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I Believe In Money Advice, But Only If It Looks At The Whole Picture
Recently, there have been several different articles written that criticize the personal finance industry. And for good reason! A lot of the traditional and prevailing financial advice is steeped in privilege and often glosses over the systemic problems that keep people in poverty. This type of blindness can make people feel, at best, overlooked, and at worst, completely dismissed.
As a financial coach myself, I’m obviously biased in thinking that personal finance advice is important and helpful for many. I know that most Americans are not given the financial literacy that they need to properly manage their money day-to-day and plan for their futures. I’m passionate about helping women get the tools to take control of their finances. However, I also know that it’s often not that simple. Many people do the best they can and are held back by other obstacles. That’s why it’s so important to look at the big picture when talking about money and giving financial advice.
A lot of the other folks I know in the personal finance space are doing things the right way, but for those who aren’t, here’s what I recommend and what I try to do within my own business:
Be Honest About Your Own Privilege
I don’t think privilege is inherently bad. You aren’t automatically a bad person if you were born into wealth or other privileged circumstances. The important thing is how you use your privilege for good. It’s also imperative that you are honest with yourself and with others about your privilege and how that has influenced your personal circumstances.
For example, I was born into a white, middle-class family and both of my parents had college educations. My dad didn’t make a ton of money while I was growing up, but he made enough so that my mom could be a stay-at-home mom for much of my childhood. Since my parents were around a lot of the time, I had the support that I needed to thrive and do well in school. I was able to apply for and attend a state college. My parents didn’t have the money to put me through school themselves, but I took out loans for half of my education and my parents took out loans for the other half. My parents were able to pay back their half of my loan debt, while I paid back my half. I had a home to return to after I graduated college and tried to figure out what I wanted to do with my life. When I moved to DC, I had to work two jobs to make enough money to live in the city, but I always knew that I could rely on my parents if I really needed to. In fact, my dad drove me down to DC and bought me a bed for my shared studio apartment.
Fast forward 10 years and I still live in the DC area. I own a home (which I was able to buy due to an injury settlement) and I run my own business. I’m able to run my business full-time while it grows because my husband (who was also born into a white, educated, middle-class family) has a great job that pays enough to support our life together.
That’s a lot of information about my life, but it shows that I certainly had a leg up from the beginning. Things weren’t perfect, but I was given opportunities that many other people would not have had. Admitting these things doesn’t diminish my accomplishments or downplay the skills that I have. It just shows that I’m aware of how a lot of my circumstances are due to luck. If I pretended like none of this was true, I would not be honest with my readers or clients. Don’t gloss over your privilege, because it can make your followers and customers feel like they are failing when they can’t seem to catch up to where you are.
Don’t Oversimplify
Recently, Suze Orman said that buying coffee everyday is like “peeing $1 million down the drain”. I think that’s the type of outrageous comment that turns a lot of young people off of financial advice. First of all, I doubt anyone is buying $1 million worth of coffee in their lifetime. Additionally, coffee is not the reason that young people are struggling. Neither is avocado toast. These are just a few things that I think have more of an impact on financial security: graduating into the worst recession ever, staggering student loan debt, rising cost of living, and stagnating wages. But these are issues that are not dependent upon the action of the individual, so it’s not as sexy or controversial to point them out.
Of course, there are lots of people who are spending more money than they can afford without realizing it. And some of that money might go towards coffee (or avocado toast). It is important to live within your means if you want to have financial stability eventually, but shaming and blaming people isn’t the way to make that happen.
Don’t Tell People To Give Up Joy
One of the easiest ways to make people tune out is to tell them to sacrifice everything that they love. There are lots of blogs out there written by people on a journey to get out of debt who decide to forego all non-essential spending. Many of them also work many jobs in order to make as much money as possible and get out of debt as quickly as possible. And I get it! Debt sucks and it makes sense to want to get out of it as fast as you can. Many of my clients are struggling with debt and our work often centers around a debt payoff strategy. But restricting everything outside of the essentials is a recipe for disaster for many people. Just like restricting food makes people more likely to binge, restricting all joyful spending makes people more likely to overspend as compensation. It’s more realistic to build the things you love most into your monthly budget so that you don’t feel completely depleted.
Of course, as always, there are definitely people out there who want to use the deprivation strategy and become debt-free quickly. I salute those people! Each person’s situation and values are going to be different. I don’t begrudge them their own approach, but it’s certainly not feasible for most people.
Take Intersectionality Into Account
Every individual’s financial situation is going to be at least somewhat dependent upon the intersectionality of their gender, race, sexual orientation, gender identity, religion, etc. The American Constitution might say that all men are created equal, but we are certainly not all treated that way. If you are white, straight, male, educated, and/or upper class, your circumstances are going to be MUCH different than someone who is a person of color, or a woman, or queer, or an immigrant, or all of the above!
This is why I don’t believe in one-size-fits-all solutions. Everyone’s situation is different, sometimes people are coming from complete opposites of the money spectrum. It’s important to take all of these intersectionalities into account when you’re talking about money and giving advice. Of course, this can feel very uncomfortable when it’s a man or a white person giving the advice (which it very often is). But it’s important to educate yourself on these issues and how they affect different people. You’ll be a better person and a better expert for it.
Don’t Promise The World
There are a lot of “get rich quick” schemes out there. They are not going to work. Anyone who promises to completely change your circumstances over night is lying to you. Any kind of big change takes time and dedication to achieve. Experts need to make it clear how difficult and frustrating this change can be, while still showing that it’s possible for people. For individuals, you should celebrate the small wins when you reach them. Waiting until the big end goal to celebrate will make you feel demoralized and pessimistic. So celebrate the interim goals and pat yourself on the back when you do the things you set out to do.
Fight For Systemic Change
Like it or not, individual choices and actions are not going to change the system as a whole. Of course, our behaviors can change our own lives to an extent and encourage our loved ones to do the same, but we will still be affected by systemic problems. In order to make real, lasting change in our country’s quality of life, we need to change our systems. As a financial coach, and as a human, I speak out for the necessary changes that must take place. I encourage others to do the same. Just a few examples of the changes that need to be made are:
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Universal healthcare. The Affordable Care Act certainly made our healthcare system better than it was, but it didn’t finish the job. There are still many people out there who aren’t getting the healthcare that they need because they can’t afford it. This is especially true for those who don’t have employer-sponsored health insurance. Plus, Congress is still trying to gut the ACA in many ways, so we can’t even rely on what we have. Universal healthcare would make sure that everyone in the United States gets the healthcare that they need, regardless of their employment status. Until we have this, many people in the United States will still be at physical, mental, and financial risk.
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Paid family leave. The United States is the only country in the developed world that doesn’t at least have have paid maternity leave. That means that your employer has no legal obligation to let you take paid time off after giving birth to or adopting a child. If mothers aren’t able to get this benefit, fathers certainly don’t. And don’t even hope to get paid leave to care of a sick or aging family member! The lack of paid family leave means that people have to go back to work sooner than they want to or that they leave the workforce entirely while they care for their child or other loved one. This hurts people and families emotionally, physically, and financially.
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Universal child care. Paying for child care is still painful or impossible for many people and families. There are plenty of people out there who drop out of the workforce and collect welfare because all of their income would go to child care anyway. Many women in particular opt to stay home to care for their children over paying for child care. The cost of child care is only continuing to climb and becoming more unattainable. Subsidizing child care so that it’s available and affordable for everyone will improve the financial situation of most families in the United States.
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A living wage. The minimum wage ($7.25/hour federally) in the United States is pitiful. It’s not enough for most people to live off of. And it’s certainly not enough for people to live off of and save money for their futures. Mandating a living wage will lift countless people out of poverty. It will improve physical and mental health. It will help families. It will help communities. It’s imperative for the federal government to implement a living wage as housing, medical, and education costs continue to rise.
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Free higher education. This topic has been coming up more and more now that the 2020 presidential election is in full swing. Student loan debt has reached crisis levels and is preventing many young people from being able to support themselves. If we can’t make higher education free, we at least need to control and lower costs, since they have increased at a much faster speed and value than wages have.
To all the readers out there, don’t completely give up on personal finance advice. Find the people out there who include the full picture when they talk about money. Every individual expert is not going to be right for all people. Find the ones who speak to and respect your experience.
And even though I was mostly talking to other financial experts in this piece, it’s important that we all, as individuals, get more honest about money. If your parents paid for your college tuition, that’s something to be grateful for, not embarrassed of. But that certainly gives you a leg up over your friend who has student loans to pay back. If your parents gifted you the down payment for your home, that’s amazing and generous! But that gives you a hell of an advantage over someone who has to save up for that purchase. The more honest we are, the less alone, ashamed, and isolated we will feel. And it’ll show our friends (and us) that they aren’t failures, they’re just coming from different circumstances.
What else bothers you about the personal finance industry? Share in the comments!