One of the interesting topics I’ve come across in my readings is the class difference in money management. It’s part of the whole independence/ meritocracy myth that permeates American culture — you know, the idea that the U.S. is a nation of independent individuals, built from the grit and toughness of specific heroic figures whose singular actions shaped a nation.
People talk about the midnight ride of Paul Revere or the lone cowboy/ wild west, but ignore the other two participants of that midnight ride or the pioneer communities. All our historical narratives devalue the importance of community in our culture and reinforce the myth that individual merit is the factor that creates or destroys success.
So when you have this idea — whether conscious or unconscious — that your own individual merit is the sole thing responsible for your success or failures in life, then you obviously project that onto other people. Even when you’re aware of the ways that your race, gender, or parents’ financial situation and community opportunities impact lifelong choices, it’s still disturbingly easy to fall into the trap of judging the financial choices of others.
Okay, imagine this couple, Anne and Bob Pretend. They have three kids, one with each other and two from a previous relationship of Anne’s. Anne has a GED instead of a high school diploma, while Bob has a high school diploma but no college. Bob is a former Army vet, while Anne has a Nurses Aide certification. They are white, and their parents were also low income. Bob used to live here, while Anne’s family comes from another state. They met when Bob was stationed in her town, and have recently moved from her home state to Washington in pursuit of a job opportunity.
This is sort of a composite sketch inspired by several actual low-income families I know, so I’m not just pulling this out of my butt. Data shows that most low-income families on welfare are white, in a relationship, and have a statistically average amount of children. Just imagine your typical t.v. “working class” family, and you have a good picture of what welfare families actually look like.
Their monthly income primarily consists of child support sent to Anne for the two kids, which is about $750/ month, and Bob’s VA benefits, which are about $300/ month. They also get food stamps, and bring in under-the-table earnings from various odd jobs like housecleaning and vehicle repairs. They are often short on rent, and frequently borrow money from friends and family to meet their financial obligations.
In December, Anne was given $1,000 by an aunt to buy her kids Christmas gifts, which she bought … and then immediately gave to her kids, not waiting for Christmas morning. She spent the rest of the month venting about her inability to give the kids a Christmas morning, and several family friends came through, showing up on Christmas with gifts and treats for the family.
A few months later, Anne and Bob received their tax rebate, which was significant. They paid their unpaid back rent and a few bills, and then they bought their kids brand new bikes, a game system, and several other expensive toys.
You’re probably judging this imaginary family pretty hard right now, aren’t you? You’re thinking that they blew their money on stupid stuff, and this is why they’re poor. You’re probably muttering that if they managed their money better, they wouldn’t be so poor — it’s their fault for blowing it on toys instead of bills, or putting it in savings.
Let’s go a little bit deeper into their character history, though. Both Anne and Bob were raised by low-income parents. They went to poorly-funded, overcrowded public schools, and their employment opportunities are constrained by that background. They would both like to go to college and get higher education degrees, but their poor credit prevents them from qualifying for a loan. Plus, contrary to popular opinion, current research shows that the lower income a family is, the less financial aid grants they are awarded. So they can’t better their income situation through college.
Their income situation is constrained by their educational level, which was shaped by factors outside of their control (the income level and living situation of their parents). One might respond that any job will do — they don’t need to be CEO of Facebook, they just need to have a job. True.
But, the thing about jobs is that they’re actually still pretty difficult to find. On the low education/ low income side of the scale, jobs are a little easier to find … but they have demanding hours that don’t balance well with the demands of family, pay very little, and often don’t offer benefits (let alone affordable benefits).
In the case of our example family, the promised job opportunity they followed fell through after they arrived. Bob found work with a local telemarketing company known for exploiting and discarding low-income workers, but stopped going to work after their truck was repossessed and regular attendance meant navigating a bus ride that took about an hour each way, and often was unavailable during the hours he was scheduled.
Bob is chronically unemployed, due to serious and largely undiagnosed/ untreated mental health issues that prevent him from maintaining long-term employment — basically, every time he gets a job, he gets depressed or socially anxious after about 3 months and finds a reason to quit, or just stop going to work. Given that he is former Army, it’s more than likely he suffers from some form of PTSD. Although the Army is improving in their response to and treatment of PTSD, this is a recent turn of events, and Bob is both undiagnosed and out of the military.
Anne has been looking for work since they moved to the area, but has been unable to find employment yet. She does have her Nurses Aide certification, but the certification and experience were acquired in a different state, and she needs to take a few more classes to be compliant with the local requirements.
If she does find work as a Nurses Aide, the starting wage is state minimum wage, which is about $20,000/ year — still significantly less than the $82,175 budget the Economic Policy Institute estimates is needed to support a family of five. According to the MIT living wage calculator, even the median Nurses Aide income of about $13/hour is only slightly above area poverty wages, and does not approach the $22/hour estimated for a living wage. Even if both of them were working full time at the current local minimum wage of $9.19, they still would not be able to afford the cost of daycare for their kids — one of them has to work part time or less.
Since they moved to the area, Anne and Bob have faced difficulty in being able to meet their basic financial needs, and do not have the savings to cushion their situation or assist them in moving to an area with higher employment. Their family of five lives in a 3 bedroom rental home owned by Bob’s dad.
The rent is about $1,100/ month, which they cannot afford. Because Bob’s dad has his own financial issues, he can’t let them live there for free, but he does not charge late fees and is generally understanding. Though Bob and Anne are lucky enough to have a forgiving landlord, they often have to borrow money from friends or family to pay their rent and utilities, or buy groceries.
All that sounds really stressful and upsetting, and no doubt contributes to marital strain and household discord. But it has another effect, too, a very specific one. It influences their parenting choices.
Imagine that your child comes home from school with a note. It is from their teacher, praising your child on an essay that was so well done, they want to submit it to a statewide contest. If they win, your child will be recognized in an assembly and given a ribbon.
As a parent, you’re delighted. You’re proud of your child, and excited that other adults recognize potential in them. You praise your kid, and tell them how proud you are of them, and ask to read the essay in question. Maybe you put it on the fridge. Because you’re so pleased with your kid, you take them out for ice cream. You are explicitly rewarding good behavior. Child performs well in school, gets praise and ice cream.
This is true in smaller scenarios, too — you’re out grocery shopping, and your kid is quiet and helpful instead of a noisy pain in the patootie. At the check-out counter, they ask for a candy bar or pack of gum, and you say, “Sure, you’ve been really helpful. I think you earned it.”
Again, good behavior = reward. The two are explicitly linked in those situations. You don’t buy your kid ice cream or get them candy bars when they get in trouble, though. You don’t want to reward bad behavior, so a kid who comes home with a detention notice or a kid who spends the entire grocery store trip whining and begging doesn’t get little fun rewards.
Most parents like to both make their kids happy and reward good behavior, so we do this kind of thing all the time, and it’s great! It’s a widely accepted and acculturated parenting practice that rewards desirable behavior and links the value of effort and reward in the child’s mind. This parenting practice implicitly teaches kids that their work ethic is what will dictate their financial rewards in life, and it’s a normal practice for middle class and affluent families.
The only downside (in my opinion) is that unless parents explicitly teach their kids about the role of luck and circumstance in acquiring and maintaining financial stability, that awareness may never develop.
But Anne and Bob, as seen above, are operating on a negative budget 90% of the time. They buy their kids stuff whenever they’re lucky enough to have extra money. They’re not trying to be financially irresponsible, or to teach their kids that good behavior is not rewarded. They just have the same desires any parent does — they want to make their kids happy, and they want to reward good behavior.
The difference is that if their kid comes home with an award, or is particularly helpful and cheerful on a given day, Anne and Bob don’t have the funds to get an ice cream or candy bar. They are in a situation where literally every penny counts, and on the regular day-to-day cycle of life, they can’t afford the little thoughtless extras that we should be able to take for granted, like a pack of gum at the supermarket to reward good behavior. Sometimes they can’t even afford to celebrate holidays or birthdays when they arrive.
So what happens is that when Anne and Bob get the surprise influxes of money — the tax return, the $1000 gift from a family friend — they spend it immediately on all the rewards/ gifts that their kids either earned or were promised over the past few months, which their kids get even if they are being bad that day, because they can’t afford to reward them in ways both large and small the rest of the time.
Because the gifts are not tied to good behavior, but to the economic ups and downs of the adults in their life, the kids learn to associate financial and material excess with luck, rather than good behavior. This is the essence of “windfall parenting.”
Windfall parenting actually decreases the ability of a family to teach frugality. Let me borrow and repurpose an analogy one of my son’s teachers used about bullying: Everyone has a bucket that they carry around with them. The bucket is full of good feelings, and we can dip into other people’s buckets and take their good feelings away, or we can share our good feelings and fill up the buckets of other people.
As parents, our ability to offer moderate or frugal rewards is tied to our ability to keep our child’s bucket full. If a family takes their kid to a museum on Sunday, and out to eat with the family on Wednesday, and pays for a class field trip on Friday, then the parents will feel more justified in choosing more frugal gift or restaurant options. Instead of the $150 bike, they might find a used bike at a garage sale for $50.
Instead of buying a newly released video game or console regardless of price, a parent might promise that the item will be purchased when it goes on sale if the child continues to behave well. After all, if the kid complains, the parent can point to all the other ways they’ve filled their child’s bucket of happiness.
Anne and Bob don’t have the economic stability, ironically, to wait for sales or good behavior that would teach lessons of frugality, saving, and rewarding work ethic. When they get a windfall of cash, they pay the overdue bills and spend the excess on the family. In response to internalized guilt for not being able to provide regular rewards for good behavior, Anne and Bob will be less likely to feel comfortable with buying the used or less expensive option, especially since the status-quo for their kids is making do with used and hand-me-down items.
When there is an influx of cash, Anne and Bob purchase new items at full price precisely because there are so few opportunities for their kids to own new items that bring admiration and envy from their social group.
So the next time you find yourself silently judging a low-income parent for money mismanagement, remember all the structural social, historical, and familial elements that are shaping their choices. There’s a lot more to it than just a perceived inability to budget.