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4 Reasons For Poverty


Do you ever wonder how that homeless man in your town lost everything? How can someone go from living well in a home of their own to begging for food on the street corner? If you don’t know the answer to this, then you should really be scared.

The old adage, “What you don’t know can’t hurt you” is completely false. If you do not know how some people have plummeted below the poverty line, then chances are you don’t know how to avoid it. For this reason, I give you the 4 reasons for poverty.

1) Fraud

There are plenty of people out there that are looking for the easy road to wealth. More often than not, this leads to criminal activity, and some unsuspecting people can suddenly lose everything they have.

Fraud can come in many forms. Here are some schemes that could wipe out your bank account.

  • Fake inheritance (typically shows up in your email inbox)
  • Investing in a small business (sometimes they just take your money and run)
  • Identity Theft – make sure to keep your eye out for fraudulent charges on your credit cards!

2) Misfortune

Many of us have seen Murphy show up at our door from time to time. Sometimes life just hands us a batch of misfortune, and there’s really not much we can do about it. I would consider the experiences below to be misfortune, and they could even leave you homeless.

  • Your house is overcome with termites and is condemned.
  • You and your spouse lose your jobs
  • You are diagnosed with a disease and your medical bills aren’t covered by your insurance (or you don’t have insurance)

The best way to beat misfortune is to be properly insured, develop multiple sources of income, and save up money into an emergency fund. Misfortune will happen – it’s best to be ready for it.

3) Laziness

Some people are just plain lazy. For whatever reason, they don’t think that they should be responsible for their own lives. Much of the time, these people will sponge off from anyone they can, just so they can avoid lifting their own finger. Sometimes they get lucky and they connect with a rich girl/guy, but most of the time, their mooching gets old and they’re tossed to the curb. If they don’t find someone else to take care of them, then the curb is where they’ll stay.

4) Cultural

If you’ve ever visited a developing country (some of you may refer to these places as 3rd world countries), you know that there are entire regions that live below the poverty line. It’s basically part of the culture.

Avoid Poverty – No Excuses

If you carefully study each of these reasons for poverty, you’ll soon realize that almost every cause can be avoided!

  • Keep your eyes open for fraud – if it seems too good to be true, then it probably is…. don’t ever give your money for something you don’t understand.
  • Save up your money and be ready for that large unexpected expense. If you have the money, suddenly that hole in your roof doesn’t seem like such a big deal.
  • Realize that money won’t be handed to you. If you’re willing to work, then chances are you’ll be just fine.
  • You most likely don’t have to worry about cultural poverty if it doesn’t affect you already, and for many of you, it doesn’t.

Have you ever been burned by any of these reasons for poverty? Or maybe you know of someone that has? Please share!




My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Many of the homeless that I have seen have been involved in drug use or will have medical illnesses such as schizophrenia. One guy I talked to had gotten divorced and his wife got the house, then he was laid off. There are as many stories as there are homeless.

    • Yep. I would say that’s the majority. I wonder how many of them get back on their feet?

  2. Alcohol, mental illness and drug abuse are prime causes of poverty. I have a relative that choose to a certain extent to live on the street. He tells me that many of the people he meets have one or more of these conditions. Environment and nurture during formative years are other causes.

    • I can see where drug addiction would put you on the street. It’s expensive and you think you need it. That would be one good reason no to try drugs….

      • Haha, I like the dry humor. “That would be one good reason not to try drugs.” Yeah, I’d say so. I do have to say, however, that sometimes poverty IS unavoidable–especially in this recession. However, if people put away emergency funds and began to make smart decisions with their money they could still lose their job and not be desolate. You have to make smart decisions and unfortunately sometimes hindsight is 20/20.

        • My wife and I recently lost an income, but because we have been wise with our money, we’re still not in bad shape. Plus, we have enough in reserves to keep putting money toward our fixer-upper house. 🙂

      • “that would be one good reason not to try drugs”
        True, but addicts don’t think that far ahead.

  3. I cannot agree more.. Laziness + Misfortune = Poverty.. This is proven and tested! Thanks for this info! I really love to learn from you..

    • Glad you enjoyed the post Nikea! I love teaching others what I learn, and I’m glad that you’re benefiting from it!

  4. There are a whole bunch of people living at or below the poverty level who are not homeless. I was one of them, once, and the reason was pretty simple. I lost my job (along with many thousands of others) post 9/11, and couldn’t find another one. And yes, I looked at places like Blockbuster — and I had a larger emergency fund than many people. Most people burn through any emergency savings they may have after years of unemployment.

    Other reasons could include: growing up poor and missing out on many opportunities that others don’t even realize they have, leaving an abusive spouse, a business or industry that employs most people in town closing, simply getting divorced (which plunges many women with kids below the poverty level), etc.

    • Yep, there are quite a few people below the poverty level that are not homeless. I realize that. I was just using the homeless as an example within my intro paragraph.

      Thank you so much for giving us a quick glimpse into your life. I’m sure 2001 was a terrible year for you, but you came out of that bad experience so well! Great job!

    • That happened to me as well. I eneded up in the enlisted military as a result. I guess that’s better than being homelessand getting my new 2001 car repossesed.

  5. Many fo the homeless in the Los angeles areas have mental issues. Due to overcrowding or budget cuts, many were released from facilities. I am sure drugs may have contributed to some homeless as well.

    • Wow! I’d be scared to live in Los Angeles knowing that! I’ll stay here in Michigan…

  6. I am afraid I don’t quite agree with the use of the word “culture” in the context of third world countries. What exactly is meant by that? Does that include geographical constraints, oppressive governments etc? or are you referring to the people’s inherent nature that you think leads to their poverty? How about 3rd world countries who advance to 1st world? Are these nations culturally poor or rich?

    Besides, poverty levels are pretty subjective when applied across countries. While an entire region may seem below poverty level to you, they may be the happiest people on earth. We all know of Bhutan after all.

    I agree with all your other points, but perhaps 4) should be left well alone, unless you intend to delve into a whole anthropological thesis. 

    • Can you name a culture that has moved from a developing country to a rich one within the past 50 years? It’s pretty atypical. I’m just saying that sometimes you’re born into poverty and there is very little opportunity to escape from it. I didn’t mean to delve into a anthropological thesis. 😉 Thanks for the comment though.

  7. For years my mother has sponsored a family at Christmas time. This has been a great way to know a family that has gone through hardships. Growing up and listening to many of their stories was truly heartbreaking. Since Christmas is right around the corner it may be a good time to look for a family to sponsor. You will be amazed that these people are a lot like you and me.

    • That sounds like a great idea David! I’ll definitely look into that!

  8. I often wonder the same thing…also where is the support? I feel like I would have family and friends I could turn to. I think that is the thing that gets me emotionally, that feeling of alone they must feel.

    • You’re right. That loneliness must really suck! I think you may have convinced me to start talking to the homeless more. Who knows, maybe I can help them somehow! 🙂

  9. poverty is the number 1 problem here in our country, i hope and pray this issue will end.

    • I’m with you Abby.

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