I recently read a fantastic article from The Atlantic entitled . Although the article is demographically correct in stating that the points that they make apply best to minority families, the truth is that the problems described in the article affect almost everyone who is in the bottom 30% to 40% in family incomes in the United States – that bracket just happens to be disproportionately minority in nature. I’m certainly not a minority, but I saw many of the things described in that article in low-income Caucasian families and even, in some respects, in my own childhood.
The opening of the article felt so familiar:
The year after my father died, I graduated from grad school, got a new job, and looked forward to saving for a down payment on my first home, a dream I had always had, but found lofty. I pulled up a blank spreadsheet and made a line item called “House Fund.”
That same week I got a call from my mom—she was struggling to pay off my dad’s funeral expenses. I looked at my “House Fund” and sighed. Then I deleted it and typed the words “Funeral Fund” instead.
My father’s passing was unexpected. And so was the financial burden that came with it.
When I was growing up, I witnessed a lot of situations where my parents were saving and planning for particular goals but then something would come up and that goal had to be tossed to the wayside.
I’ll pin part of it on myself. I had a seemingly endless run of medical problems in my childhood and even though my parents had good insurance, that still meant a lot of expenses. There were co-pays. There were deductibles. There were all kinds of add-on expenses that come when you have a child in the hospital a hour or two away from home.
Add on top of that family illnesses and deaths, layoffs, bizarre legal problems, struggling relatives… the list of unexpected expenses went on and on and on.
The truth is that when you don’t have a whole lot of money, those kinds of expenses can hit you like a Mack truck. You work hard to build up a little bit of savings… and then something just comes along and devours all of it. It can feel like an endless cycle.
This is particularly true when you don’t have a lot of financial support around you. If your parents and siblings and other close family members are also struggling financially, everything becomes harder, and like it or not, that’s a situation that many people in the lower levels of income in the United States find themselves.
The article goes on:
A seminal study published in the Journal of Economic Perspectives on wealth accumulation estimates that as much as 20 percent of wealth can be attributed to formal and informal gifts from family members, especially parents. And it starts early. In college, black and Hispanic Millennials are more likely to have to work one or two jobs to get through, missing out on opportunities to connect with classmates who have time to tinker around in dorm rooms and go on to found multibillion-dollar companies together. Many of them take on higher levels of student debt than their white peers, often to pay for routine expenses, such as textbooks, that their parents are less likely to subsidize.
“Student debt is the biggest millstone around Millennials, period, and an even larger and heavier one around the necks of black Millennials,” said Tom Shapiro, the director of the Institute on Assets and Social Policy. “It really hits those doing the right thing. [They’re] going through all the hoops.” He explained that, unlike in previous decades when college tuition was drastically lower, the risks of educational costs are now passed down to the individual.
Even more important – I added the bold myself:
Recent polls indicate that a large portion of Millennials receive financial help from parents. At least 40 percent of the 1,000 Millennials (ages 18 to 34) polled in a March USA Today/Bank of America poll get help from parents on everyday expenses. A Clark University poll indicated an even higher number, with almost three-quarters of parents reporting that they provide their Millennial children with financial support. Another survey saw nearly a third of Baby Boomers paying for Millennials’ medical expenses. A quarter of Boomers subsidized “other expenses” so their Millennial offspring could save money. Black and Hispanic Americans are less likely to be the recipients of this type of support.
Ironically, even though black and Hispanic Millennials are less likely to receive financial support from parents, their parents are more likely than white parents to expect their kids to help financially support them later on. According to the Clark poll, upward of 80 percent of black parents and 70 percent of Hispanic parents expect to be supported. And most studies show that a primary reason why people of color are unable to save as adults is because they give financial support to close family. This is important because when emergencies happen, many Millennials won’t have the reserve money to cover them.
Again, as I said at the start of the article, the lack of family support isn’t just a racial thing – it just happens that black and Hispanic Americans are statistically much more likely to be in families that fall into the bottom 30% or 40% of income level. White families most definitely fall into that group, too.
People who come from families with a low level of income have more obstacles to saving because of family needs. It matches the statistics and it also matches my own experiences.
The conclusion sums it up well:
[I]t’s made up of many smaller inequalities instead of one massive one. It’s not the difference between a silver spoon and a dirt floor — it’s the one between textbook money and a campus job. It’s not the difference between the 1 percent and the destitute—it’s the one between a birthday card from Grandma and paying her hospital bill. The gap in gifts, debts, and inheritances creates a vicious cycle
So, how exactly does a young person from a low income family manage to escape this trap without telling their family to get lost? That’s an obvious solution, but it’s also extremely hard-hearted, especially when people have strong family ties and genuinely love their family members. The Atlantic article does a great job of describing the problem, but it doesn’t touch on solutions. Since I’ve actually been in that very situation – the college-aged student of a low-income tight-knit family – here are some things I’ve learned that might be useful.
First, understand that you don’t have to be the source of financial help, but you might be positioned to offer other kinds of help. When someone is struggling with a problem, use your mind and your other non-financial resources to help. Help those people find services and programs that will help them get through the problem. Don’t immediately turn to your pocketbook.
For example, when someone passes away, don’t immediately start tapping your savings account. Start looking for community resources that can help solve the resulting problems. Perhaps the people left behind need to quickly sign up for programs like . Maybe you can find the address of a community food bank for a family member who is hungry. Maybe they simply need help paying for a funeral, so perhaps . In fact, sometimes just listening to your family members can be a huge help – and that means genuine listening, not just twiddling your thumbs or thinking of the next thing you’re going to say. Your first response doesn’t have to come from your wallet.
Second, you’re probably going to have to work while in college, but strive to find work that will actually be resume-worthy. When I first went to college, my academic advisor gave me a piece of advice that literally changed my life. He said to get to know as many professors as possible in my major and ask them about their research and then do anything possible to find work that is connected to that, whether it’s working for that professor or for their department or even at businesses that the professors have connections with. I found that by doing this, many different professors were thrilled to offer a helping hand because so many other students were just interested in getting their grade and getting out of the class. I found that many research grants actually have room for undergraduate assistants and it was that money that got me several different jobs as an undergraduate. I also found a job as an assistant for the department, which helped me get to know a bunch of professors and graduate students. Don’t just rely on work-study programs or for a job listing. Take the first steps yourself.
Sure, you may end up having to use the money you earn to help family members, but the valuable experience and resume fodder is something that you can’t give away. It stays with you and bolsters your options after graduation.
Finally, use your spare time for errands. Your sister might be struggling to pay for child care while she interviews for a job, so step up and offer to watch her kids for her. Your uncle might need a ride to work sometime after his car breaks down, so don’t help him buy a beater. Give him a ride to where he needs to go. Help your grandmother take care of some chores that she might have to hire someone to do.
These solutions aren’t perfect, but at least they can make a difference now. One could talk all day about grand societal solutions to these problems, but all of that talk doesn’t do a single thing to help a college student whose parents are broke and struggling. These tips at least provide a starting point to do something without sacrificing one’s future.
The thing to remember is that you are broke, too. You’re a student or perhaps an entry-level professional with a huge pile of student loans. You can’t afford to help by opening your wallet, but that doesn’t mean you can’t be open to helping. Use what you have – energy, spare time, intelligence, and the ability to research solutions – to help them solve problems.