Societal norms would tell you that people who struggle to pay bills and yet still buy the fancy coffee are "bad with money." But for broke people like me, it's quite the opposite.

By Terri Huggins
June 10, 2021
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When I was newly out of college, I was making $10 an hour, paying nearly $1,000 per month in rent, and had a student loan bill that topped $800 a month. To say I was short on cash was an understatement. Bills got paid late, going out was limited, and there was little extra money-if anything was left over at all. Still, I had what I needed. And that wasn't by chance or good luck; it's because I became really good with the little bit of money I did have. Because I was forced to.

When money is in short supply due to pay inequalities, inaccessible healthcare, and the rising costs of living that pay rates have yet to keep up with, financial awareness becomes more of a survival tactic than a money habit.

Putting off dealing with your financial fears and stresses? That's a luxury that broke people simply don't have. And while the necessity of scrimping and saving does become burdensome (it's exhausting, and definitely takes a toll on your physical and mental health), there is a silver lining: Being forced to think about money constantly means you naturally become...very good at thinking about money. For me and many others who have struggled with being broke, that also includes managing money problems and coming up with financial solutions that fit your immediate needs.

However, that focus on immediate needs-with little thought to the long-term-is exactly what poor people are constantly criticized over. And yes, always financially planning for the next thing is not ideal; we should also all be allowed the opportunity to build wealth, save for retirement, and more. And yet for me, immediate money planning consistently remained my best option during times of financial distress. After all, it seemed pointless to set aside money for an elusive $1,000 emergency fund I may need several months from now if I didn't have enough money for rent today. Every day was a financial emergency. How can you contemplate saving for retirement when you're unsure if you'll have enough to pay for food this month?

Those optics alone of having no emergency fund or retirement plus mounting debt certainly lend themselves to the illusion that someone is "bad with money." But for me, and many people like me, it's quite the opposite.

The term "broke," of course, is subjective; a survey of 1,000 Americans cited having less than $878 in the bank account as "broke." But regardless of how you ideate that definition, broke or poor or otherwise financially struggling people everywhere are forced to make tough decisions every day, gamble with those decisions, and make sacrifices to somehow fund the things that truly matter.

For me, learning how to stretch $2,000 to cover a month's rent, bills, food, transportation, and more wasn't a trick of the trade. It was a necessity that often resembled a magic act-because it can feel impossible to keep a roof over your head, maintain a car, pay all utilities, keep up laundry expenses, maintain your mental health, have some sort of social life, and eat.

But somehow, I did it-using the fight-or-flight skills that so often come with being broke. And while I wouldn't dare go back to living like that or wish it upon anyone, I'm certainly grateful for the much-needed financial lessons that my broke days taught me-lessons that are surprisingly necessary to achieve financial freedom, yet which are missed by so many who actually have money.

Broke folks master money-tracking.

My broke self knew exactly how much money I had available at all times, when bills were due, and how long I had to replenish my account to avoid costly overdraft fees or penalties if my bank account fell below a certain threshold. (Overdraft fees are one of the reasons why so many people below the poverty line don't have a bank account, according to a 2019 survey conducted by the FDIC.) In some cases, I knew down to the minute what time some bills would be withdrawn, so I'd be able to squeeze in an extra side gig at the eleventh hour if necessary to make ends meet.

If I only had enough money for three bills, yet had five to pay? Then I became an expert at prioritizing-via analyzing every payment term, knowing when late fees would be applied, and understanding how long I would have before services got cut off or accounts would be transferred to a collection agency.

It was a never-ending cycle of paying the minimum amount at just the right time-which, of course, didn't make a dent in my balance. But it did leave enough money to put gas in my tank so I could get to work. It's not uncommon for broke people to make such tough decisions as choosing between paying the internet bill so they have the opportunity to apply for better-paying jobs, or paying the electricity bill before it gets cut so they actually have power to use the internet.

Every expense is a mindful decision.

What many financial experts fail to realize is that poorly thought-out purchases on a whim are a privilege that broke people just don't have. We are routinely required to analyze every purchase-because one small slip-up could result in severe consequences. When I was broke, buyers' remorse was a nonexistent phenomenon in my world; there was no mistaking the difference between "wants" and "needs"-a concept that people who do have money admit to struggling with.

While the memes and financial gurus may trick you into thinking the reason broke people stay broke is because they keep buying coffee or splurging on the Big Mac with extra cheese, remember: That purchase was most likely a conscious decision that the person debated for days. The few times I splurged on "wants" as opposed to "needs," whether it was fast-food fries or a sheet mask? I wrestled with the decision for a long time-all while fully acknowledging that this would be a splurge that would mean I'd have less money to apply towards a necessity.

But the thing is, when you're spending all your free time picking up extra side gigs to barely get by at the expense of your mental and physical exhaustion, a $10 splurge on a "want" can be worth it-if it means it will provide reprieve and the motivation to cycle through the day again. I'd argue that "want" may even be your wisest expense at times.

And prioritizing mental health and motivation? Those money moves are exactly what's needed to reach financial freedom. According to a 2016 Princeton University study published in The Washington Post, poor people are less likely to make many of the financial mistakes that wealthier people do-and are more adept at arriving at accurate conclusions as they relate to determining value and perceived expense.

Still, society and some financial experts want you to believe that broke people are broke because they make bad choices. But when you're broke, the problem isn't that you're making bad choices. The problem is that you don't have enough choices-so you make the best choice from the options given. Broke people are often choosing between buying everything they need on their grocery list and having enough money to pay their electric bills.

What so many miss is that some of the most financially sound people didn't make good choices; they had good choices-choices that broke people can only dream of making. And that's the problem with a lot of financial advice: It's usually targeting middle-class people who may be making not-so-great financial decisions rather than people making the best decision they can with the very little money they have.

Now that I'm no longer broke, I'm still able to take those broke-learned money management lessons with me as I strive to grow my savings, expand my investment portfolio, and create wealth for years to come.

So instead of vilifying poor people for indulging in that latte or going out to a restaurant every few months using money that might have put a small dent in their growing debt, we need to start applauding broke people for making tough money judgments on a daily basis-and celebrating their efforts to sustain life on meager means. Because it truly does take a skilled person to make that happen.