Imagine what it would be like to live on less than $2 per day.Â That is what 40%Â of the people in the world do. “Among these 2.7 billion, the poorest 1.1 billion were scraping by on less than one dollar per day” according to” Portfolios of the Poor…How the World’s Poor Live on 2$ a Day“ by Collins, Morduch, Rutherford and Ruthven.Â
These numbers are staggering.Â I, like most, imagine that all of these poor must live day to day, hand-to-mouth trying only to survive one more day. I can’t even comprehend how anyone could even live for any length of time on so little and yet for two-fifths of our world that is exactly what they do.
What I learned from “Portfolios of the Poor” was astounding and humbling.Â Â “If you are poor, managing your money well is absolutely central to your life–perhaps more so than any other group….Far from living hand-to-mouth” one of the families studied had built up reserves in six different instruments, ranging from $2 kept at home for minor day-to-day shortfalls to $30 sent for safe-keeping to his parents, $40 lent out to a relative, and $76 in a life insurance savings policy. In addition, Hamid always made sure he had $2 in his pocket to deal with anthing that might befall him…”
ThisÂ is simply amazing to me.Â Like many, this poor family not only survived but they were able to save, borrow, trade and plan for emergencies.Â Â I can’t help but compare this to our own country and theÂ broken financial systems both large and small that led to our financial crisis.
Where did we take a wrong turn?Â When did our ability to manage money deteriorate?Â What can we learn from the poorest of the poor to help us take a fresh look at how we live?
My grandfather was a doctor during the Great Depression.Â Many of the people that he treated paid him in kind, with everything from deer skins to food.Â Trading in this way is also very common among the poor.Â
I and many of my fellow Baby Boomers seem to have grown up without a sense of need for managing our money the way our parents and grandparentsÂ did, or the poor do today.Â What I have realized after reading “Portfolios of the Poor” is not only how money management plays a role in the lives of the poor and how to improve their systems but that I need to be a better financial role model for myÂ children and it is imperative that I instill in them the importance of managing theirÂ own money.Â
Isn’t it amazing that a book meant to analyze the financial practices of the poor couldÂ actually be a wake-up call for folks like me and you?