When you are on a low income, there are certain services which become an indispensable part of your life. Some might seem harmless such as subscription services, while others such as payday loans can cause an endless cycle of debt and poverty. The common factor is that they are all related to the different characteristics of living without much money. Here are 9 services poor people use that rich people don’t, as well as 9 alternatives that can help save cash.
Taxi Services
Ride-sharing and taxi services are now at our fingertips; a simple press of a button on your phone and you can have a taxi at your door in minutes.
For lower income people who live in areas with little or no public transportation, these services are a necessity if it’s the only means to get to work. Taking a taxi to work every day adds up and will represent a large percentage of their monthly outgoings.
Alternative to Taxi Services
The obvious alternative to taking a taxi would be to walk. Walking will save you a lot of money while also having the added health benefits of exercise everyday.
If your workplace is too far away, it may be worth investigating if any colleagues are able to pick you up on their way to and from work. The money you pay them for gas will be far less than you spend on taxis.
Television Subscriptions
Having less money usually means spending more time at home. If you’re spending time at home then you will want something to keep you entertained and subscription television services fit that bill.
With such a wide variety of these services, there is a great temptation to sign up for more than one. While one on its own may not break the bank, 3 or 4 become a monthly burden if you are tied into long term contracts.
Alternative to Television Subscriptions
Taking up a hobby is a great money saver. When you are bored, instead of reaching for the remote control try something new such as drawing, learning a language or even exercising.
You don’t have to get rid of all your subscription services, but try to keep them to a minimum.
Payday Loans
Having to stretch money until the end of the month is not something rich people are accustomed to doing. For most people it’s a difficult task, especially when unexpected costs arise. Payday loans are an easily accessible method of getting quick cash.
Payday loans have a long term effect as they are usually very high interest and cause people to fall into an endless debt trap. In certain circumstances they provide a necessary service, but as a means to get you through every month you risk ruining your finances.
Alternative to Payday Loans
Given the absurdly high interest charged, it would be better to seek out other ways of obtaining cash before turning to such companies. Your bank might be able to help, or your work might be able to pay you in advance.
The best solution to payday loans is to make a budget and stick to it. It will be difficult at times, but it will prevent the misery of loan companies constantly chasing you.
Pawn Shops
When you are low on money, selling your goods can be a quick means of getting extra cash. Pawn shops will often give you much less than the actual value of the item, leaving lower income people short changed.
As well as buying goods, they also sell them. For those with low income, buying goods from pawn shops may seem a cost effective choice. However, they usually end up with lower quality items that do not last very long which means spending more money in the long term.
Alternative to Pawn Shops
For selling goods it may be better to use social media or online stores. It may take slightly longer but you decide the price.
When buying items, you can use thrift stores and charity stores that will likely have cheaper and better value items.
Grocery Delivery
Time is valuable and it is something which is not spoken about enough when discussing the disparity between rich and poor. Lower earners spend more time working to make ends meet and this leaves less time to complete menial tasks.
If you’re always working, then you’ll probably be too tired or simply won’t have the time to do your groceries. Grocery delivery services provide convenience but it comes at a cost which will add up over the course of a month or year.
Alternative to Grocery Delivery
Time constraints are an obvious barrier but if you want to save money, then it’s best to set aside a dedicated time each week to do your groceries. Be disciplined and your wallet will thank you for it.
Paying High Insurance
Being rich doesn’t mean you won’t have insurance costs, but rich people are probably unaware that they will have lower insurance costs than those on a low income.
Insurance companies see those on low incomes as high risk and so bump up their prices. Poorer people also live in areas which have higher levels of crime and so insurance companies will believe there is a higher chance of having to pay out.
Alternative to Paying High Insurance
Insurance is a necessity but it’s worth shopping around to see if it’s possible to get a better deal. Insurance is a competitive market so take advantage of that.
Increasing your credit score can also help in bringing down insurance costs.
High Cost Cell Phone Plans
Cell phones and access to the internet are a necessity in the modern world. Even for those who aren't employed, it’s an essential tool when looking for work.
Providers take advantage of this by offering high cost plans for smartphones knowing that they are essential. If you’re a high earner, an expensive plan will probably not make much difference, but if you don’t earn much it will be a considerable expense each month.
Alternative to High Cost Cell Phone Plans
This is another case of having to shop around in what is a competitive market. There are deals out there to be had, but you will have to spend a bit of time researching and finding the best price for you.
It’s also worth remembering that you don’t need a top of the range smartphone, as long as it does the basics you will save a lot of money.
Rent-to-Own Products
Most wealthy people own their household goods outright and don’t have to worry about making a monthly payment to keep them. For those on lower incomes renting items for the goal of owning can be the only alternative.
Many of these products come at high interest rates and you will end up paying much more than what the item is actually worth.
Alternative to Rent-to-Own Products
For higher cost goods it may be the only viable solution if you are on a low income. Before putting down any money, assess if it’s worth it in the long term and if there are any cheaper alternatives.
If you can find an affordable item second hand, you will pay much less and also have the comfort of knowing that the item is yours without worrying about monthly payments.
High Fee Checking Accounts
If you are unable to maintain a certain balance in your bank account, then the bank is likely to hit you with fees. Those with large amounts of money in the bank will not have to worry about these types of fees but those on low incomes are the ones who get hit hardest.
Alternative to High Fee Checking Accounts
There are more banks now who don’t charge fees, especially the newer online banks. It’s worth finding out if you are eligible to join one. Less fees means more savings.
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