Understanding why there’s no one-size-fits-all approach.
Don’t talk about politics, religion, or money. It’s a cardinal rule of conversation many etiquette coaches preach and their followers abide by. But is it healthy?
Poverty is complex. Per 2019 numbers from the U.S. Census, 12.9% of Jefferson City residents live in poverty, meaning their family’s total income is less than the family’s measure of need. Naturally, the paths leading to poverty vary from person to person. Situational poverty develops when a family or individual lacks financial resources due to a specific event like a natural disaster, illness, or job loss. Generational poverty occurs when a family lives in poverty for at least two generations.
In recent years, filmmakers have gone behind the lens to depict generational poverty, along with the various paths it can take. Many of these accounts are powerfully told through fictional storytelling. Consider the Langmore family in the TV show Ozark and the Gallagher crew in Shameless. And then there are the documentaries, which explore poverty across America, from Appalachia to Flint, Michigan. In 2014, Rich Hill, Jefferson City native Andrew Droz Palermo and Tracy Droz Tragos examined rural poverty through the eyes of three teen boys navigating life in a small Missouri town.
These accounts of struggle, both true and imagined, spark discussion about what poverty looks like in our state and beyond.
But of course, poverty extends beyond the screen. In a recent op-ed for the Kansas City Star, Terrence Wise, a second-generation fast-food worker, shared his experiences in the cycle of poverty.
“There’s something broken in America when you can get up each day and go to work, but still be trapped in poverty,” Terrence wrote.
In February, Terrence delivered testimony to a U.S. Senate committee on the budget. There, he advocated for a $15 federal minimum wage, saying, “My story is the story of 62 million workers across the country who are paid less than $15 an hour.”
According to Eric Jensen, author of “Teaching with Poverty in Mind,” families living in this type of generational poverty are not equipped with the tools to simply move out of their situations. Mark R. Rank, the Herbert S. Hadley Professor of Social Welfare at Washington University in St. Louis, recently wrote a piece for the Washington Post discussing five myths of poverty. Included among them is the concept of “rags to riches.”
“This is theoretically a land of opportunity where anyone can climb the economic ladder with hard work and determination,” Mark writes. “In the United States, one in 25 children raised in the bottom quintile of the income distribution are able to climb to the top quintile, while the figure in Denmark is nearly one out of six. In our popular rhetoric, we celebrate the success of that single individual to the exclusion of the other 24.”
Because everyone’s financial and family situation is unique, there is no one-size-fits-all way to approach generational poverty, but perhaps candid conversations about money could be a place to start. In Jefferson City, that’s already happening in several areas.
Realtor Beth McGeorge has seen firsthand how generational poverty impacts individual options and opportunities for housing in Jefferson City.
“If you’re worried about your food budget, utilities, and keeping up with meeting basic needs, you’re not going to feel ready to begin saving for a down payment for a home,” Beth says.
She explains that when families are not able to save for a down payment and pay bills timely to build a strong credit score, then it’s very likely they’ll be renting a home. Renting a home gives the tenant less peace of mind and little control over the residence. When the home they are renting is sold to a new owner, then it’s likely the families might have to move more frequently than that of a homeowner, forcing kids to change school districts and incurring additional bills for a moving truck, utility deposits, etc. Beth also believes individuals who haven’t witnessed firsthand the home-buying process (parents purchasing a home) growing up might be unsure of how it works or even what questions to ask. But it remains clear that owning a home versus renting one has more benefits in the long run.
“If an owner has a house paid off, that impacts their children positively,” Beth says. “They are able to leave equity in the home when selling, rental income or a mortgage free place to live. Being able to live in retirement without a mortgage is a game changer financially and offers additional freedom. There are many people who are renting and they are at a typical retirement age, but they didn’t save appropriately and they’re still paying rent. Those individuals have to keep working well beyond the typical retirement age.”
For potential buyers hoping to break the cycle of poverty, Beth advocates for setting reasonable goals, understanding your financial situation, what your budget will look like with a mortgage, and asking questions of both your realtor and banker.
Deciding to purchase a home is a big decision and we pride ourselves on being involved early in the process to ensure clients needs and desires are understood,” she says. “We want anyone who has a dream to buy a home to have the tools to make that dream a reality,”
Beth also notes that banks, especially at the local level, are eager to assist clients with everything from raising credit scores to better understanding financial jargon.
“Even someone’s dream home can become a nightmare if they’re not properly prepared for homeownership or if they let their budget get away from them” She says. “We want everyone to understand their budget, tuck away some extra for a rainy day fund, and help set them up for success in home ownership.”
Zac Schoene, a financial advisor with Wallstreet Group, agrees that financial education can impact an individual’s life — including what they do with the money they have.
“If a person comes from poverty, they may not have been offered the same opportunity to learn about finances,” Zac says. “If a person lacks financial education and experience, they may also lack confidence. That has a huge impact on financial decisions.”
Zac is quick to shoot down the misconception that a person must already be wealthy to start investing or financial planning.
“No matter your income or age, a little bit goes a long way when it comes to investing,” he explains. “Most wealthy people started out with no money, but they invested little by little. Compound interest and time work for you, and your money can multiply into the future. If you are willing to save and you are patient, this can be one of the biggest attributes to your net worth and can help you achieve various financial goals throughout your lifetime.”
He also notes that just a little bit of financial education goes a long way toward making good financial decisions, and those discussions can take place in many ways.
“We must educate, advocate, and challenge people who don’t believe they can succeed financially,” Zac says. “Those who have achieved any degree of financial success can do a huge service by sharing basic financial information. I frequently have older clients who say, ‘I wish I’d known this stuff when I was young.’ And I have others who say, ‘I’m so thankful to my old boss or my parents or my financial planner who told me to save a little bit each paycheck.’”
Missouri is one of only 17 states that require personal finance coursework in high school. In 2017, the Missouri Department of Elementary and Secondary Education approved revised personal finance standards. In a press release announcing the news, the Missouri Department of Elementary and Secondary Education explains the “standards specify levels of attainment for high school students in the areas of financial decision making, earning income, buying goods and services, saving, using credit, protecting and insuring, and financial investing.”
These areas of study are created to build on each other as students move through the course. The updates came after the state’s first review of personal finance standards since 2006.
“Financial literacy is a vital component in the education of Missouri students,” said Dr. Margie Vandeven, commissioner of education at the time. “We are committed to ensuring all high school graduates are prepared for life, and personal finance courses can help them reach that goal.”
In today’s world, there are also free courses on financial literacy, including programs from the FDIC and Charles Scwab that target youth, education sessions at regional libraries and churches, and an abundance of YouTube videos and websites aimed at helping families and individuals tackle finances.
In terms of more concrete, brick-and-mortar approaches, Jefferson City might consider looking to other cities throughout the country. In Nashville, Tennessee, for example, Meharry Medical College has developed the Building Resources and Initiatives to Develop Growth and Enrichment (BRIDGE) to Success Program with the aim of creating a legacy of economic security for families. The program approaches generational poverty holistically, connecting with both adults and kids.
As explained by the Urban Institute, “these two-generation approaches target low-income children and parents from the same household, combining parent and child interventions to interrupt the cycle of poverty. They emphasize education, economic support, social capital, and health and well-being to create a legacy of economic security that passes from one generation to the next.”
It seems clear that Jefferson City’s residents are ready to have more open conversations with those directly impacted by generational poverty and those on the outside looking in. Through these frank discussions, residents can come to terms with the conditions that perpetuate poverty and become one step closer to helping more families obtain that security.
*Securities and Advisory Services offered through Client One Securities, LLC. Member FINRA/SIPC and an Investment Advisor. Wallstreet Group Advisors and Client One Securities, LLC are not affiliated.