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Thursday, May 30, 2013

Expensive Poverty



In poor countries, things like shampoo are commonly sold in single use packaging. While the tiny package doesn't cost much, it's actually much more expensive per ounce than buying a large bottle of the same shampoo. The problem is that really poor people can't tie up all that money in a bottle of shampoo. Then they'd need a safe place to store all that valuable shampoo.

It's even worse with food. We know buying in bulk saves money. If a shopper can afford to buy in bulk, the cost per meal goes way down. Unfortunately, poor people can't afford to. They buy a 12 oz bag of dried beans instead of the 50 pound bag. With limited funds, there's no buying the big bag, even though there are long term savings. Limited funds necessarily make a person short sighted.

When times are good, stock up and not just on beans and rice. Buy molasses in the gallon jug, olive oil in the big can, big jars of honey, sugar, spices, and so on. If you suddenly find yourself poor, you'll at least avoid the single serve package trap.

Imagine the cost of something if you have to buy a tiny bottle of cooking oil, small box of sugar, single use spice packet, individual tea bags, cup of rice, and handful of beans -cheap meals become a lot more expensive.

Big businesses market tiny packages to the poor -and it's keeping them poor. People living on two dollars a day can't buy anything in economy packaging. Now if a person could take that two dollars a day up front for a year: $730, they could buy in bulk and actually eat well enough. It wouldn't be fancy, but it would keep body and soul together.

Now lets look at a typical middle class family making $50,000/year. They have the same problem of not enough working capital to save money. They can pay a monthly electric bill, but they can't save enough to put in solar electric panels. They can't afford a new car, so they spend a lot of money every month to keep an old gas guzzling clunker on the road. (been there, done that) Money is not available for home insulation and new windows, so they pay high heating and cooling bills.

In the long run, investing in these things save money, but if you need all you've got in the short run, it's impossible.

-Sixbears

14 comments:

  1. One day when I was in poverty, I noticed green beans at 4cans/$1. (long time ago) I decided to forego something else and buy a dozen cans. The next time I bought groceries, I found another deal. Since I did not have to buy a can of green beans, I stocked up on the other item. Soon, after doing this for many weeks, I was only eating food on sale.

    Then, I could afford better quality food such as fresh green beans. I was already making sure I had a banana and an apple to eat every day, potatoes, onions, leafy greens, and carrots, even in poverty. Nutrition was at the top of my list. However, buying smart enabled to me to access even more on-sale fruits and vegetables since I would now buy things only when a sale rolled around.

    I did and do have a secure place to keep my sale items. If I had lived in a place where others shared space with me, I am sure my food and sale-priced shampoo would not have lasted as long as they did with me being careful with use and buying it on sale.

    It bothers me that sizes have shrunk lots but prices on some items are "just" $1. I do the math and these cheap items, as you say, are more per ounce. Most people have a certain amount of money to buy a certain amount of food and bath items and just look at the low price per bottle without looking at price per ounce. It makes me sad because the people who buy these things are obviously very poor.

    I have a friend who said she only buys what she needs for the next week and never buys on sale unless she needs it. Then, she only buys just what she needs for the week. I tried to explain how to build up a stock of on-sale items. She was resistant.

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    1. You were wise and were able to bootstrap your way. It's a tough road sometimes, but worth it. Now if you were sharing your living space with roommates, it might have been impossible. Your "extra" would have disappeared.

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  2. I think we've all been there at some point in our lives. We always stock up when we are able to. It's comforting to know there is extra in the pantry.

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    Replies
    1. A well stocked pantry is a comfort.

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  3. I ounce made the comment to a friend, poor people can't afford to buy cheap.

    I stand by my comment. Buy cheap, it breaks, which requires another outlay of precious funds. Purchase quality, it will last, which lowers the cost long term. Your example of the shampoo and dried products are spot on.

    ReplyDelete
    Replies
    1. You are right. Sometimes people are so poor that all they can do is buy cheap.

      I like Practical Parsimony's comment. With planning, time and will, the cycle can be broken.

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  4. "Buying cheap" always "costs" more in the long run.

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  5. Not to mention the $1 store portions can be rather sparse. I find myself shaking the opened can upside down, saying 'Thats it?'

    I gave up on shaving cream a long time ago, switching to standard regular soap and shaving the shower. Take a bit more attention, but shaving cream prices are crazy expensive. I'd grow a beard but my wife would go on strike, she don't like long hair or hairy faces, lol.

    No offense intended.

    ReplyDelete
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    1. None taken.

      Lucky it works for me.

      The beard and long hair are pretty cheap and easy to maintain.

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