Breaking The Cycle Of Generational Poverty

A lesson in trial and error

“It’s generational.”

My mother used the phrase in as many conversations as she could. Poverty, depression, struggle. She seemed to fully grasp that her predicament in life had been set in motion by the lives and actions of those who had come before her. All of those poor, depressed, alcoholic, abused, and abusive wrecks of lives that had created another kid to have another kid to have her.

As a child, her statements appeared to be wise. Ah, she has uncovered the mystery. As an adult, I am far more critical. It is true that those things were set in motion, but when she continued to behave as a child raised by those circumstance, she ensured that I would grow up with the same detrimental environment for which she blamed her woes. She would, on many occasion, claim she “did her best”. But. Did she?

The first step to undoing the generational problems, is to get to work on fixing yourself. Next, you learn how to make it easier on the next generation. It is hard work, but the results are far better than what you get when you stand around blaming your entire existence on your parents. Look, we all have our 20’s to point out that our parents screwed us up. Then, we fix it and move on. Would we have been better off if they did their job properly? One hundred percent, but time isn’t going backward to make that happen. All you have is tomorrow.

Rich Dad Poor Dad

Ugh. I read this book several years ago. There were some great takeaways in it for sure, but a lot of things just irritated me. For instance, the endless tax loopholes. Congratulations on finding all the ways to avoid paying taxes. I agree, it is a sure fire way to build and pass down wealth. I am all for passing down wealth without a tax burden for my kids, but the rest of the hoop jumping? I pay taxes because I want to live in a society that has services and educated people, fine, and a strong defense network.

So many of us struggle to even build wealth, let alone something that can be passed down to our children. I recently read a story about parents living long enough to spend through their retirement and having nothing to leave behind. Having nothing to give to your kids is obviously a let down, but not having enough for yourself in the first place can be absolutely devastating.

Education

Over a decade ago I sat down and started reading about investing. I learned all of the stock market and trading lingo. I spent months researching. Eventually I had a nice little investment account for myself. Beyond what you pick up at a job with benefits. This was my own little project and I enjoyed it. I didn’t have much, but each time I wanted to buy a frivolous item, I bought a stock instead.

Some of my investments were so good that, if I had had thousands upon thousands at the time to invest, I would have come out with hundreds of thousands to show for it. Unfortunately, I had dollars and I got a few hundred more. It is what it is. Life hit and I sold everything. As you do when you come from generational poverty. You are always a little behind I suppose.

No. Not letting it get me down. I picked myself back up and began the process again. This time with a rule to never touch the money, it was a ghost, it didn’t exist. This has helped.

Teaching ourselves about money, money management, and all that it entails is difficult when you have no frame of reference. It involves reshaping your mind around what wealth is and how to make it work for you. If you can do this, it is equally important to start passing that information down to the next generation. Give them a leg up.

Moving Forward

When you are in the midst of poverty, you are in survival mode 24/7. An impoverished person can appear to be irresponsible. Taking out high interest loans. Not making any solid plans for the future. Failing to tend to regular upkeep like keeping their car maintained and registered, or being up to date on anything at all.

At the core, the person lacks resources to get these done. The first step to ending the cycle is to systematically tackle the mundane. Then move up towards the bigger problems. With debt, it is easier and more rewarding to choose the snowball method even when the avalanche method will ultimately save more money.

Snowball Method: Focusing on low balance debt first then diverting those funds to higher balances as each one gets paid off.

Avalanche Method: Focusing on high interest debts, often with higher balances, to prevent more debt creep as quickly as possible.

As resources grow, it is time to plan for the future. Savings. Investment. Life insurance. A will. A trust fund.

When we think of trust funds, we think of the “trust fund baby”. Those people who turned 25, or whatever the set age was, and inherited piles of cash with which to gallivant around the world. In truth, regular people can use trusts as well. It helps with the passing down of wealth and assets. More importantly, it could potentially give the next generation a fighting chance.

Review

Work on yourself. Get in the habit of handling business, all those little things we have to do during the day to make things manageable. Education. Education for yourself. Education for your kids. Pay off debt and save for the future. Invest.

I am writing about improving myself, traveling, making money, paying off debts, figuring out how to help others, and all the thoughts and questions I have along the way. Consider following me to see what happens next!