My family is mentoring a young woman that comes from a broken background (was abused, grew up bouncing between foster families). She's trying to do everything right: finishing her GED, getting a job, etc. In addition to support from my family and a few others, she is in a formal program to learn how to budget, and has always been willing to be proactive in finding ways to better her situation.

But every step along the way, the system is fighting her. Most recently, she's in jeopardy of losing two sources of assistance because she's doing "too well" to qualify. With those gone, she'll likely be making less than she was before she had a job.

Our system (in the United States) is seriously fucked up. All of the various programs try to pass the buck whenever they can. The negative feedback loops are overwhelming.

I'm also familiar with the disincentives people face as they pull themselves out of our welfare system. I know two such people who face similar dilemmas.

and it has been for decades. I was a shift manager at a burger king in the early 90s - nearly 30 years ago. Some of those same issues faced some of the people I worked with. Can't earn "too much" because their assistance would be cut off by a larger percentage than the increase in $ they might earn. This was in the days of sub $4/hr wages for most of the folks there.

Can't schedule Tara for an extra 5 hours because that will be an extra $20, which will put her over $100/week, and her assistance will be cut by $50/week because she earned that extra $20. (paraphrasing the numbers here). It was also costing some of these people $x/day to take a bus to and from work, but that wasn't calculated in their earnings/cutoff calculations.

Truly messed up 30 years ago, messed up today.

That's the thing: they do know. They watch rich people earn money doing, from their poverty-clouded perspective, nothing. Learned helplessness is a powerful force. It took me years to break out of it. I can see how wrong it was from the other side, but I also know how useless criticism of people inside it is.

Doing what's kept your head barely above water for years seems safer than putting a few dollars away every month hoping it grows higher than the next thing that fails in your car or house. That's if you can get a bank account at all. Everyone knows someone to ask for the number of a good bankruptcy attorney. That's networking when you're broke and defeated.

Wasn't familiar with the concept of learned helplessness and found this interesting study looking it up [0]

> The mechanism of learned helplessness is now very well-charted biologically, and the original theory got it backward. Passivity in response to shock is not learned. It is the default, unlearned response to prolonged aversive events and it is mediated by the serotonergic activity of the dorsal raphe nucleus, which in turn inhibits escape.

Learning how to help yourself isn't as easy as it seems especially when you barely or don't have the means to do so.

[0] https://www.ncbi.nlm.nih.gov/pubmed/27337390

Let's take an median household. That's $40,000 in the US. Let's say they save 5% of their post-tax income monthly, and get an amazing rate of 3% APR with no fees.

How much will that compound interest have added after 15 years? Only about $7,000. Not exactly a "big outcome".

That’s pretty privileged of you to say $7,000 is not a big outcome.

To a lot of folks it is. That’s half a down payment for a house in a lot of the US.

Plus the OTHER 32k they have saved. Over 30 years that is an extra 50,000.

You could save it for 15 and have 37k (7k interest)after 15 years. Or 0. You could save it for 30 and have 126k (54k interest) after 30 years. Or 0.

$56k of earnings in exchange for freezing $70,000 of your income for 30 years? That seems insane if I'm honest.

If it were FU levels of money, or even 100%+ returns, I might think differently. But I can't imagine someone locking away $70k of their earnings for 30 years for only a 70% return.

To be fair, $7000 in 15 years probably won't get you the house downpayment but... you're right on the privileged part.

I imagine that people actually seeing some progress over time may encourage them to save/contribute a bit more, or to put some money in to somewhat larger CDs or whatnot (even excluding stock stuff). Or... they may be encouraged to contribute a small bit to a 401k if they end up at a job that offers it.

You may $40k/year - having, say, $3k in savings can really change your outlook and susceptibility to otherwise crippling 'emergencies'.

As a return for tying up 5% of your income (which is hard to do when you're working with a household budget of ~$625 a week) for 15 years? Yes, that is a tiny outcome. It's especially tiny when you consider that a static 3% APR is absurdly unrealistic.

You could use that same 5% and have a full down payment four years sooner.