Do poor people have a complex when they climb the social ladder?

Before we start, thank you Financial Post’s Ora Morison for featuring me, Money Rabbit & Young and Thrifty in this article: Young bloggers look to spark fin lit passion 🙂


A reference to “Status and Poverty” from Journal of the European Economic Association, April/May 2010, Vol. 8, No. 2-3, Pages 413-420 stated:

…poor families that climb up the social ladder by the accumulation of wealth engage in conspicuous consumption that prevents them from escaping poverty.

Via Bakadesuyo

At first you might think: Wait, they’re earning more but they’re still in poverty?

Yes, if you consider that even if you earn $100,000 a year but you spend it all, you are no better off than when you were making $10,000 a year living paycheque to paycheque.

The only difference is you can easily cover your basics, but without savings, there can be no wealth.

It’s an interesting statement from the study but unfortunately, they don’t detail out what the reasons are in the blog post above.

So without reading it, it could still make for a good discussion.

(No we don’t have more details and facts, but we can still talk!)



Perhaps it’s because they feel the need to “wash the poverty” off themselves by covering their outsides with jewels, drive fancy cars, live in big houses.

I want to point out that it doesn’t mean just because you came from poverty, you’d follow this path of conspicuous consumption if you made more money.

I daresay anyone feels like this sometimes, even middle-class background kids like myself.

Many of us, regardless of our previous money situation, may at one point or another, feel ashamed for what we can’t afford to buy.

They say even single-digit millionaires are jealous.

Of who? Of other double-digit millionaires. Or of billionaires of course. 😛


Or maybe they simply just wish they had those things before, and are finally buying them to satisfy their unmet wants and desires.

When anyone has more money, the instinct is to spend.

At least.. my instinct was to spend.

I had to fight and work against fighting that instinct for many years. It isn’t easy but it’s the right thing to do for my future.

So when I got my hands on some money the first time I started working, I was stoked.


I admit, I did spend it. A bit. I went a bit overboard but then my rational side took over and has controlled the budget ever since.


But I think for someone coming from poverty, the gap between poverty to having more money, might be larger.

I think the change would be larger too, and perhaps much harder to cope with?

Just thinking about it, if I had lived with struggling my whole life to pay for the essentials, and then I suddenly had all of this room to breathe financially, I wouldn’t put it past my old self to have gone crazy in the shopping center to make up for lost time.

I wouldn’t be so smart and rational to immediately think: Gee I lived in poverty, let’s SAVE all of this extra dough so I never go back there again.

Read: Generational Poverty — what is your motivation to save?


Before I started reading about personal finance I believed all of the following:

  • Being middle-class meant you had to have a house and a mortgage
  • Debt was a normal part of life, even for student
  • Debt wasn’t a big deal for people who wanted a good life
  • People who made $50,000/year had 1 home, and 1 car
  • People who made $100,000/year had 2 homes, 2 cars, lots of bling
  • People who made $500,000/year had homes overseas
  • People who made $1 million/year flew in private jets & lived in castles
  • People who make a lot of money never worry about money

You get the idea.

I had no idea what people really spent, let alone what I spent.

I just assumed people who were rich, never worried about money, had everything, were always happy…

I wasn’t in touch with what was realistic. I had been assuming so much, that it seemed shameful to have less than what I was supposed to have, given my “status”.

At my $65,000 income bracket, people would tell me:

  • Why don’t you drive a car, any car? You’re making good money.
  • Why don’t you buy a home? You have the money.
  • Why don’t you go on a vacation twice a year? You have the money.
  • Just pay the minimums on your loans & enjoy your money

What they also knew was that I had debt, but they figured I had my whole life to pay my debt, and even after paying just the minimums on my debt, I’d have plenty of cash to “burn”.

This was true, but it isn’t the best way to see things.

It’s like telling someone to just pay the minimum on their credit cards, and to continue for the next 10-20 years.

Paying the minimums was the norm for many, because we just simply didn’t do the calculations of how much interest we would have been paying over time.

So there you go.

My unofficial, probably totally off the reserve observations and half-minded theories.

Update: Meg from World of Wealth (love her!) wrote a response to this post.

What do you think?

About the Author

Just a girl trying to find a balance between being a Shopaholic and a Saver. I cleared $60,000 in 18 months earning $65,000 gross/year. Now I am self-employed, and you can read more about my story here, or visit my other blog: The Everyday Minimalist.