Shopping from a Poverty Perspective

I read the COOLEST article the other day. It is called "Behavioral Economics and Marketing in Aid of Decision Making Among the Poor." You should read it. It explains the logic in decision making, especially about financial products, for people in poverty. I knew what it was saying, intuitively, but until I read the article, I couldn't explain the logic to others. Now I can, and I want to share my experience using the logic it provided when I went shopping last night.

First, I think you need a little background. My car broke down two weeks ago and it cost 50% of my months pay to fix it. A whole paycheck went just to fixing the car. So I have been broke beyond broke. I didn't overdraft any money, but I was tempted to. I was running dangerously low on food. When most people think "low on food" they think they mean good to eat food. I mean I was literally low on food. I had 4 cans of corn, 2 cans of peas, 4 eggs, some coffee creamer (no coffee), 3 frozen bananas, and spices. That is literally all the food I had at home. It isn't because I haven't gone shopping, it is that I don't have money to spend on food. Not having enough leads to the habit of not shopping for food.

I am also in the habit of filling my cars  gas tank anytime I have to buy gas. My dad taught me that the top half of the tank costs just as much as the bottom. It would make sense to fill it up and save time later. The bad habits come when you know you don't have enough. If I know I only have $20 dollars to live and eat on for 2 weeks, even if the empty light comes on (like it did last week) I can't fill the tank. I want to do it, I know in the long run that $20 dollars to fill the tank and I save time later, but that isn't my primary goal. My goal is to get just enough to keep as much of the $20 in my pocket for the next emergency.

I was thinking about this last night as I was shopping for groceries for the first time in about a month. I was looking at the things I needed, like soap, shampoo, tampons, deodorant, ect. I was looking at them in terms of price, not value. I knew I couldn't spend more than $200 on everything (food and personal products, and still planned on $40 for gas) I need for the next entire month. The long-term benefits of buying in bulk are clear. I know that each unit is cheaper. But when I was looking at buying the extra large box of tampons, not the smaller cheaper box, I realized that I needed the extra $3 sooner than I needed the product. Contact solution was the same way. I needed some, and it cost about $9. I know I should have bought the duel pack for $18 but I needed to keep $9 in my pocket more because it was the only $9 I had. Really, I couldn't even bring myself to spend $18 on any one product on my trip. It would have been the most expensive item, and been worth, say, 10 cans of soup. If I bought the single bottle of solution, I could have what I needed (the solution) AND 5 cans of soup, which I also needed. It isn't economical as dollars per unit, but it is economical for fluidity of use.

 When most people teach financial literacy, they go about teaching the unit value and how to calculate it. It is what people learn in school. Education is taught at the middle-class level, and unit calculation is practical if you have enough money, and want to save more of it. It is the logic of what to do when you don't have enough that we aren't teaching. Maybe that is why education as we teach it now only works for some people, and not anyone. We are teaching a logic with no real application. My hope for BankOn is that we do something different. We move beyond the logic, and come up with a good reason why I should go ahead and fill my gas tank when I know it means I won't be able to eat tomorrow.