Why are we always feeling poor?

Why? Why? Why? You asked yourself why is it that you are working harder these days but you are hardly getting by with whatever you are earning? You asked yourself why is it that after years of working with a rising salary and you are still unable to catch up to the rising economy? If you are asking these questions, do take a minute to think it through. What exactly is wealth? If you think that wealth equates to money then you have gotten it all wrong! Money is simply a currency that is used to complete a transaction. Essentially, it is a tool that is used to facilitate the process of bartering a trade. Its value is determined by the actual item that it is used for the exchange. Say for example, if you have a million dollars Indonesia rupiah, the value of a million dollars does sound decently high valued. However, when we convert one million Indonesia rupiah to Singapore dollars, it is only slightly under a hundred dollars. As such, having a high value currency does not represents wealth. Then, what exactly is wealth? How is one considered as wealthy? If one is unable to comprehend the meaning of wealth, there is a high possibility that one can continue to be poor. Here's an example to illustrate this point. When I was young, I used to have a neighbour who was working for an engineering firm, he was holding onto a decent job and one which can craft out an illustrious career. He was paid $3000 for his monthly salary. During those times, a $3000 per month was considered as a highly paid job. However, after many years of working in the same job, this neighbour is still drawing pretty much the same amount every month. Fast forward to present day, his monthly income is now considered as a reasonably salary. Why is it is that the same value of $3000 has not changed and yet it seems that $3000 is hardly enough these days? Many motivational books will tell you that being poor has a direct correlation to working hard. You are simply unmotivated at work and not putting enough effort to make a difference. The truth is, this is simply not true but an understanding of financial literacy. 

You must have seen people waking up to work in wee hours. These people woke up early and returned home only when the sun has set. Do you not think that they are the most hardworking people around and highly motivated at work? They have all worked diligently, contributing their best at work and yet still find themselves stuck to get by with their monthly salary. The real reason behind all of these is inflation. The amount of money one brings home is unable to catch up to the rising cost of daily essentials and needs. 

A 5 room HDB used to cost slightly over $100K in the 1980s. The same 5 room HDB (smaller in floor area) costs $540K in 2022! That is an amazing 500% more in a span of over 40 years! HDB flats which used to cost cheaper in the older days is now sold at a higher price. This is inflation. Not only does inflation affect the value of your money, it also contributes to a wider income gap between the poor and the rich. With the rise of Covid-19 across the world, many countries were hit by a decline in the country's GDP thus resulting in an economic slump. To overcome this problem, the respective Central Banks had to introduce many stimulus packages to stimulate the country's economy and productivity by the way of money printing. Money is distributed to the poor to tie over the sudden wave of the pandemic. Then why is it that the poor is still poor? This is simply because of rising costs! When there is more money out there in the economy, money gets de-valued and when the stimulus package is spent, there is none to be replaced. This is the part where the rich gets richer. Unlike the poor, the rich holds assets, they do not need the stimulus package to begin with, let alone the lack of money. With assets and rising costs, the assets held by the rich naturally gets higher in value, the same reasons why housing prices and stock market saw an all time high during Covid-19. For a commoner like you and I, working hard saving money hoping to get rich one day, can be illustrated as trying to collect water using a broken pail. The more you save, the more water leaks away from the broken pail. Through inflation, every dollar you save, is as good as losing a fair amount overtime. A broken pail will never be filled!

As for the rich, they too work hard and using their savings to purchase assets that appreciates in value. With time, these assets gain its growth in capital. Unlike the poor, the rich will not fill a broken pail but instead buy a chicken that lays eggs and use the laid eggs to produce more chickens thus generating more eggs and chickens. At this juncture, I hope you can understand that wealth is not about having money but about acquiring assets. Only with assets can one get rich. Assets in the form of properties, stocks, investments, collectibles, etc. 

So in summary, being poor is not about working hard but simply by educating oneself in managing your finances.

About The Contributor

Ben is not financially trained. He is not a certified financial planner and he does not sell any insurance or investment plans. He is not financially motivated by any entities to produce this blog. He just want his friends to know more about money management and not have anyone fall between the social cracks. Nope, he is not a millionaire though he aims to be financially free before 50 years old.