Starting Out Poor or Rich: Which is Better?

by Andy Hough on February 2, 2012

According to a 20-year study, the gap between rich and poor is growing, not getting smaller. The difference is even more pronounced when comparing countries, according to the Organization for Economic Cooperation. The OECD’s rep “urged governments to address the ‘divisive’ issue of growing inequality. He said they should do more to educate the whole work force – and not just the elite – while helping people get jobs and increasing incomes for working families, rather than relying on social benefits.(Unfortunately, he didn’t also explain how this is going to happen.)

So — do you learn more in life, by growing up rich — or poor?

It could be good. It could be bad. Some, like Not Made of Money, say that their money-strapped upbringings actually made them more responsible adults. Nah, John Cheese argues. If you learned bad habits when you were poor, things probably won’t change. Get a better job, and you’ll still be eating crappy junk food and blowing your paycheck.

Either way, we learn by example: good or bad. (Sharon Jasper isn’t famous for nothing.) Chatting At the Sky, talking about her dad, the former alcoholic, says, ” It seems to me the people most qualified to talk about hope are the ones who have been hopeless and lived to tell about it.” Keep the good ideas, like sticking to fifty bucks a month for food, or living richly when you’re scraping bottom. (Three words: “Less is more.”) Discard the rest.

Your parents’ response to money matters is going to affect yours — whether you like it or not. (See a good overview on this, thanks to Get Rich Slowly.) If your folks were spendthrifts, you may be, too — or you may sprint across the spectrum, and become a miser. Hopefully you won’t go to either extreme. The key is understanding where you came from, and why you react the way you do.

Case in point: my parents had a tendency to choose the cheapest appliance, regardless of its track record. I did, too, until Husband pointed out that a higher quality item lasted much longer. We spent more on a refrigerator than they did — but it’s lasted for nearly a decade, so far, with more years to go.

Just living in America has given us a leg up that many others would love to have.

Yes, I Am Cheap grew up poor…to the point of shivering through the first year or so of high school, until she could afford a winter coat. (Thrift shop, I would say!) But as an immigrant herself (she moved to the U.S. at age 6), she says, “Growing up poor in the U.S. is entirely different than growing up poor in some other countries. Even some of the worse conditions here can be better than some of the best conditions elsewhere. Homeless families here can be accepted into programs where a roof will be put over their heads. In some other countries when you are homeless, you are truly homeless. There are no resources for you.”

Rich, poor — it’s all relative. If you’ve read Andy’s post on the subject, his family had cable in his teenaged years, and he owned his own computer. (An Atari — big stuff back in those days!) His mother, on the other hand, was born in a farmhouse with no running water.

As a farm girl, we had plenty to eat, including lots of steaks and roast (luxuries nowadays). But the only television I saw until 4th grade was my grandma’s, while she was in Florida for the winter. (We kept the tiny b&w tv while she was gone.) Husband and I managed to buy our first computer only because Apple offered a half-off special to students at the University of Michigan.

This all seemed incredibly fancy to my dad, whose home didn’t have electricity until he was in his late teens. (Rural South Dakota was not exactly on the cutting edge of technology.) He only went to school through eighth grade; his help was needed on the farm. And to the end of his days, he wore the same basic dark blue shirt and pants, with clodhopper work boots, throughout the week.

My viewpoint on all this changed even more when friends came to supper Saturday night. ‘Dan’ spent his childhood in a grubby apartment in ‘Alphabet City,’ a rent-controlled complex in lower east Manhattan. He vividly remembered stepping over drunks in the hallway, fighting with gang members, and begging for money in the subway with his mom and younger brother.

His life has completely changed now, but he hasn’t forgotten the many nights they spent in New York City’s homeless shelters…or his relief, when he finally felt ‘safe.’ That feeling didn’t come until his twenties.

I never had that experience. Perhaps what seemed poor was really rich, after all.

This post is by staff writer Cindy Brick. Cindy is a quilting expert with several published books on the subject and has also had many published articles on a variety of subjects. You can visit her business website at CindyBrick.com or visit her personal blog.

{ 10 comments… read them below or add one }

1 Money Tips February 2, 2012 at 2:14 pm

I think since you do not have control over how you start, rich or poor, the only thing that should matter is how you end!

2 Krantcents February 2, 2012 at 3:19 pm

Growing up rich with the wrong parents could affect the rest of life. The same is true growing up poor. I would rather have good parents who love and care about me. They should teach me good values and the skills to succeed in life.

3 Squirrelers February 2, 2012 at 4:06 pm

Good post, thought-provoking. I think that one can learn different lessons either way, and what’s better is hard to determine based on rich vs. poor in terms of lessons. I guess my first impression is that one learns more and has a more realistic view of life growing up with less, but has some built-in advantages growing up with money.

4 Cindy Brick February 2, 2012 at 7:40 pm

HI all, you’ve got some great points —

One thing I didn’t mention in the post, that I think has a strong effect on this question —

Would you appreciate the money just as much, if you didn’t have to work for it? (Squirrelers, that question is especially for you.)

Thanks for writing in to Andy’s site. Your comments are very welcome!

5 Chuck Harnish February 2, 2012 at 9:10 pm

Growing up poor was difficult. I can still hear the arguments my parents had over and over again about money. But though we were poor of money we were never short of love – something I will always be grateful for. That upbringing has made me make many choices as an adult – I knew very early that I did not want to struggle daily as my parents had done and as a result many of the career choices I have taken were a result of that inner vow. I am happy with those choices but wonder how different my adult path might have been if my folks had been a little better off financially.

6 Money Infant February 2, 2012 at 10:20 pm

I think if you want to be rich when you grow up then it is certainly better to start out rich. Personally I grew up middle class, but had friends that could be considered both rich and poor. Some 30+ years later the vast majority of my poor friends from high school are still poor and the vast majority of rich friends are still rich (or at least upper middle class).

True you can’t choose to be born either rich or poor, but if you could why would you want to start at a disadvantage (assuming your adult goal is to be money rich).

7 Jana @ Daily Money Shot February 3, 2012 at 12:38 pm

Talking about how I grew up makes me extremely uncomfortable. I grew up in an upper middle class to upper class (depending on the neighborhood) suburb of NYC and had cable, a computer, vacations…everything you can imagine having, I had growing up thanks to the success of my dad’s business. This did have a tremendous effect on me because, although my parents had money, they never taught me about it. I just thought that money was just something that appeared and would always be there. Needless to say, it was a big shock when it wasn’t.

While I’ll never regret how I grew up, I often wonder what it would have been like if I had grown up with my parents’ current financial situation rather than the one they had 20-25 years ago. Would I have made the same mistakes? Would my parents have been more open about money? What would I have learned that I didn’t? I know that I’ll never know but I do wonder.

As I’ve gotten older, I’ve also learned that just because you make a lot of money, doesn’t mean that you know how to manage it. Rich or poor, we all need to know how to manage what we have.

8 Sustainable PF February 3, 2012 at 8:04 pm

I think growing up without much money really formed my adult habits which include comfort without over-indulgence but certainly not frugal to the point of being silly.

I wrote about my experience a while back on our site: http://sustainablepersonalfinance.com/mom-knows-best-financial-advice-by-example/ (if it is not cool to leave a URL I put the same one that links from the name on this comment).

9 Cindy Brick February 3, 2012 at 11:42 pm

We have one life to live. Just one. That means that we will never know how we would have turned out for certain, if we’d grown up with more money — or less.

So can I wonder what would have happened if I hadn’t lived on a rural farm in Michigan? Or my parents had enough money to give me multiple “store-bought” outfits, like some of my cousins? I pretty much had hand-me-downs, and clothes my mom sewed…beautifully, by the way. Chuck, who comes from the same small town that I did, surely can relate. (Hi, guy!) He, like yours truly, worked all through high school.)

It’s interesting to speculate. But the truth is still that I have one life to live. Just one. So I’d better make it count.

Thanks, all of you, for contributing. You’ve made this discussion even richer by your comments.

10 American Debt Project February 12, 2012 at 8:39 pm

Great post, and I think you make some excellent points. Above all, you will be affected by how your parents relate to money and what they teach you about it. My parents meant well but never managed their spending very well. If you really want to reduce expenses and live below your means, you have to be serious about a budget. I know my parents never did that. We had a very comfortable life growing up, but I know there was always money concerns. And there really shouldn’t have been because they made a decent income. But you know what? Money was just never important to them. They were so focused on giving everything they could (in terms of support, sports/activities, education, anything) to their kids and everyone else they came across. My parents are truly amazing, generous people. They didn’t know how to manage money, but they taught me so much more about humanity and responsibility to your fellow man that is worth much more to me. I’ve been figuring out the money part on my own for the better part of a year now!

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