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Stop Calling It “Personal Finance”

By Frugaling 9 Comments

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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?

Filed Under: Social Justice Tagged With: Capital, Capitalism, Eviction, Finances, Income, inequality, Personal Finance, Social Finances, Social Responsibility, socialism, Wealth

Frugal Articles of the Week

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Reading Nook Photo

Today I wanted to feature a few frugal articles that caught my eye this week. Curl up in your favorite reading nook and enjoy. Hopefully these encourage you to live frugal lives!

The Cheapest Generation by Derek Thompson and Jordan Weissmann
While this article was actually published a couple years ago in The Atlantic, I just recently read it. It catalogues the many challenges that major companies are facing from Millennials. Companies like Ford are getting desperate, as the latest generation refuses to buy cars at the rate of their parents. While a clever title — “The Cheapest Generation” — I found it to be inherently pessimistic. Instead of being the cheapest, Millennials could be considered the most “green,” “eco-friendly,” “budget-conscious,” and more.

Flowchart: Should I buy this? by Callie Enlow
Good Magazine has been a leader in publishing articles about environmental, political, and socioeconomic issues. In this latest feature, Callie Enlow created a flowchart to show readers what they should and shouldn’t buy — to provide a roadmap. It’s worth your time, especially during the holiday season.

A Big Safety Net and Strong Job Market Can Coexist. Just Ask Scandinavia. by Neil Irwin
Here’s a politically controversial topic that looks at the high-tax Scandinavian countries. In America, we tend to assume that the more capitalist our economy is, the better we all perform. In reality, the evidence regarding these “free market” principles can be somewhat dubious. Neil Irwin masterfully presents a basic thesis: high-tax countries actually have lower unemployment rates.

The Opportunity Cost of Parents Leaving Their Village by Femme Frugality
Femme Frugality is an inspiring author and parent, who talks honestly about family dynamics and home life in her latest article. Femme provides insight into the pressures put on families — financially and psychologically. Despite these pressures, she emphasizes the powerful opportunity for collective action and shared help. It’s worth a read!

Filed Under: Save Money Tagged With: articles, collectivism, Frugal, Millennials, socialism

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