It’s expensive to be poor. Although it may seem like a paradox, it’s the sad reality. One lottery winning couple have not only managed to keep living modestly after receiving a windfall but have also managed to become better at saving since their big win!

A steady stream of income

Having £10,000 deposited into your bank account each month for 30 years would certainly be a relief for most, a guaranteed income, and a generous one at that, without having to work for it. Giving you the time to enjoy leisurely pursuits, such as ghost-hunting, in the case of one lucky couple from Nottinghamshire.
The top prize for most lotteries is usually offered as a lump sum payment, but other jackpots such as the National Lottery’s Set for Life and the Cash4Life jackpot at Lottoland are paid out over a lengthy period of time, in the case of Lottoland’s Cash4Life, you really do get paid for the rest of your life, in fact, you get an incredible £1,000 a day until you pass away.
The advantage lottery winnings being paid out in this way is that the winner does not have the temptation to blow all their winnings at once by making unwise investments or going on a crazy shopping spree. There winner can invest and save the money more wisely while having the peace of mind that the next payment will be on its way.
However, the temptation to spend more just because you can, is always there. It would be tempting to upgrade your lifestyle, which is definitely not a bad thing, as long as you live within your means.
One aspect of being rich which is often overlooked, is that you can actually lower your cost of living, although you still have to be money savvy.

The stingy Lotto winners

For Laura Hoyle and Kirk Stevens, it wasn’t a case of ‘more money, more problems’. The couple from Nottinghamshire scooped the main prize in the Set for Life draw last year and have found that “(they) have actually got more stingy” according to Laura, since they won the prize.

“I haven’t gone for anything more upmarket since winning. For me, I look at something, and if it's a £1,000 I think' no way, I'm not buying that'. Some people have always dreamt of having this kind of money and buying what they want. I look at something and think ‘that's poor quality and not worth it.’” Laura added.

Having savings and a high income enable people to save more by taking advantage of things which people on a lower income can’t afford the privilege of.

For example, buying in bulk, “why go to supermarket and get 16 loo rolls when you can go on Amazon and get 56 loo rolls for the same price,” explains Kirk.

Buying food in bulk and eating in, not only helps keep your wallet fatter, but is also much better for your health. "Before, we were eating a lot of convenient stuff and takeaways, when I was working 14-hour days…now I refuse to do that. We need to stay alive longer’” affirms Laura.
Everyday struggles

Buying in bulk is a great option, but people struggling with poverty simply can’t afford to do so. Furthermore, many wholesalers or large supermarkets are located in areas which are not easily accessible to those on lower incomes. If you don’t have a car, you have to spend money on public transport to get out to the areas where these stores are located and even then, they’d only be so much you could carry with you on the bus or train.

Therefore, lower income earners are almost forced to have to buy food on a day-to-day basis, with many resorting to eating fast-food daily. Not only is fast food unhealthy, in the long run, it’s more expensive.

However, with the price of the cheapest bag of pasta having risen by 141% in the last year and the cheapest packet of rice rising by an astonishing 344% due to inflation, buying food is also increasingly expensive. Foodbanks in the UK are currently at what has been described as “breaking point” due to the surge in demand.

Either way, people on low incomes may have to decide whether they would go to the doctor or go without a meal. These hard choices can result in decision fatigue which can in turn result in poor decisions being made.
Beware of the sharks

Seeking a payday loan would be an example of a poor decision, unfortunately, many desperate people end up falling prey to loan sharks or ‘get rich quick’ scams and pyramid schemes. All sorts of scammers and con-artists prey on the most desperate, as shown by the hugely popular Netflix series, Squid Game.

Everyday items such as mobile phones are an essential part of modern life, but they too can be a real financial burden.

Paying for a phone up-front can save you a great deal of money long-term as opposed to paying through a contract, but you need to have the money in the first place.

Don’t walk under the ladder

Then there’s the struggle of climbing the property ladder, many people won’t even be able to take the first step.

Banks want to deal with someone who is financially responsible, someone with a good credit history, a stable (and preferably high) income plus other assets. Leading money to the highest earners isn’t too risky, but if you don’t have a good credit score, you’ll find it almost impossible to get a mortgage as you’ll be deemed too much of a risk.

Not only can the rich buy themselves a home to live in, they can buy multiple, meaning they can make extra money by renting or selling them. Rich people always have multiple streams of income. This is the plan for Laura and Kirk, "everything has been going into savings…the aim is to be landlords and to have a portfolio” assures Laura.

For those struggling financially, buying a house is merely a dream, but even the option of renting can be tricky for many.

Most landlords ask for a deposit before rental. Those who can’t afford to pay a deposit, may resort to having to stay in hostels or cheap hotels, which in turn, cost more than renting, it’s a vicious cycle. Furthermore, these types of accommodation may not provide a kitchen or laundry service, meaning more money must be spent on eating out and doing the laundry.

Time is money. Making the trip to the laundrette, waiting for your clothes to be washed and dried, waiting in long lines at the food bank etc. means that you have less time to spend on working on a side job, looking for new job prospects or simply trying to figure out a course of action to try and get out of poverty.

Rising costs

Some households will be pushed into poverty by inflation. In 2022, the UK’s inflation is expected to reach 7%. Petrol, gas, food, taxes and travel costs have all risen, with lower income families being hit the hardest.

In general, higher income households are able to save more by spending more on the goods and services which allow them to afford sudden increases in costs, without slipping into debt. Having disposable income is a privilege. In many cases, people who live on a low-income unwillingly spend more than they earn, living in debt, relying on family handouts or benefits or having to constantly dip into savings (if they have any).
Unfortunately, the rich have the upper hand but generosity goes a long way as Laura explains: “We paid off car payments for family members and replaced TVs that had broken. (We helped) a friend that had a bit of trouble with her business. But no one has asked us for money."

In a nutshell, becoming rich can certainly lower your cost of living as you can save money on things buying in bulk, using credit and loans to your advantage, paying lower taxes or avoiding them by going offshore etc.

However, you still need to invest wisely and not overspend, be rich can be expensive too. At the end of the day, it’s down to the individual’s mindset and habits, but an extra £10,000 a month or even better, getting £1,000 a day for the rest of your life, would always come in very handy!