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Stop Calling It “Personal Finance”

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Personal finance change

No one thought the poor more undeserving than the poor themselves.
–Matthew Desmond, Evicted: Poverty and Profit in the American City

Frugaling is fast approaching its third anniversary. Three years of articles, debates, conversations, comments, and millions of visitors. It’s been a humbling journey, but I’ve struggled with a concept at the center of my writing: “personal finance.”

The term grew in popularity in the early 1900s. It was primarily deployed and embraced by the middle classes of America. To scrimp and save was seen as virtuous. You could take nicer vacations, save for retirement, or give more to charity by budgeting better. Undoubtedly, all good things.

“Personal finance” has allowed many to live a fuller life, but also placed much of the burden and responsibility on individuals. Unfortunately, little has changed in nearly 100 years of regular use. Amidst record breaking income and wealth inequality, we seem frozen in time — continuing the use of this term without reservation or thought.

We must ask ourselves some questions about financial education and planning: Are people able to scrimp and save like years prior? Does personal finance capture the economic hardship many face? Is this the best advice we can offer after 100+ years of collective financial experience?

The answer is no, no, and no.

When I break from the 100-year-old script of personal finance and call out the tragedy of income and wealth disparities, people tend to invoke the personal responsibility argument. In response, I receive comments and emails from devout readers who balk at my hesitation to call out financial errs and place more emphasis on society. They tend to ask, What’s the point of saving and making more money if people aren’t personally responsible? They suggest that finances are personal and failure is on the individual.

Over time, I’ve grown increasingly more resistant to the term. For the oppressed, try as they might, their budgets do not add up. They must seek social assistance or face dire consequences (i.e., hunger, eviction, and homelessness).

Whether we know it, prefer it, or like it, personal finance alludes to personal responsibility for errors and successes.

Fail? It’s your fault.

Succeed? It’s your smarts.

Can’t we do better than these oversimplified, overused assumptions? Fortunately, we have an opportunity to approach finance in a new way. It starts with a reinvention of terms. As inequality has worsened, the term has become antiquated and inaccurate. We need to shift to something more appropriate, which captures the diversity of responsibility.

Today I propose we seek a new term and call it: “social finance.” Whereas personal finance places the burden solely on the individual, social finance highlights the environmental, societal, and governmental consequences to an individual.

With social finance, we understand that budgeting will be more difficult for African American men than White guys like me. Why? Because I was afforded great privilege. For instance, one-third of African American men will go to prison in their lifetime. Word to the wise: it’s not because black men are more predisposed to crime than white men.

With social finance, we understand that making money will be more difficult for women than White guys like me. Why? Because I continually earn more than women; not because I work harder, but because society pays women 64% of what I make as a man.

With social finance, we understand that intellectual and physical disabilities affect earning potential — not temporarily-abled White guys like me. Why? Because persons with disabilities are prejudicially fired, refused work opportunities, and the first to lose their jobs to automation and outsourcing.

Personal finance fits well within Western culture. We value hard work, ethic, and personal responsibility above all else. The idea of social finance will be challenging for many, but I believe we can do it. What do you think?

Is Capitalism Compatible With Caring?

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Google is known for being one of the best places to work, with some of the happiest employees.

On the cost of caring

Each year, 217 million workdays are lost or less productive due to mental health concerns. Indirect mental health costs on companies are estimated at $59 billion. But some estimates put these costs as high as $80 to $100 billion. These staggering numbers often serve as motivators for human resources departments and corporations to take action and “solve” mental health crises.

For each specific diagnosis, the statistics vary widely. Researchers tend to look at indirect costs, direct health coverage costs, productivity disruptions, absenteeism, and failure to be mindful while on the job. One of the more common ones, depression, costs employers about $44 billion in lost productive time. Additionally, employees with depression miss about 4.8 days of work and 11.5 days of reduced productivity every 90 days.

Another frequent mental health concern in employees is anxiety. Symptoms of anxiety manifest in various ways, but generally are closely linked with stressors. Anxiety disorders cost about $42.3 billion in the 90s. Inevitably, that estimate would likely be far greater today.

The most expensive diagnosis is usually bipolar disorder. From absenteeism to lost productivity to medications, this disorder has a potent effect on profits. In fact, it costs about $6,836 per employee with bipolar disorder. Closely linked, suicide amounts to $34.6 billion in medical costs and work lost. And non-fatal suicide attempts cost $4.3 billion in lost wages and productivity.

Make companies care through stats

All of these statistics come from fairly reputable sources such as the Centers for Disease Control (CDC), National Institute of Mental Health (NIH/NIMH), National Alliance on Mental Health (NAMI), and peer-reviewed journal articles. As an academic, I trust that these organizations are estimating — to the best of their ability — the high price of mental health in America.

In the past, many companies discriminated against applicants with mental health concerns. Frequently, people were ruled out for jobs they would otherwise be qualified for because of mental illnesses. What the CDC, NAMI, and NIMH have worked tirelessly to do is normalize mental health concerns and reduce stigmas. They’ve worked to interject a hypothesis for companies, which is that everybody wins when you care for employees.

Each organization learned that to talk to companies you need to focus on the bottom line: profits. They’ve excelled at making terrific inroads with corporate giants that have instituted better fringe benefits, fun activities in the workplace, and greater time off. They know that companies want happy, healthy workers because that leads to greater sales, revenue, and shareholder returns. And, for the most part, it’s helped.

Treat the illness and profits will boom!

Mental health advocates in the corporate world seem to politely accept that companies are only motivated by numbers. They argue that untreated and undertreated mental concerns cost more than proper treatment.

Understanding this basic premise, companies have accepted a Mr-Fix-It-style psychology. Treat the illness, get better, and then get back to work! Similarly, healthcare companies rarely offer long-term mental health treatment, as it’s limited to short-term, brief therapy. To offer something more substantial would require companies to pay more profits to care for employees.

This pressure has led companies to ask researchers and academics to think of faster ways to treat distress. The question seems to be, How can we rapidly patch people up so that they can get back to work?

Models of treatment have focused on prescription pills and quick rounds of talk therapy to douse the fires. We’ve learned to cap emotional distress — to keep it in line with what corporate America needs.

Companies aren’t the victims, we are

Capitalism is predicated on a fatal flaw: work hard and be rewarded. Unfortunately, people are all born with different strengths and weaknesses, positions in society, and economic hand-me-downs. Working hard will look different for everyone. We are fundamentally created unequal, unlike the founding fathers suggested.

Men are generally taller than women, but that doesn’t mean they should get paid any different. Women live longer than men on average, but that doesn’t mean companies should begin to hire women because they could spend more years working. Our differences must be balanced out, because purely capitalistic forces fail to change the systemic problems.

And just like the aforementioned physicality and livelihood between genders, there’s great variety in mental health needs. People are not raised equally. Some parents are wonderful — others abusive. Some schools are the best in the country, and others are the worst. Some experience difficult traumas, and others seem to float by without incident. Our experiences from womb to tomb will vary greatly, and we need to learn to embrace this fact. Some people will need greater mental health care.

Flipping our understanding of mental health

Anything that gets in the way of working hard, being productive, and increasing revenue has — up until this point — been seen as an impediment. Being depressed has become a “bad” thing that you should avoid. Get that treated! It’s considered a flaw to suffer and hurt, because of the cost to a company’s bottom line. You’re causing profits to dip! Additionally, it’s encouraged people to stay tight-lipped and private about their struggles for fear of being ostracized.

When dollar signs flashed before corporations’ eyes, they listened. They understood that by making their employees healthier, they’d increase their bottom line. It would seem — for a moment — that capitalism was compatible with caring. But what if the money wasn’t there, would companies still care?

Companies desperately need to change the way they do business. Companies must see their employees as autonomous, capable, and creative humans. Companies must provide a space to excel, but also to seek freedom. Companies must look beyond the dollar amounts and pay for better time off and vacations. Companies must do their best to disregard the power of shareholders, in favor of respecting their employees.

Medical and mental health are in decline in America. Our system is bloated, expensive, and frankly, embarrassingly flaccid. It’s time we flip the paradigm. It’s time we say that workplaces need a reboot. It’s time for employers to receive the treatment. Perhaps it’s time to make companies work for us?

Ownership Isn’t Real, We Rent This Life

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“Nature does not hurry, yet everything is accomplished.”
–Lao Tzu

There was a time when I could describe exactly what my life would look like in 5, 10, 15, and 20 years. It felt so grown up and reassuring. I was the man with the plan.

There was a time when I envisioned a beautiful home with a yard. It had windows overlooking an ocean. It’d be mine. I could wake up to it every day.

There was a time when I owned a car and wanted to buy an even nicer one. I held my smartphone, but wanted a newer one. I was obsessed with latest upgrades and features.

There was a time when I looked at my ratty spiral notebook and needed a chic Moleskine. Imagine what it would be like to write in those acid-free pages and flip open that iconic cover.

Largely, those days of desire without logical reason are dying out. I’m no longer urgently pursuing or planning for material possessions. Nowadays, the white picket fence isn’t for me, and I’ve finally realized why.

Life is exceptionally fragile and short. Think about it, our 70, 80, or 90 years represent but a fraction of the Earth’s existence. We are little blips on this planet, and unrecognizably small objects within this solar system, galaxy, and universe.

From the time we exit the womb, we are bombarded with messages that demand our attention. They don’t stop until we do. All five of our senses are put into warp drive, as they begin to process everything around us. Despite our relative insignificance, we cling to material goods and messages — buying whatever we can afford and socking away the rest for rainy days.

These messages beg us to consume, own, and carve out space. They tell us that, with maturity and income, you should own a residence. We are expected — from employers to families to spouses — to buy a car to get to work. But ownership is a figment of our capitalistic imaginations. In this economy, it’s easy to be pulled into a mental trap of expectations and hopes for a possessive future.

Each step countering the current culture of consumption is like running into a 50-mph headwind — you’re not moving fast. Bucking the status quo means isolating yourself from society’s expectations of amassing wealth. But the reality is we don’t own anything — ever. I mean it!

We are simply temporary custodians — holders — of physical objects that we lug around. We fill containers, storage warehouses, and entire homes with stuff. We bear witness to various forms of mass, but all fade — like us. Even the most prized possessions will transfer to someone else or perish. No matter how much home and life insurance we take out, we will eventually pass away.

Truthfully, we rent this life. It’s not solely ours to destroy, abuse, love, and cherish. We share this rental with everyone. Any rental necessitates respect. Destroy another’s property or object, and you’ll be on the hook to replace and/or fix it.

There’s more to life than amassing more than thy neighbor. Forego the mortgages, down payments, and constant maintenance. Choose a life that honors and recognizes everyone. When we rent this life, we recognize that we are just maintaining it for future generations.

Free Will Isn’t Real, Until We Do This

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Hammock Good Life Free Will
Photo: Angie Yates/Flickr

Free will: an American value

Free will is defined as, “the power of acting without the constraint of necessity or fate; the ability to act at one’s own discretion.” This concept — along with self-determination and willpower — are at the heart of America’s capitalism and democracy. Fundamentally, it’s the ability to choose actions without restrictions.

Americans tend to hold free will in high regard — whether you live here or not. When the system is working, people are working. When people are working, they should have increased free will. The mainstream message is that if you work hard, choose wisely, and are entrepreneurial, you will surely succeed.

How to envision another’s free will

Unfortunately, free will is a philosophically dense, nightmarish concept to swallow. The aforementioned dictionary definition doesn’t speak to the measurements of “one’s own discretion.”

For instance, what amount of free will does a…

  • North Korean have under a “supreme leader’s” rule have?
  • Child living in a physically and emotionally abusive household have?
  • Minority living in Ferguson, Missouri have?
  • Woman working on Wall Street have?

In each of these disparate examples, an individual has their free will impacted. The North Korean doesn’t have access to the Internet, controversial literature, and cannot speak in critique of their leader. The child living in an abusive household has no money, a small social network, and little experience (if any) experience escaping the oppressive household. The minority living in Ferguson, Missouri might feel coerced or pressured by the current police presence, and suffer from racial stereotypes in the workplace. The woman is in a world that’s eschewed the role of women, and frequently denigrates their intelligence and place in business.

Free will is not universal, but relative

Despite contrary evidence, America continues to trumpet free will as universal and absolute. You have it, and always have it no matter who or where you are — absolutely.

In reality, free will appears to be relative and on a spectrum. This means that the free will I experience day-to-day would differ based on location, if I was a different race, income class, etc. There is no absolute — only more or less.

At times, I’ve criticized the idea of free will because it’s frequently used to explain class and income differences. It can be used to blame people, instead of properly attributing individual and societal variables. The message goes something like this: “If they would just work harder, maybe they’d be more successful.”

Messages manipulate our free will, too

Recently, I wrote about refusing to be a “customer in training.” My argument was that IKEA’s powerful brand recognition and loyalty efforts affected my shopping decisions. Moreover, that being a child, exposed to IKEA’s lifestyle design affected my decisions as an adult.

One of the common complaints I heard from readers was that I was blaming the corporation for my own decisions — that I wasn’t taking responsibility for my actions. Essentially, the critical readers were suggesting that I had free will, and should know better — that I chose to purchase IKEA products (regardless of being exposed as a child). Rather than deny that claim, I hesitate to provide an answer to it, as I don’t have one.

Those in Western society are born with advertising everywhere. We never had the free will to say “no” to ads. We never had the free will to prevent magazines, TV shows, and billboards from advertising us at every waking moment. And now, many businesses (including this one) use advertising to supplement revenue that wouldn’t otherwise be there. I wouldn’t make a dime off my website and the time I spend would never be paid, if there weren’t ads.

Advertising works, too. People buy after seeing external messages. The industry is growing at epic proportions, and it’s hard to find an accurate number for the amount of money spent to advertise to consumers. What we do know is that research suggests people are tremendously affected by emotionally provocative marketing campaigns. Thus, companies will continue to advertise.

Financial free will isn’t real, until we do this…

Today, I urge you to question the concept of financial free will — that some have worked harder than others for wealth. If not for yourself, then for others who might not be as well off.

Recognize free will as relative and on a spectrum

We are born into a society with relative free will — on a spectrum of more or less — and we are targeted via advertisements to spend and/or “choose” one product over another. We are manipulated for dollars — in complete contrast to the ideals of free will.

Notice that successes and/or failures are both individual and societal

Additionally, it doesn’t do us any good to blame one’s failures or successes on pure individual free will, hard work, and entrepreneurism. Instead, we need to properly attribute the societal, cultural, and communal attributes that helped that individual accomplish their goals.

Develop a skepticism towards advertisements and external pressures

This can be tricky to accomplish. Advertisements are everywhere. Fortunately, you can reduce advertising messages by turning off the TV and downloading Internet ad blockers. Those two steps alone will prevent most of the messages from getting through. Remember that nothing truly necessary should need to be advertised. If it’s being advertised, it likely isn’t a necessity like air or tap water.

Provide equal opportunity to others

To truly have a functioning democracy, meritocracy, and informed electorate, a society must have strong health care, education, and living wages for all. As these needs are restricted, so are the dreams for future generations and social/income mobility. By providing these basic living standards, more people will succeed.

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