Hi.
I'm Chelsea from The Financial Diet,
and today I'm here to talk about a very important difference
in money and in life, which is the difference between being
broke and being poor.
Everyone has probably jokingly referred to themselves
as either broke or poor at some point,
especially during college and in their 20s.
Basically, anytime you feel the pinch
of not being able to spend for a certain amount of time,
you're likely to call yourself one of those things.
But there is actually a big difference between the two,
and depending on where you live, there
are different sort of technical markers
for what defines poverty.
Here in New York, the poverty line is around $16,000
for a household of two people, which
if you have ever lived in New York,
you know is a completely insane number.
But everywhere is different based on cost of living
and we'll include a link in the description
to find out what poverty means where you live.
Now, as I've mentioned here on these videos
before, I've actually experienced poverty
when I was a little kid, but as I grew up,
my parents became more comfortably middle class,
and even when I was poor as a kid, my poverty for me
really meant things like not having new toys or clothes
or things like that.
But I never wanted for basic needs, I didn't go hungry,
and that meant that I could you know share food
even sometimes with the kids who were
quote unquote, really poor.
So even within poverty, there are definitely variance.
And then from about the ages of 18 to 21,
I experienced poverty again, this time very self-inflicted.
As I've mentioned before on this channel,
it was really caused by my anxiety, my laziness,
and my recklessness when I did have money.
My parents refused to help me out
during this time because of my really dangerous behaviors
around money, which meant that even though my family at home
technically at that time was comfortable financially,
I personally experienced a lot of the markers of poverty.
For me, this meant stuff like using check cashing places,
driving really unsafe cars that I
would buy for like a couple hundred bucks cash and then
get rid of pretty quickly.
Things like not be able to pay bills or rent on time
because I didn't have the money.
Having defaulted credit cards and just generally never
having money for luxuries and going out.
And that made me really feel both ashamed and resentful,
because I hated saying no to things,
but I also hated being put in the position to have to say no.
And when friends would joke that they're
so poor because they couldn't afford to go to a bar
that weekend, it made me feel awful.
I felt like I had to hide a huge part of my life
because their definition of poor was fun and relatable,
and my definition of poor was really sad and scary.
Like the few friends who had come to a check cashing place
with me were definitely freaked out by the experience.
But even through all of that, I would
consider myself to have been broke and not poor,
because my situation was self-inflicted and something
that I could have overcome if I had changed
the way I handled money.
Real poverty for most often means
caught in a cycle that is very difficult to escape even
when you're making all of the right choices with your money.
And it often means not having much in the way of help
to get out of it.
Now, women-- especially black and Latino women--
make up the majority of the working poor,
and a full 43% of Americans couldn't
afford to pay their bills if they missed just one month's
paycheck.
Now, that's a shocking number, but what it also
teaches us is that within poverty, there
is a huge spectrum of what that can mean
for people's day-to-day lives.
You could be living very materially comfortably,
but at the risk of having it all disappear,
or you could be struggling to feed your family.
Serious poverty can mean a lot of things,
but one of its biggest day to day impacts
is how expensive it can make very basic life needs.
Buying items in bulk to save money
or waiting till things go on sale is nearly impossible.
Buying higher quality items that don't
need to be replaced or repaired all the time
is also pretty much impossible, and having
to use services like payday loans and check cashing places
means that the poor often have to pay just
to access their own money.
As we can see, being poor is a very real thing
with a lot of very complicated and often embarrassing
meanings for people.
So when we casually refer to ourselves that way,
we're not just being ignorant or inaccurate,
we're also potentially being very
hurtful to the people around us who are really dealing
with those consequences.
And broke is a more flexible term,
because it can often imply someone who's overall
pretty financially comfortable but experiencing a time
when spending is not so much an option.
For example, if you're at college
and your parents are supporting you
but your checking account is empty,
that means for that time, you're broke.
And while you're in that situation,
you might have a friend who's actually poor.
Someone who is on scholarships, doesn't
have help from family members, is living paycheck to paycheck
with a job that she might have off campus.
And so for her, every weekend is your broke weekend.
So that means that for a time, even
if you're spending freezes are identical,
your situations are not the same, and for her, going out
any weekend might be putting her in an awkward position.
Really understanding the difference between the two
and knowing how to talk about each situation
and how to socially handle each situation
is hugely important for being able to be friends with people
of all different backgrounds.
For this video, I spoke to my friend Danielle--
her name's been changed--
who grew up in serious poverty and was
on government assistance until about 25
about what it was like navigating
her friendships with people who weren't
in the same position as her.
She told me, I used to be a master at hiding pretty
much every detail of my life.
No one saw my apartment because it
was a room in a creepy old guy's Queens basement,
and my bed was a cot on the floor.
I couldn't afford to eat some days,
and most others I would eat canned vegetables and ramen.
I saved up all the money I could for my social activities
so that I could keep a front of being normal with my friends
because I was so afraid that if they knew I wasn't just
20 something broke the way they were,
they would stop wanting to hang out with me.
So I would do stuff like go to a bar,
order one drink with the little bit of money that I had,
and then drink water for the rest of the night
and pretend it was a vodka soda by putting it
in my first glass.
Sometimes I'd even take mostly unfinished drinks off the bar
when people left them and drink those.
Keeping up the appearance of being normal
is sometimes the most expensive part of being poor.
And it's very easy for us, especially
when friends don't often talk about money
in a very transparent way, to not understand what poor really
means for your friends.
There are many friends who are too
ashamed to be honest with their social group
or ask for help when they need it,
because they think that their friends either wouldn't
understand or would no longer want to hang out with them.
And we've probably all experienced
some version of this when we couldn't afford
to go to something that our friends were going to,
and we were faced with the awkward dilemma of,
do I either say that I can't afford it and be judged,
or do I pretend that I'm sick or something
and lie to my friends?
And it's an awkward situation, but it's isolated.
Now imagine if that were every detail of your life.
Remember that money means different things
to different people, and what might seem like no big deal
to you could be the difference for someone else between eating
that day and going hungry.
Being careful with the way we talk
about these things and the way we make the people around
us feel is one of the biggest steps we can take
to becoming smarter, more thoughtful, and more
open about money.
If we're the friend that our more financially
insecure friends feel comfortable going to,
that is a huge life achievement.
Sometimes, the biggest thing you can do
is just letting someone else know that you understand.
So as always, thanks for watching,
and don't forget to hit the Subscribe button
and to go to the FinancialDiet.com for more.
Bye!