The Psychology of Poverty

The Psychology of Poverty

Topics Covered In This Article:

-Feminization of Poverty

-Poverty’s Impact on the Brain

-Systemic Implications

-Effectiveness of Employee Resource Groups

-Trauma Informed Social Emotional Learning

Money plays a significant role in our lives and affects our behaviors and emotions in various ways. From a psychological perspective, money represents not only a means of exchange but also a source of security, power, and status. The way we think about money and how we manage it is influenced by our upbringing, culture, personality, and life experiences.

Those who grew up in poverty often face a range of challenges that can affect their mental, emotional and financial well-being in adulthood. These challenges may include limited access to education, fewer job opportunities, lack of social support, and exposure to chronic stress and trauma. As a result, they may develop certain patterns of behavior and beliefs about money that can make it difficult to escape poverty. A lack of experience and exposure enables the education gap as it relates to accumulating wealth and understanding financial literacy.

“In 2019, the share of Blacks in poverty was 1.8 times greater than their share among the general population. Blacks represented 13.2% of the total population in the United States, but 23.8% of the poverty population. The share of Hispanics in poverty was 1.5 times more than their share in the general population.” [1]

Half of the global population lives on less than US$6.85 per person per day - Many of which are women and minorities. [2] Those who grew up in poverty may have a scarcity mindset, where they focus on immediate needs rather than long-term goals. In other words, they focus on surviving versus thriving. This can lead to behaviors such as overspending or undersaving, which can perpetuate their financial struggles. Additionally, they may have limited financial literacy or experience with financial planning, which can make it difficult to make informed decisions about money. The thresholds placed on individuals by the system become the thresholds that are imposed on ones mind.

Because of the differences in the socioeconomic situations we are born into, financial success is not always a result of hard work and lack of financial success is not always a result of laziness. From a psychological perspective, ones experience with money out weights their education with it - which is why your emotions will always impact your investments.

Furthermore, growing up in poverty can also have negative effects on mental health, such as depression and anxiety, which can further hinder financial stability. The stress of financial insecurity can also lead to impulsive decision-making and risk-taking behaviors, such as taking out high-interest loans or gambling.

There are many systemic issues that perpetuate poverty among different races and genders. Here are some examples:

  1. Discrimination and Bias: Discrimination and bias in hiring, promotions, and pay can make it harder for individuals from certain racial and gender groups to access well-paying jobs, educational opportunities, and housing. This can lead to income and wealth disparities that persist across generations.
  2. Unequal Access to Education: Access to quality education is essential to breaking the cycle of poverty. However, individuals from low-income communities and communities of color often face inadequate education systems, lack of resources, and discrimination, which can limit their opportunities for upward mobility.
  3. Housing Discrimination: Housing discrimination can make it difficult for individuals from certain racial and ethnic groups to access affordable and safe housing. Redlining, which is the practice of denying mortgage loans or insurance to people based on their race or ethnicity, has contributed to the creation of segregated neighborhoods and perpetuated disparities in wealth and opportunity.
  4. Criminal Justice System: Individuals from communities of color are more likely to be incarcerated and face harsher penalties for similar crimes compared to white individuals. This can lead to reduced opportunities for employment, housing, and education, which can perpetuate poverty.
  5. Lack of Access to Healthcare: Lack of access to healthcare, particularly in low-income communities and communities of color, can lead to poor health outcomes, increased medical debt, and reduced opportunities for employment and education.
  6. Wage Inequality: Women, particularly women of color, are more likely to be paid less than their male counterparts for similar work. This wage gap can limit their opportunities for upward mobility and contribute to poverty.

Research has also shown that poverty can have a significant impact on the brain, particularly during early childhood when the brain is still developing. Some of the ways in which poverty can affect the brain:

  1. Stress: Poverty can cause chronic stress, which can have a negative impact on the brain. Constant stress can lead to an increase in the hormone cortisol, which can affect the development of the prefrontal cortex, a part of the brain that is responsible for executive function, attention, and decision-making.
  2. Nutrition: Poverty can lead to a lack of access to healthy food, which can affect brain development. Malnutrition during critical periods of brain development can lead to long-term cognitive deficits and impairments.
  3. Exposure to toxins: People living in poverty are more likely to be exposed to toxins such as lead, which can have a negative impact on the brain.
  4. Lack of stimulation: Poverty can lead to a lack of access to stimulating environments, such as books, toys, and educational activities. This can affect brain development and lead to long-term cognitive deficits.
  5. Mental health: Poverty can lead to mental health problems such as depression and anxiety, which can affect brain function.

It's worth noting that the impact of poverty on the brain can be mitigated through interventions such as high-quality early childhood education, access to healthy food and healthcare, and programs that support parents and caregivers. Overall, breaking the cycle of poverty requires addressing both the systemic issues that perpetuate poverty and individual-level factors such as financial education and mental health support.

From a gender perspective the Feminization of Poverty refers to the phenomenon where women are more likely to experience poverty than men. It is a global issue affecting women of all ages, races, and ethnicities. In general, women face more significant economic and social barriers that make it harder for them to achieve financial security and independence.

Poverty rate in the United States in 2021, by age and gender [3]




18 to 24 years



25 to 34 years



35 to 44 years



45 to 54 years




There are several reasons why women are disproportionately affected by poverty. For example:

    1. Unequal Pay: Women, on average, are paid less than men for the same work, leading to lower lifetime earnings and less money to save or invest. As this relates to the gender pay gap, Women earn about 82 cents for every dollar men make, according to the U.S. Government Accountability Office. [4] In 2022, Black women earned 70% as much as White men and Hispanic women earned only 65% as much. The ratio for White women stood at 83%, about the same as the earnings gap overall, while Asian women were closer to parity with White men, making 93% as much. [5]
    2. Occupational Segregation: Women are more likely to work in low-paying, part-time, or temporary jobs with little job security or benefits.
    3. Caregiving Responsibilities: Women are more likely to have caregiving responsibilities, such as raising children or caring for elderly relatives, which can make it harder for them to work full-time or pursue educational opportunities. High scoring women experience a net 8 percent reduction in pay during the first five years after giving birth, a penalty that reaches 24 percent a decade after birth. Men's earning profiles are relatively unaffected by having children although men who never have children earn less on average than those who do. [6] 
    4. Discrimination and Bias: Women are more likely to face discrimination and bias in the workplace, including sexual harassment and gender-based violence, which can limit their opportunities for advancement.

 The Feminization of Poverty has several negative impacts on women, including:

  1. Limited Access to Healthcare: Women living in poverty may lack access to quality healthcare, leading to poor health outcomes and reduced opportunities for employment and education.
  2. Increased Risk of Violence: Women living in poverty are at higher risk of experiencing violence, including domestic violence and sexual assault.
  3. Reduced Educational Opportunities: Women living in poverty may have limited access to educational opportunities, leading to reduced opportunities for career advancement and increased likelihood of poverty in the future.
  4. Limited Political Power: Women living in poverty may have limited political power, making it harder for them to advocate for policies and programs that could help them overcome poverty.

The unfortunate truth is hidden the ways with which we discuss symptoms like: The Glass Ceiling, Pay Gap or the Achievement Gap while overlooking the root cause of such issues like the Ambition Penalty, Discrimination Biases and Patriarchal Socialization that perpetuates such transgenerational issues to exist today.

Poverty cycles perpetuate as we continue to repeat patterns we have yet to repair. With inflation rates rising at least 3% each year and the annual merit increase based on job performance ranges 3-5% each year, individuals are handicapped by compensation rates that just barely keep up with the times - let alone allowing them to get ahead of it.

Most companies offer two hour Implicit Bias trainings once a year to reduce unconscious biases we may unknowingly project. Emphasis on “two hour trainings once a year”.

“While 90% of Fortune 500 companies offer employee resource groups, only 8.5% of employees participate.” [7]

Daily education and integration should be a part of one’s company culture with cohesive efforts that align with the overall goal vs singular siloed efforts. 

Overall, these systemic issues are deeply ingrained in our society and require long-term solutions that address the root causes of poverty and inequality.  By understanding the psychology behind money and the challenges that individuals from poverty face, we can work towards creating a more equitable society.

It is my belief that Trauma-informed Social Emotional Learning (SEL) can address many of our core challenges that are a result of group think, unconscious biases and collective shadow projections that impact our ability to achieve Unity Consciousness. Everything is interconnected. Trauma-informed social emotional learning (SEL) is an approach to education that integrates trauma-informed practices with traditional social emotional learning strategies. I believe that mental and emotional wellness should be a daily integrative practice - just like working out and brushing your teeth. Most companies provide transactional education but fail to provide transformative integration. My approach is based on the recognition that many individuals have experienced trauma, and that trauma can impact a person’s social and emotional development, decision making abilities, as well as their ability to learn and develop deep connections. That’s why I created THE IMANI MVMT Resilience Planners.

Trauma-informed SEL involves creating a safe and supportive learning environment that is sensitive to the needs of individuals who have experienced trauma. This includes creating an atmosphere of trust and respect, providing opportunities for individuals to share their experiences and feelings, and offering supportive resources and services.

Some key components of trauma-informed SEL include:

  1. Understanding the impact of trauma: All individuals are trained to recognize the signs and symptoms of trauma, and understand how trauma can affect a person’s social and emotional development.
  2. Fostering a sense of safety: All individuals create a physically and emotionally safe learning environment where everyone feels supported and validated.
  3. Promoting positive relationships: All individuals promote positive relationships with one another, and encourage one another to build strong connections with their peers and leaders.
  4. Building resilience: All individuals build resilience by providing collective opportunities to develop coping skills and strategies for managing stress and trauma.
  5. Encouraging responsible decision-making: All individuals develop responsible decision-making skills by learning to consider the consequences of their actions and make choices that promote positive outcomes.

Trauma-informed SEL can have a positive impact on individuals, institutions and entire communities that have experienced trauma by promoting healing, resilience, and academic success. By integrating trauma-informed practices with social emotional learning strategies, individuals and institutions can create a supportive and empowering learning environment that benefits all.

It’s how we can heal the collective, one individual at a time.

To Learn More:

-Grab Your Copy Of THE IMANI MVMT Resilience Planner ♥️

-Click Here To Schedule Your Lunch & Learn Today! ♥️










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