There is both direct and indirect impact of poverty on literacy in a number of ways and hence both the terms are correlated. Illiteracy is one major trap which leads to poverty. In this era almost all the jobs which provide decent salary requires literate people to be engaged with the work. Therefore, illiteracy and poverty are two terms which are highly correlated  
Statistics provided by the Literacy Project Foundation states that 50% of the American adults does not have the capability to read even an eighth standard level textbook. Such a boundless shortfall of literacy skills, heavily supplies to the number of people continuing in poverty.
Program for the International Assessment of Adult Competencies has defined literacy as “understanding, evaluating, using, and engaging with written text to participate in society, to achieve one’s goals, and to develop one’s knowledge and potential.”
Around the globe, there are a large number of adults who neither can read nor write, and because of this they strive to earn a living for their families as well as for themselves.
All the areas of life get affected due to illiteracy. People who are more likely to live in poverty are the ones with low literacy skills and they also face more of health problems since they won’t be able to read the prescription instructions as well as the labels, and become more alienated in this world which is highly depended on computers.
Since both the terms, poverty and illiteracy are heavily correlated, literacy or providing education can contribute immensely in putting an end to acute poverty.
According to the important evidences provided by the Education Commission’s Learning Generation Report  and UNESCO Global Education Monitoring Report on the impact of education on economic growth and individual’s earnings  of the ways in which education can help are:-

  • By promoting economic growth,
  • By reducing economic inequalities,
  • By increasing individual earnings.
In order to make poverty stricken people literate, government need to identify accurately the areas where there is acute poverty and should do the needful to eliminate it so as to alleviate poverty as well.