Sometimes "luxuries" are necessities, in less obvious ways. For example, it may be very difficult to get certain types of jobs unless you display the right status symbols[1].
[1] https://tressiemc.com/2013/10/29/the-logic-of-stupid-poor-pe...
The $20 Principle
I have written before about how $20 can change a
student’s life.
The $20 is slightly euphemistic but not entirely so.
We talk a lot about big money in higher education but I
know for a fact that it’s small money that can derail
one’s educational ambitions.
I was a student in a doctoral preparation program. I was
an older “non-traditional” student. I was independent. I
didn’t have children but neither was I still someone’s
child. To take advantage of this highly competitive
program, I had to submit a $100 reservation fee.
I didn’t have it.
I was $24 short.
But that just makes the whole "if you give someone in need 600$, they will spend it on an iphone" MORE valid. If you need status symbols just for the symbol, you might wind up skimping on physical necessities (car repairs, rent, food, etc). Whether or not that is their fault could be up for debate, but it makes the statement itself all the more true.
I only have anecdotal evidence, but people who are poor because they have bad decision making skills would drop 600$ on some "status symbol" trifle without a second thought. People who are poor because of bad luck/circumstances will try their best to save it, or spend it on bills, food, etc.
There is going to be a huge intersection of people with less than 1000$ in savings, but have an iPhone.
Perhaps that's WHY they have so little savings? I knew a family who filed for bankruptcy while having 3 macbooks they used for MS Word and Facebook. Bad spending habits and the need to keep up with the Jones are both issues.
Not all people are poor because they "waste" money, but when you consider that a lot of luxuries are considered "necessities", you have to question things.