9 Services That Poor People Spend On That the Rich and Middle Class Don’t
Having access to fewer resources means those with lower incomes will end up paying for services out of necessity that other classes don’t need to budget for.
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According to experts, learning what these are can give us insights into how those with lesser means are disproportionately affected by systemic issues.
Here are some services that lower-income people spend money on that those in other classes don’t.
High-Fee Checking Accounts
“Lower-income people often cannot keep a high enough balance in their checking account to waive any monthly fees,” said Janita Grift, finance expert and owner of Frugal Fun Finance.
“Until I was able to keep a minimum balance in my checking account, I paid between $5-$10 a month to keep my checking account open.”
Taxis and Ride-Shares
“Lower-income people often need to rely on public transportation,” Grift noted. “If they live in a city with unreliable transportation or limited service, they’ll need to shell out funds for a costly taxi or ride-share across the city.”
“When I was making a lower income, I ended up spending nearly $200 per month on ride-shares,” she explained. “I had to get to my weekend job as a cashier early in the morning when public transportation was running on a limited schedule.”
Andy Kolodgie, real estate expert at PropertyLeads, equally noted that those with lower incomes are more likely to require alternative transportation.
“In some neighborhoods, public transportation options might be limited or unreliable.”
He said this can push people to spend more on alternative transportation like taxis or ride-sharing services, or even buying older cars that guzzle more gas.
“It’s a trade-off between convenience and cost, and for many with lower incomes, the latter often wins out.”
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Pawn Shops and Thrift Stores
When money is tight, finding affordable clothing or household items becomes a priority, Kolodgie said.
“That’s why many lower-income individuals rely on pawn shops or thrift stores.”
“They offer a way to stretch their dollars further, but it can sometimes mean sacrificing quality or choice compared to higher-end retailers,” he said.
Interest and Cash Advance Fees
“Lower-income people often live paycheck to paycheck,” Grift said. “When money is so tight that bills cannot be paid on time, they often need to rely on payday loans and cash advance services with extremely high interest rates.”
Tom Bruzek, real estate expert at Selling Land Fast, noted that people will often need to rely on these payday loans and check cashing services.
“Sometimes, folks with lower incomes find themselves in a tough spot financially, perhaps due to not having access to traditional banks or facing challenges with their credit history.”
In these situations, he said they might turn to payday loans or check cashing services for quick cash.
“However, these options often come with high fees and interest rates, making it harder for them to get back on their feet financially.”
More experts agreed.
Rhett Stubbendeck, finance and insurance expert at Leverage Planning, said that even though payday loans are a quick fix for tough times, those interest rates are brutal.
“Yet for some, it’s the only option,” he said. “At [my company], we’ve seen it all. Like this one time, we helped a family ditch the check-cashing routine by setting them up with a no-fee bank account. It was a small step, but it made a big difference to them.”
Rent-to-Own Stores
“Imagine needing a new fridge or sofa, but not having the credit score to finance it traditionally,” Bruzek said. “That’s where rent-to-own stores come in for many lower-income individuals. While it might seem like a convenient solution at first, the truth is they end up paying way more than the item’s actual value over time, which can really strain their budgets.”
Stubbendeck equally noted that these “deals” end up costing people much more.
“When you can’t pay all at once and credit’s not an option, it’s a way to fill your home without waiting. It does end up costing more but sometimes you don’t have the luxury of choice.”
Processed Foods
“Lower-income people often work multiple jobs and want to minimize meal prep time,” Grift said. “Therefore, they often buy frozen or processed foods that take a minimum amount of prep time. When I was making a lower income and working two jobs, my diet was higher in processed foods.”
Grocery Delivery Services
“Lower-income people are often short on time so they may opt to have their groceries delivered,” Grift said. “When I was on a lower income and did not have access to a vehicle, I spent an additional $50 a month on grocery delivery fees.”
Housing Costs
According to Martin Orefice, CEO of Rent To Own Labs, one of the ways that being poor is expensive is in housing.
“Renting an apartment can definitely be more convenient than homeownership in terms of repairs and maintenance, but landlords also have to make a living, and you’re the one who’s paying for it.”
“Even if you do manage to buy a house, you’ll probably be stuck paying for private mortgage insurance unless you can afford to put at least 20% down,” he said. “This insurance isn’t for you; it’s for your lender, and will pay them if you default on your mortgage.”
Insurance Coverage
John Crist, founder of Prestizia Insurance, said one of the stark realizations he’s had in his work has been the differential in services that people of lower income levels spend on, often out of necessity, which those of higher income brackets rarely, if ever, consider.
In the realm of insurance, he noted that there’s a noticeable trend where lower-income individuals end up paying more for basic auto and renters insurance policies.
“This is often due to residing in areas seen as high-risk by insurers, lacking access to policy discounts tied to bundling or advanced payments, or simply not having the time and resources to shop around for the best deals,” he said. “Our mission has always been to bridge these gaps, offering more equitable insurance solutions, but the broader industry trends remain a challenge.”
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This article originally appeared on GOBankingRates.com: 9 Services That Poor People Spend On That the Rich and Middle Class Don’t
