Posted by Tim Stobbs on April 20, 2011
Ok, confession time. As a student I had the experience of being broke a few times, but I can honestly say I’ve never been poor in my life. So what is the difference? Mmm, to me it is a rather fine line between the two states yet still a big difference.
Being broke is the simple state of being without money. It might be right before your next pay cheque, so while you are without money you are not without hope of more money. Being poor is a completely different mind set, you don’t have any money, but you also don’t have any hope of more money. So at that point worries of having a place to live or having enough to eat come forward. So I have experienced the first state of being broke, but I’ve never been poor.
I grew up firmly in the middle class (or upper middle class depending on your definition). So I never went to bed hungry (unless I had been a stubborn idiot and tried to say I won’t eat supper because I didn’t like it). I grew up always having that security behind me, so I didn’t worry about going hungry or having a place to sleep. This carried forward even during my broke times as a student. I always knew if push came to shove I could always beg for some grocery money from my parents and get it (not that I ever did it). Yet this background level of security has marked me with my approach to money.
I’m not afraid of living on a low amount of spending. I don’t equate a low level of spending with being poor or a lack of security. As such my retirement plan can contain a modest level of spending ($27,000/yr) that might scare the crap out of others, but I’m fine with it.
You see money really isn’t just money. Money is also your hopes, dreams, fears all wrapped up in the guise of numbers at your bank or bills in your pocket. Your childhood can mark your relationship with money, so if you have ever been poor that will affect you greatly and likely for life. That desire to never been poor again can drive people to odd savings targets that are really too rich and they can often fall into a cycle of never having enough money or things. I know I will never be that way, but I do understand how that can drive people in their retirement planning (I’ve had several long discussions with people who have been poor).
I’ve a bit of the opposite of that since I don’t equate a lower level of spending as risky. Actually I would argue the opposite is true. A lower level of spending in your life actually allows more savings and thus better security at a much younger age than others. Also by leaving work while you are younger allows you more time to earn money at other opportunities, that might not exist when you get older and have poorer health. So while I’m planning an early retirement that might scare you, I would argue I’m going to be better off than most people at that age. I won’t have to work, so layoffs won’t be a worry, food will always be at the table and I will never be forced to move out of my home by the bank or a landlord. I just might spend my entire like never knowing the feeling of being poor.
So how about you? Have you ever been poor or broke? How did the experience change your relationship with money?