Wake up folks and smell the home brew, because when you're looking for jobs in your pajamas, you aren't going to be able to afford Starbucks (complimentary ad, you're welcome). Traditional financial planning and saving methods are undeveloped, cater to mid-to-high income levels, and are unrealistic in an economy with an increasing amount of working poor, and working age people who have given up looking for work.
Financial advisors, or planners also often only deal with clients with net worth over a certain amount of money. Obviously many low-income people have the intelligence they need to manage their own finances, it's the advice and lack of money that is faulty. How can someone have a back up plan when they are trying to pay for rent and food, and only have a couple of dollars left over?
The reason old money management methods do not really work is because it is so easy for a simple, but devastating medical event, or a layoff in a right to work state to ruin years of financial planning in a heartbeat. Traditional plans are based on stable incomes in a solid economy; they are obsolete like a manual typewriter, and assume people have job stability. For example, according to the Wall Street Journal citing DOL data, 73 percent of American adults work 9 or fewer years with a single employer, and 52.8 percent stick around for less than four years.
If traditional financial plans were really effective, they would be able to handle worst-case scenarios, and help individuals achieve financial goals at the same time without relying on a trite formula that simply reallocates assets, and reorganizes budgets. For example, television financial evangelists with their loud piercing voices and savvy investment advice are like the financial advisors of 1928 still playing cards and commenting on the game rather than telling people to think in realistic terms. After all, 1928 was very profitable.
A new kind of thinking needs to evolve in financial advising, a kind that helps multiple income levels. Even the rich can end up at the food banks, and it is too easy to just advise people how to manage money, when really what many people need is a plan of how to make less money work smarter, and how to get the money in the first place. Financial advisors should also be life management consultants that understand the world is not the prosperous, linear, black and white, "father knows best" place it used to be.
To get you started, the following comparison illustrates the contrast between ways of thinking about saving money. On the left are more mainstream ways of saving money; even these tips are the type of advice high-end financial planners try to avoid. On the right are money saving alternatives for low-income individuals or households. These represent a meager lifestyle that is attainable within a low-budget and is often far beyond what we many are accustomed to practicing in their daily lives, but might have to after retiring, losing a job, receiving a harsh medical diagnosis etc.
Mid-to-high income saving tips Low-income money saving tips
1. Build emergency account | 1. Sell everything |
2. Bulk shop | 2. Fishing, edible vegetation |
3. Refinance mortgage | 3. Move in with relatives, R.V or Van |
4. Go to state school | 4. Learn at library, or earn jail degree |
5. Downsize vehicle | 5. Tax free old vehicle, scooter, bicycle |
6. Turn down pool heater | 6. Shower at the gym |
7. Bundle utilities | 7. WiFi, Antenna, VoP phone |
8. Downgrade theater membership | 8. Freegan events -ex. Art gallery |
9. Extend salon visits | 9. Learn to cut & style hair |
10. Sale shop only | 10. Dollar stores, & church garage sales |
* Left image attribution US-PDGov
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