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How can the poor get rich?

By David McMillin · Bankrate.com
Friday, November 8, 2013
Posted: 4 pm ET

You've heard the story plenty of times. Born into poverty, a person works hard, overcomes obstacles and finds his or her way to personal finance success. It's the classic American dream. However, how often does it actually come true?

Unfortunately, the findings from a new study from The Pew Charitable Trusts, a nonprofit organization working to improve public policy, indicate that the rags-to-riches story may belong in the fiction aisle for the majority of poor Americans. Using data from families between 1968 to the present, the research reveals that 70 percent of children who are born into lower-class conditions never even make it to the middle class, let alone the upper tier of society. The research also underscores a continuing racial disparity in the country. Whites are twice as likely as blacks to leave the bottom rung of the ladder.

These findings are troubling, but the research does highlight which factors can make an individual's personal-finance situation more promising. Earning a college degree and being part of a dual-earning family increase the likelihood of moving up from the bottom.

There is another very important piece of the American-dream equation. The report points out that individuals who did leave the bottom of the economic ladder had six times higher median liquid savings. Consider this statistic: Someone with $10,000 in liquid savings is 5.5 times more likely to move to the middle class than someone with just $1,000 in liquid savings.

I realize the challenge that this presents. When someone has very little money, it's not easy to put much of that away for the future. However, there are small steps that can add up toward big payoffs down the road. Rather than working to figure out how to earn more immediately, it's wise to determine how to spend less. Reducing expenses is a simple method to saving more.

What do you think of the research? Do you think the American dream can become a reality for poor citizens?

 

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29 Comments
Lore
November 14, 2013 at 9:40 pm

It is always interesting to read some of the comments on these types of blogs. Everyone has someone else to blame for everyone else's problems. How many of you take the time to even attempt to try and help others, less fortunate that yourselves, to learn to read, write, do math? How many of you have even taken the time to give just one hour of your time to something like that?

We need more do'ers and fewer talkers in the world.

Joe
November 14, 2013 at 8:48 pm

I was raised in 5 foster homes. Forty seven percent of foster children do not graduate from high school. In inner city Detroit the numbers are similar for black children.
My credit score is well over 800 and I have a dollar value retirement higher than the average college graduate. All of our children are college graduates, as well. Each family has an income of six figures.
Notice the key word of education. It usually precedes decent income. Try sending your children to the Detroit schools and see how well they do in those run down facilities.

Mark
November 14, 2013 at 7:51 pm

Go online or turn on the radio and listen to Dave Ramsey. Follow the baby steps he has laid out. Start with a small $1000 emergency fund, then start throwing all extra money at your smallest bill regardless of the amount of interest. Once the smallest bill is gone, celebrate and then throw all extra towards the next smallest bill. Rinse and repeat. There is light at the end of the tunnel and it's not a train! He has a plan and it works. My wife and I plan to be credit card debit free this weekend. Then all our extra money will be put on our last debt, my car. We expect to be completely debt free by next summer. Then we will put all extra away to save for a house.

Robert
November 14, 2013 at 7:18 pm

We are a product of our environment, in most cases. Define rich, everyone will tell you something different. Many of us are rich and don't even know it. Pretty sad. I agree with the parental comment. Parents should take responsibility for basic common sense traits there children feature. Most bad apple's or less fortunate humans will blame there dis-functions on there mentors/parents. Where some have a valid case. Most are to lazy to take the ethical path. BE BETTER PARENTS!! law of large numbers. Our youth generation will have a better chance of BEING RICH!! How ever you want to define that!

alex
November 14, 2013 at 5:39 pm

l would like to tell my life experience,l come to this country when l was 19 years old barely finish two years technical course. l did not spend one single penny, it is all provided by uncle sam so long that l will join the armed forces. l made ninety five dollars a month in salary and out of that amount l am sending 55 dollas to my family.. l am not considering that we are poor cause my Dad is a school teacher. but with five children it is not enough l remember cooking with firewood when l was in grade school. To make story short, l have three children, the oldest one is a school teacher the second one is Doctor and the youngest one is an Attorney. l have been retired long time ago. and achieving your goal takes a lot of determination and hard work, if l did not migrate to this country l do not know what my life looks like,, this is the best country on earth believe me l have been around.

Benjamin
November 14, 2013 at 5:33 pm

Jim seems to be out of touch with reality. Our teachers are tied to limitations set forth by the government standards. Teachers are well educated but parents are using the public school system as a personal daycare facility. A child's learning should start at home and many parents are unwilling to put in the time and effort. If parents don't show the value of learning at home then how can the teacher get through to the child in school? Get rid of the video games, put down the cell phones, log off the computer and pick up a book.

Kate
November 14, 2013 at 4:58 pm

Jim's points are very well-taken. However, before he complains about how little teachers and schools are preparing our kids with the basics - like SPELLING, GRAMMAR, SYNTAX and USAGE - I think he should consider a brush-up course for himself!

Jim
November 14, 2013 at 4:24 pm

The problem of going from rages to riches starts with our children in school. The school's don't teach this subject at all . This should be a mandatory course thru all 12 years. were will they learn it. Teachers say Well I just teach Math or English or chemistry what ever. Where are our financial teachers/ advisors. we now graduating kids who can't even sign their own names. yes , what happened to writing. O I know we now have computers they don't have to do anything but type the computer does all the thinking for them. My grandson is great at math A student as long as he has a computer. Ask him to proof a problem and he said what is that. They give them computers in school to take tests because the teachers can't do it. Is this the short cut to saying how smart our kids are getting . kids that come from poor families where the parents weren't taught these fundamentals can't help them . It is the schools/ societies obligation to start them on the right road and prepare them for the RAGS TO RICHES STORY. I could go on and on, but I think you get the idea by now. Balance a check book what is that etc. etc. ???

sheila
November 14, 2013 at 3:11 pm

Many of these "rags to riches" stories are from people born in
other countries and raised with a work ethic which is largely
unmatched by the people born into poverty in the U.S.
I agree with the comments above. It's the environment. The discipline and motivation is not shown or taught by the folks in this demographic.....very sad but true

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