What are "good" money choices?
I'm going to pick on Linda Tirado author of Hand to Mouth: Living in Bootstrap America one last time before I move on. The article I'm referencing is an book excerpt on Slate, but I'll quote the part I want to focus on in this post.
"And let’s also talk about the ways in which money advice is geared only toward people who actually have money in the first place.
I once read a book for people in poverty, written by someone in the middle class, containing real-life tips for saving pennies and such. It’s all fantastic advice: buy in bulk, buy a lot when there’s a sale on, hand-wash everything you can, make sure you keep up on vehicle and indoor filter maintenance.
Of course, very little of it was actually practicable. Bulk buying in general is cheaper, but you have to have a lot of money to spend on stuff you don’t actually need yet. Hand-washing saves on the utilities, but nobody actually has time for that..."
- Linda Tirado, Hand to Mouth: Living in Bootstrap America
I actually agree with Linda that the lion's share of books on money and budgeting are written for the middle and upper class. That was our main motivation for writing Living Single on Minimum Wage. And even then our book is aimed towards singles without dependents which doesn't fully cover her situation.
What I found interesting were her examples of being "good" with money. These examples all have to do with domestic concerns and mainly capping the outflow of day to day expenses. If you're a full-time homemaker, then generally yes that is your domain. I've seen the value of a homemaker estimated between $70,000-$80,000 per year based on all the roles they serve for the family unit. So pinching pennies and doing things yourself certainly can add up.
But is that really the only way someone can be "good" with money? I don't think so. Let's break this down to a three-part answer.
A. The Most Important Financial Decisions Are Not Purely Financial.
The most important and most impactful money choices you make are choices that may not always seems like financial choices as first glance. Do I try a cigarette? Who do I marry/move-in with/have sex with? Do I go to college or a vocational school? What car should I buy? Where do I want to live? When do I do or not do these things?
The #1 indicator of poverty for a woman is whether she has a child, and as states crackdown on child support, this is affecting the wallets of more men. Even though we grate at the idea of money being a factor in our love life, family, and personal decisions, it really should be. (Remember money issues are also the top reason given for divorce.)
Good decisions in these areas have the biggest impact on your finances within the realm of things you can control. (You aren't directly responsible for the general state of the economy or who your parents were. Those are just things you have to deal with.)
B. "Good" choices don't always have immediate results.
Some of the smartest things you can do financially do not show their full benefits immediately. Maintaining health insurance or car insurance may seem like a waste of money until you get sick or arrested for driving without it. Hopefully, you'll never need to use your emergency fund (though probability is good you will at some point). A retirement fund may feel like a hardship until you retire.
C. A "good" Financial Choice For One May Be "bad" For Another.
I've discussed Stockpiling Responsibly before. But it's a financial strategy that makes a lot more sense when you have a stable living situation and extra storage space. If you're short on space and particularly if you may need to pack up and move soon, then heavy stockpiling is more likely to lower your quality of life than raise it. At most you might take advantage of a two-for-one sale and keep your cash liquid to help stabilize your shelter.
Tirado dismisses "Hand-washing" because of the time factor. Which honestly in many cases is quite valid. During a period where you're working 60 hours a week and make $10/per hour, it does not make sense to work two or three hours less to spend hand washing and save $1 or even $5 on your utility bill. And it may be unwise to cut into your sleep or free schedule to do so. You'll see more savings from preparing your own meals. However if you suddenly find yourself unemployed or only working part time, the value of saving $1 or $5 increases. This isn't limited to hand washing but applies in other areas.
$$$
End Note: Any budgeting or money tip related book must be written broadly by it's nature as a mass publication. You should always feel free not to follow financial advice that doesn't work for your current situation. Some of it will become useful when you hit another stage of life armed with that knowledge, and some of it may never apply.
"And let’s also talk about the ways in which money advice is geared only toward people who actually have money in the first place.
I once read a book for people in poverty, written by someone in the middle class, containing real-life tips for saving pennies and such. It’s all fantastic advice: buy in bulk, buy a lot when there’s a sale on, hand-wash everything you can, make sure you keep up on vehicle and indoor filter maintenance.
Of course, very little of it was actually practicable. Bulk buying in general is cheaper, but you have to have a lot of money to spend on stuff you don’t actually need yet. Hand-washing saves on the utilities, but nobody actually has time for that..."
- Linda Tirado, Hand to Mouth: Living in Bootstrap America
I actually agree with Linda that the lion's share of books on money and budgeting are written for the middle and upper class. That was our main motivation for writing Living Single on Minimum Wage. And even then our book is aimed towards singles without dependents which doesn't fully cover her situation.
What I found interesting were her examples of being "good" with money. These examples all have to do with domestic concerns and mainly capping the outflow of day to day expenses. If you're a full-time homemaker, then generally yes that is your domain. I've seen the value of a homemaker estimated between $70,000-$80,000 per year based on all the roles they serve for the family unit. So pinching pennies and doing things yourself certainly can add up.
But is that really the only way someone can be "good" with money? I don't think so. Let's break this down to a three-part answer.
A. The Most Important Financial Decisions Are Not Purely Financial.
The most important and most impactful money choices you make are choices that may not always seems like financial choices as first glance. Do I try a cigarette? Who do I marry/move-in with/have sex with? Do I go to college or a vocational school? What car should I buy? Where do I want to live? When do I do or not do these things?
The #1 indicator of poverty for a woman is whether she has a child, and as states crackdown on child support, this is affecting the wallets of more men. Even though we grate at the idea of money being a factor in our love life, family, and personal decisions, it really should be. (Remember money issues are also the top reason given for divorce.)
Good decisions in these areas have the biggest impact on your finances within the realm of things you can control. (You aren't directly responsible for the general state of the economy or who your parents were. Those are just things you have to deal with.)
B. "Good" choices don't always have immediate results.
Some of the smartest things you can do financially do not show their full benefits immediately. Maintaining health insurance or car insurance may seem like a waste of money until you get sick or arrested for driving without it. Hopefully, you'll never need to use your emergency fund (though probability is good you will at some point). A retirement fund may feel like a hardship until you retire.
C. A "good" Financial Choice For One May Be "bad" For Another.
I've discussed Stockpiling Responsibly before. But it's a financial strategy that makes a lot more sense when you have a stable living situation and extra storage space. If you're short on space and particularly if you may need to pack up and move soon, then heavy stockpiling is more likely to lower your quality of life than raise it. At most you might take advantage of a two-for-one sale and keep your cash liquid to help stabilize your shelter.
Tirado dismisses "Hand-washing" because of the time factor. Which honestly in many cases is quite valid. During a period where you're working 60 hours a week and make $10/per hour, it does not make sense to work two or three hours less to spend hand washing and save $1 or even $5 on your utility bill. And it may be unwise to cut into your sleep or free schedule to do so. You'll see more savings from preparing your own meals. However if you suddenly find yourself unemployed or only working part time, the value of saving $1 or $5 increases. This isn't limited to hand washing but applies in other areas.
$$$
End Note: Any budgeting or money tip related book must be written broadly by it's nature as a mass publication. You should always feel free not to follow financial advice that doesn't work for your current situation. Some of it will become useful when you hit another stage of life armed with that knowledge, and some of it may never apply.