The Vicious Circle of Poverty

If someone is asked what is the reason he is poor? Because his parents were poor. Then why are his parents also poor? It could be due to the following reasons:

• Because his parents are also poor and do not have assets or assets that are inherited to him
• Because they don’t get a higher education to get a decent job.
• because they are not good at making money, do not have sufficient skills needed by the business world, for example sales, marketing, management, financial intelligence, etc.
• because they are not good at managing money, inherited from grandfather but not good at managing money so that assets or assets will be used up to spend on needs first, without being able to save or invest.
• because they lost their jobs, most of them work as workers who depend on their place of work. Every job is certainly not permanent, there are various factors that cause us to lose our jobs including: the company goes bankrupt, the company’s policy of rejuvenating human resources, etc. As you get older, it is not easy to find a new job.
• because of divorce, when there is a divorce in one family, it is not uncommon for the mother to have to go to work to meet the daily needs of herself and her child. Meanwhile, from the father’s side, it is easy to have a new family again and often neglects his duties as a father who has to take care of his children’s lives from previous marriages including education to adulthood and is independent to have their own livelihood.
• due to death or loss of life support family members.
• etc

Poverty cycle

The cycle of poverty is often depicted according to the illustration above. A person in a condition of poverty will go through a cycle starting from

• aspects of education: low level of education results in low knowledge,
• income aspect: low income results in low savings and small capital
• health aspect: low consumption levels result in low nutrition and poor health

And if you have children, you will tend to inherit poverty conditions like the ones above: no education, low income, etc.
They will be trapped in conditions of poverty and difficult to get out of the poverty trap.

The poverty trap is created when the economic system requires a certain amount of capital to earn a large enough income to escape poverty.

A simple example of a poverty trap is the lack of housing/houses.If you do not own a house then what happens is to rent/rent a house.

Not infrequently there are even those who build houses under the bridge/river side because they can’t afford to pay the rent.

For employees, every month after receiving income, a portion of the income will be used by renting costs.

As a result, it reduces the portion in other parts such as for consumption, education, and saving.

And this will continue if not enough capital is collected so that you can own your own house either on credit or buy it in full.

By having a board/house, the burden of paying rent is no longer there and can be used for other purposes.

The situation will get worse if someone or a family does not make owning a board a priority, due to poor financial management and more concerned with consumptive spending.
For those of you who are in that position, make sure having a board is a top priority.

This cycle is called the vicious cycle of poverty.

The vicious circle of poverty in English Vicious Circle of Poverty was popularized by Ragnar Nurkse in Jhingan in 2010
One way to break the cycle of poverty is education. With education, they will get enough income to help them get out of poverty. However, accessing education requires assistance from external factors, whether it’s the government/institution, because the poor certainly cannot afford it.