There are some significant barriers that people living in poverty face when it comes to managing their finances. However, these may not always be obvious, so let’s talk about them.
Let’s consider what it might look like to be living in poverty here in British Columbia, Canada, where I live. Provincial income assistance payments, including basic welfare and disability benefits, can be direct deposited into a bank account, or they can be issued by cheque. Easy peasy, right? Not necessarily.
Direct deposit may seem like an obvious choice, but only if you have a bank account. Banking can be expensive, and that adds up pretty quickly if you’ve got barely enough to live on. And you probably use up your cheque before month-end, so you’re running a zero account balance at least part of the time.
No ID without ID
Another potentially significant issue is a lack of identification, and you can’t open a bank account without ID. If you’re sleeping outside and haven’t showered for a while, security might not even let you in the door, ID or no ID, but that’s a whole other problem.
It’s remarkably difficult to get ID without ID. Let’s say everything you had was stolen. The first step usually needs to be getting a birth certificate. Okay, but let’s say your mother is dead and your father is in prison for molesting you. The only extended family you have is on your dad’s side, but they won’t speak to you because they blame you for getting him locked up. You know both parents’ date of birth, but not where they were born. Now you’ve got yourself a big problem, because you probably can’t get a birth certificate without that information.
Or, let’s say you do have the information to replace your ID. But do you have the money to spare to pay for that replacement ID?
Show me the money
Alternatively, you could take your cheque to a payday loan/cheque-cashing service. They’ll take a substantial cut of your cheque, but, unlike most banks, they won’t put a hold on it and you can get your money right away. They also won’t demand ID. Their fees seriously suck, but there isn’t much of an alternative.
If you’re lucky (or not, depending on how you look at it), your government benefits may qualify you for payday loans. The maximum annual percentage rate interest allowed in BC is 391%. But there’s no way an actual bank is going to give you a loan, so what can you do?
If you’re caught in the spiral of addiction, you’d better hope that you don’t owe people other than your payday loaner, like your dealer or your pimp. When everybody on assistance gets paid on the same day, everyone’s cashing their cheques at the same time and in the same few places. Cash in people’s pockets makes for easy targets.
A social justice alternative
Here in Vancouver, there’s a partnership between a local credit union and a social service non-profit organization to operate Pigeon Park Savings. It’s right in the heart of the city’s skid row area. They have a low monthly flat fee account package that includes unlimited withdrawals, as well as low-fee government cheque cashing for non-members. They also provide assistance with getting ID. Basically, they treat poor people like human beings.
Poverty is hard, but it doesn’t have to be this hard. Universal basic income could be a far more civilized solution.
It’s easy to write off people living in poverty, but maybe if we stop throwing so many barriers in their way, more people might be able to rise out of poverty.