This is a very tricky question I am asking today. Please don’t get offended by the word ‘poverty threshold’, as this term is not meant only for poor or low income earners but to all.
Although it may be bit difficult for you to accept that how a term which has a direct reference to the poverty can be applicable to all human being irrespective of one’s income level.
But this is what the truth is. So before we proceed further, let us first attempt to understand the integral meaning of this term called ‘Poverty Threshold’.
In simple terms, ‘Poverty Threshold’ refers to the minimum level of income deemed necessary to achieve an adequate standard of living in a given Society or Country. Moreover it is important to understand that the ‘minimum level of income’ as referred herein may differ from one person to another depending on one’s standard of living as practiced.
For one person the daily newspaper may form an essential part of his daily requirements to maintain an adequate standard of living, while for some other person it may just be a luxury to buy the newspaper.
This proves a point that the ‘poverty threshold’ limit may differ from one person to another depending on one’s level of income. Therefore, I have used the term ‘poverty threshold’ just to describe the minimum amount of money one would need to lead a comfortable life.
Some people may require USD 20,000 per year for living a comfortable life, while some other may need even less than USD 2,000 in a year. So your poverty threshold basically refers to the reserve amount, which invariably you would need to lead an honourable living. So the lower this limit be, better it is for you.
Thus, it is important to keep a low poverty threshold [than the actual] which means you would be able to manage your living at a lower amount than what you estimated. Suppose, if all your savings were stripped from you, and your income gets reduced by 70%, could you still enjoy yourself the same life style Or would you be miserable having to adjust to a lower level of income. Remember, your poverty threshold is just psychological. It’s not about actually having to survive/ experience poverty.
Having a low threshold simply means you’d be willing to sacrifice more to make bigger changes. For example, imagine your poverty threshold was roughly USD 20,000 per year.
If you had the opportunity to switch to a more exciting career, but here the starting annual emoluments was only USD 15,000/-, you wouldn’t be able to make the switch. Fixing a lower poverty threshold is nothing but a freedom from unwanted luxuries of life.
Building a low poverty threshold is about occasionally conditioning yourself to go without. Go an entire week without spending any money. Travel for a month and stay in hostels instead of nice hotels.
Go without your car for a month. Experiencing mild poverty in small doses allows you to lower your threshold. It’s just like dipping your feet in a lake to get used to the cold water. Occasional splashes keep you from being afraid to dive in when you need to. I think this last element of financial freedom is the one most away from current advice being given today. It has nothing to do with money, but entirely your mental disposition towards money.
Won’t it be a good idea to practice your poverty threshold at least for a day every month or for a week or fortnight every year and donate the money saved as a result of this practise to a charity? Practicing ‘poverty threshold’ occasionally will prepare you and your family members to face any eventuality, which God forbade can strike us any moment.
We know our living environment is very unpredictable, thus the need of hour is to prepare ourselves to face any eventualities and one of the best ways to achieve this is first by keeping your ‘poverty threshold’ low and second by practicing it occasionally.
Try it ones, it is essential. Cheers!!!