Millions of Americans are so used to feeling broke that they may not look into the various factors that cause this. You may feel as though you can’t rise out of poverty or move out of the middle class and wonder: Why is it so much harder to climb the ranks that the oligarchs and other wealthy people have done before?
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While there’s a lot of rhetoric about people pulling themselves up by their bootstraps, the reality is that sometimes the circumstances conspire against you. Here are six factors that can prevent people from advancing up the financial ladder, regardless of whether the rungs have been kicked out.
Barriers to Financial Services
Unfortunately, old notions and biased stereotypes can limit people’s ability to achieve their financial goals. One of the most prevalent myths is that everyone has equal access to banking and financial services. This attitude doesn’t reckon with the very real social and economic barriers that prevent people from engaging with these services.
Many people living in poverty might not even have the resources or time to open a bank account or have the proper identity verification. These blind spots in the financial system mean a lack of access to basic banking services or other financial tools, which creates a hindrance to financial literacy that can help people grow wealth or get out of debt cycles.
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Old Narratives About Money
Money can be a source of deep emotions for people. Whether someone is in poverty or stuck in the middle class, they are potentially grappling with cultural and familial narratives about money that can’t simply be fixed with a quick financial strategy. Your inherited mindset on money could be preventing you from stepping outside of your comfort zone when it comes to saving and investing.
Transcending these traumas and old attitudes often means leaving behind the familiar, which can spark shame and a sense of guilt that can be difficult to overcome. Making these changes and financially educating yourself can emotionally take you away from your circle of friends and family, while also compelling you to unpeel layers of social and cultural dynamics.
Systemic Issues
When talking about wealth and mobility, it’s important to recognize that not everyone is starting on a level playing field. Systemic gaps in access to everything from education to job opportunities, housing and financial services can prevent people from advancing economically.
Big barriers created by inequality are not just personal or financial but deeply woven into the very fabric of the United States’ tapestry. For example, systemic racism and discrimination in education, employment, housing and even financial services create an uneven footing, so you don’t get the same opportunities to walk down specific financial paths.
Communities that often face biases are impacted by everything from garnished wages to loans they can get or the interest rates they’re offered. Being disadvantaged from the start means it compounds greatly over time, but not in a good way.
Wealth Gaps
Part of the systemic issues that can keep some people in poverty or prevent them from moving up in the middle class involves gaps in familial wealth. Simply put, it’s easier to reach home plate quickly if you were born on third base. One of the most overlooked factors in the wealth gap is family wealth and privilege.
Coming from generational wealth can feel like you get to ride a motorcycle through a marathon race. While everyone else is on foot, you get accelerated access to networks, capital and safety nets that allow you to take risks and make investments that others simply cannot afford. On the flip side, if you are in a lower-income bracket, you’ll often face financial instability, which limits your chances to take risks in your investment strategy.
Stagnant Wages and Rising Costs
Even if you can access the education or opportunities you need to get a decent start on your financial journey, other factors entirely outside your control can keep you from reaching the next point. Consider the global stagnation of wage growth as a major culprit, as the cost of living, especially housing, has only continued to skyrocket.
When the richest person in the world, Elon Musk, has an estimated net worth of $400 billion, having over 41 million people in the U.S. alone living in poverty starts to feel off. This imbalance makes it nearly impossible for many to save, invest or feel like they have a chance to take any money from the top.
Lack of Access to Capital
Offsetting many inequalities and imbalances can come from helping support businesses in distressed sectors and giving people a second chance in terms of building themselves up financially.
Access to capital is another enormous barrier in terms of economic growth, and without collateral or strong credit, you cannot secure loans to start businesses or invest in property. When these key pathways to wealth are blocked, you are essentially excluded from opportunities, thus perpetuating the cycle of economic immobility.
Laura Bogart contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: 6 Reasons the Poor Stay Poor and the Middle Class Doesn’t Get Richer
