Types of Poverty

Types of Poverty


Prosperity Club focuses on class differences to distinguish between incomes, we shouldn’t assume that those that are more educated have the brightest minds or that those that earn the most income are the best with handling money.

Prosperity Club’s blogs will help you determine for yourself where you need to start, based on your income and how to achieve prosperity. You’re going to learn strategies of how to prosper without depending on others, to the best of your ability.


Types of Poverty: How Different Types of Poverty Really ARE Different

Absolute Poverty

Having no resources is called absolute poverty.  This is when people lack the necessities of life like water, food, clothing, lack of health and medical care and even education. Living situations like those remind us of third world countries or developing nations, we’re not thinking of the United States and wealthy countries like Europe. But it does exist in United States, and we see it in the homeless population.

Many people have false notions about those that live in the streets.  People might say “Well just pick yourself up by the bootstraps, others have done it”. “They should just go get a job”, Some of those things may be true, but an idea that it’s because of this one reason is not necessarily accurate. There are a lot of variables. A drug addict for example: if they overcome their drug addiction, they can lead normal lives. However, that’s dependent on their cognitive ability and their mental health. Sometimes people in the streets have mental illnesses and because of the mental illness, or because of cognitive impairment, they might not be able to have or keep a job.

It’s a false notion that everything is black and white, or that it’s either true or it’s false.  I find that in my own experience in life, life is a lot grayer than it is black and white.  The people that live in the streets aren’t collecting welfare, they’re not able to, so these people are living on whatever people are giving them. They do not have bank accounts, credit cards, or cars and walk most places that they need to get to.

They are not on government programs, they are homeless. For those types of people, it becomes a societal problem. In the society of that government, that country or state needs to decide how they want to solve that problem for those type of homeless populations.

The types of issue that Prosperity Club deals with is not absolute poverty, but it’s necessary to understand that type of poverty does exist and that might be a situation society needs to deal.

Relative Poverty

Relative poverty is a little bit different because it’s more a matter of not enough income to meet the necessities of life. Many of these people live off government programs to make ends meet while maintaining their jobs. They may have a job but usually the money that they earn is not enough to provide for their needs.

Sometimes those that are on the government welfare programs have at least two or more generations that have lived on welfare. Many Americans believe that’s the issue with welfare, that generations of people rely on this, and they never get off the programs. That’s not always a true statement, because some of these people can also lack skills, education, or cognitive ability to ever obtain a decent job with a decent wage to survive.

Nobody wants to live on welfare. When was the last time you heard someone say I would rather be poor than rich? If that were the case, the poor wouldn’t be buying lottery tickets.

Those in relative poverty are usually at the mercy of payday loans which charge exorbitant amounts of money to cash checks. Many do not have bank accounts because they can’t meet the minimum requirement to have an account, the money to buy checks, and all the other fees associated with them. A possible bounced check fee from their bank as well as the receiving bank.

They can’t qualify for credit cards or loans based on their income and lack of credit history. They are usually dependent on public transportation as they can’t afford a car or the insurance and if they do have a car, they had to pay cash for an older unreliable vehicle with liability coverage only.

Food stamps pays for food only, not other necessities like toothbrushes, toothpaste, or shampoo. When there is a sale on an item for buying a two pack or multipack, chances are they do not have enough money to take advantage of that deal.

Situational Poverty

Usually happens during a crisis, like the Great Depression in the 1930s, or the Great Recession of 2008.  This could also be from a personal crisis, like medical/health issue, or a divorce.

Even the COVID-19 pandemic has put people in poverty, but once the initial crisis is over, you can move on. 

Those in situational poverty may not qualify for welfare assistance because of assets like a retirement account or even owning a car. When I was on welfare and pregnant, I couldn’t have any assets like a retirement account or a vehicle worth more than $2000 combined.

Transitioning between welfare and the comfortable middle class can be a struggle when you no longer qualify for government assistance. There is less money leftover when you are now paying for food and health care with your own money.

Selling assets or dipping into retirement accounts has been a common practice for those that have found themselves in situational poverty. I refused to do this when I found myself in the same situation. This should be the very last resort. If you are under 59 ½ and dipping into your retirement account, it can cost you in penalties and capital gains being lost.

Several years ago, I read a story about a couple who fell upon hard times. The wife wanted to financially contribute to help, so she decided to teach piano from home. To assist, her husband sold some Disney stock to buy her a piano. That sale of that stock eventually cost him over a million dollars because it increased exponentially. That was the most expensive piano he ever bought.

For the short period of time, I was on welfare, I can say that there is a mistaken belief that people on welfare live like royalty. You are given crumbs at best.

During my childhood, my mom also had to depend on welfare. I can remember not having a car. To get to where we needed to go, we were dependent on friends, family, took a taxi, or walked.

My mom was an example of learning new skills to obtain a higher paying job. She went for training to become a draftsman, obtaining a position at Raytheon. During the 1950’s and 60’s it was uncommon for a woman to be doing that type of work. In fact, she was the only woman draftsman in her office at the time.

Prosperity Strategies for Poverty

To become prosperous is to continue to educate oneself beyond school. Those that are willing to learn new skills or change where they work for better opportunities are the ones most likely to prosper. Wherever there is a labor shortage, earnings increase for that position. Negotiating for higher pay is on the side of the employee.

In my own personal experiences with poverty, I managed to bring myself out of welfare. I obtained a well-paying job, was earning enough money that I was able to buy a house, a brand-new car, purchase investment properties and started a retirement account. Then when the recession of 2008 happened, I found myself in situational poverty once again. Since I had started accumulating assets, I didn’t qualify for government assistance, so I prepared by having food storage. I was also able to get food from several sources, such as the Salvation Army and United Way. For clothing I went to Deseret Industries, Utah’s equivalent of the Goodwill, run by the Mormon church. I also got assistance from utility programs in the area. For medical and dental, I went to a free clinic.

In 2010, I went back to school to obtain a degree in finance. My scholarships paid for education, and I used loans to help pay for my living expenses. I figured it was a good debt because it would pay me back by getting a better paying job.

If you do not qualify for government assistance, there are many nonprofit organizations, churches, and programs unrelated to the government that you can receive help from. Every state is different, and some offer more help than others. In Massachusetts they have a green book that lists almost every program that you can utilize. In Utah, the Mormon church can lead you in the right direction.

The most expensive cost was childcare. I needed a way to pay for childcare somehow. Living in Utah and close to the polygamist community, I had a polygamist acquaintance who had a teenage daughter. She got kicked out of the community and was homeless. He asked if I could help. She was under 18 so she couldn’t qualify for government assistance. She could live with me for free in exchange for babysitting.

Another strategy if you have children is to share childcare by taking turns with other parents that also need childcare. Of course, it’s important to connect with those that you know and can trust when sharing that care.

During the pandemic of 2020 and beyond I was more prepared than the recession of 2008. I not only had food storage, but I was prepared financially with an emergency fund that would last a year. Of course, the stimulus helped as well. I was also able to work a couple of months for the Decennial Census. I felt prosperous because I was prepared. You do not have to be a millionaire to prosper.