of decline over the last decade, certain inequalities still persist. According to one recent study, for example, the poverty rate in the entire United States was 10.5%. To put that into perspective, that was the lowest rate since estimates were first made public in 1959.

Yet at the same time, certain groups – with African Americans being chief among them – were still quite high. The poverty rate for black people during that period was an estimated 18.8% according to the United States Census. Keep in mind that this is also just prior to the onset of the COVID-19 pandemic, which obviously caused turmoil and exacerbated trends among virtually all groups and classes.

So at the same time, all of this demands the question: how can a discrepancy like this exist? How, during a period of time when poverty rates seem to be declining across the board, can disparities still occur within certain segments of the population in particular? The answers to questions like those require you to keep a few key things in mind.

One of the most important things to understand about all of this is that there is no “one size fits all” description for the cause of poverty. Everybody’s situation is unique and should be treated as such, especially once you begin to examine things across various classes.

Having said that, many agree that in the black community in particular, an issue with poor financial habits is something that is transferred across generations. For many families, it begins with a poor sense of understanding about what money management best practices actually look like. For others, there is a naturally unbalanced debt-to-income ratio. Others still are the victims of unrealistic expectations in terms of what self-sufficiency actually means.

Racial inequality, a lack of opportunity – you name it, and all of these things tend to contribute to the larger issue under discussion. For many families, it’s a variety of these factors all working in conjunction with one another.

So from that perspective, poverty is less a mindset and is more about a situation that you find yourself in. But it’s also one that you don’t need to let keep you down. Anybody can become financially literate with access to the right resources – and thankfully the Internet has made that easier than ever. It’s also important to achieve and maintain more than a single income stream, something that many families in these communities already do.

Invest in life insurance. Star thinking about a retirement plan. Allow yourself the perspective of making decisions that go beyond your own prosperity. All of these are simple steps that people can take to help slowly bring themselves out of the confines of poverty, regardless of where they come from. They may not seem like much individually, but they can make a significant effort when taken together moving forward.

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