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Asset poverty is the lack of assets that can be used to support oneself for three months. Such assets to do not be to be liquid, such as cash: a house or other real estate, a spare car, stocks, and possessions that hold value such a jewelry or furniture are also included.
When discussing wealth disparity and other human development issues, poverty is almost exclusively defined in terms of raw income. The international extreme poverty live is defined as a daily income of less than $1.90, and even the United States defines national poverty as a yearly income of less than $12880 for one person. But even if one's income is greater than those numbers, whether one's income can be used to increase one's valuable assets--and subsequently ensure financial security--remains an important topic.
I had never heard of asset poverty before today, but it handily encapsulates several concerns I have with the consumer trends of the modern world.
The rate of home ownership in the United States has in general been declining in the last twenty years; today real estate companies are buying up huge swaths of land all over the country to turn into residential rental properties. People are not as quick to buy gold and other commodities; they are in fact inclined to view them as a scam, while simultaneously buying computers, game consoles and smartphones that lose half their value within a year and never recover. Even people who recognize these monetary pitfalls and invest in assets that hold their value long-term may not have enough left over to put into savings, retirement accounts or other financial assets.
The result is that a lot of people in the United States and other parts of the developed world put the majority of their money into expenses that do not increase their wealth. That means if something happens to impede their cash flow, it sets off a chain reaction that takes away what little they had. They are asset impoverished.
What can be done to address this?
Of course better wages and benefits can help. If people have affordable health care and medical leave, as well as assistance from their employers to invest in things like a house or a retirement fund, that will go a long way in building true wealth.
Another thing that can help is to reduce our consumerist tendencies. In the past several decades, our average discretionary spending as increased dramatically, while the enjoyment we get from that discretionary spending has steadily declined. Corporations use a fear of missing out and hedonistic appeals to get us to spend more and more on less and less, and in the end we aren't left any more satisfied. Finding enjoyment in small, simple and cheap pastimes frees up more of our income to invest in our futures.
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[Last updated: 2022-05-24]