Portfolios of the Poor | Daryl Collins

Summary of: Portfolios of the Poor: How the World’s Poor Live on $2 a Day
By: Daryl Collins

Introduction

Discover the financial tenacity of the world’s extreme poor and the ways they manage their lives on just $2 a day in this intriguing book summary of ‘Portfolios of the Poor’ by Daryl Collins. Contrary to popular assumptions, individuals living in extreme poverty often save and manage their finances with the help of their families, while also relying on their communities for support. This summary offers valuable insights into methods used by impoverished communities to bolster their financial strength and resilience, as well as the shortcomings of international organizations and the effectiveness of national institutions in providing assistance.

The Myths of Poverty

People living in poverty are not just surviving but managing their money effectively. In this book, the author debunks common myths that society has about the world’s poorest people. One such myth is that people living in extreme poverty spend all their cash as soon as they earn it. However, individuals who survive on an average of $2 a day set aside some savings for unforeseen expenses. These poor people mostly communicate orally with their family and friends to keep track of their finances as they are illiterate. They also put much importance on money management since their income is often unpredictable. Farmers, for instance, earn all their income from harvests in two or three months, leaving them with nothing for the remaining months. Therefore, managing their finances well is crucial to their survival.

Mutual Aid Strengthens Poor Communities

Poverty-stricken communities demonstrate an immense resilience in the face of adversity by fostering financial and non-financial support networks amongst themselves. Both official and unofficial social contracts, such as collective investment and informal lending, serve to boost communal financial strength. Non-financial aid, ranging from gifts of food to emotional support, further reinforces the tight-knit nature of these communities. The destitute thrive on the reciprocity and collaboration within their communities, providing mutual aid in any way they can in times of need.

Misunderstandings in Remediating World Poverty

When it comes to global poverty, international organizations working to end it often perpetuate misunderstandings about the poorest people. Standards for remediating world poverty that are set by these organizations mistakenly apply the same analysis to all poor people across the world. The poorest people tend to have irregular incomes, which makes applying standards like “a dollar per day” unhelpful for understanding and aiding the poor. While many poor people might make more than one dollar per day, they still have financial problems due to their irregular incomes. Converting global living standards and incomes to make them accurate relative to one another also tends to result in failure as it is tremendously difficult for international organizations to accurately measure poverty across diverse economies, societies, and cultures.

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