Our “New Normal” Is Revealing the Rot In Traditional Finance Advice

Like many personal finance writers, I have no idea what to say about money right now. What advice, information, or tips I could offer that would offset the devastating financial hardships so many of us are facing? 

When the bottom drops out of the economy, the usual money strategies and solutions that I might point you to are flung out of reach. 

I’m not going to pretend that there is a lot you or I can do to change our situations. I’m not going to act like I can work well without child care, or that my freelance income hasn’t fallen by 80%. 

I’m not going to ignore the fact that many people are out of a job and that unemployment benefits are running out this month. I can’t turn my back on the fact that many people are months behind on rent and praying that eviction suspensions hold.

I don’t know what to say because, truthfully, I don’t know that there is much to say right now. And I know that many other personal finance writers are feeling this as well. In fact, I believe more should. Because, despite the difficult situations many Americans face today, there are still daily tweets and blog posts that act like nothing in life has changed.

For example, the “money expert” in my Twitter feed claiming people struggling financially while living in a high-cost city are choosing the difficult situation they’re in. This advice disregards the fact that many people have to live in these cities in order to maintain and grow their careers. Or that they may have lived in this high-cost city all their lives — and moving can be prohibitively expensive and cost them their entire support system.

And how about a tweet pushing people to change their ideas of fun from “low-value” pastimes like watching Netflix and playing video games to investing and building businesses? Do people in our incredibly stressful times not deserve to decompress when they can?

Clearly, I’m feeling salty. Actually, I’m Ticked the H*ck Off™. But my anger toward conventional finance advice is nothing new.

What is new is that the pandemic is making it hard for me to keep quiet about how willfully oblivious these money takes are. The truth is that the most popular financial advice (and the affluent experts writing it) has been out of touch for years.

So, before I continue to write on my blog about the realistic things you can do to reach your financial goals, I need to tackle what’s unequal, toxic, and unjust about the foundation that the personal finance advice world is built on. 

Here are the main things wrong with traditional financial advice:

• It’s based in shame and blame.
• It doesn’t address psychological and behavioral elements.
• It’s unhelpful, even openly hostile, to people with few resources or opportunities.
• It doesn’t evolve to keep up with rapid economic changes of the past few decades.
• It prioritizes building net worth above well-being and value of life.

These factors not only make traditional finance ineffective for many, it can cause us to internalize a sense of shame about our financial situations. When money advice shames or blames people (or ignores the massively important psychological aspect of money), some might get the message that they’re bound to always be “bad with money.”

In addition, when money advice ignores the realities of underrepresented minorities or people living on low incomes, it tells us they lack the work ethic or merit to earn more and succeed. Finally, when the advice makes the dollar the all-important measure of success and a good life, it pushes people toward overly-restrictive, unhealthy, and misaligned financial and life choices.

This is the core of what enrages me about traditional financial advice: it actively harms people. There are so many of us who read or hear personal finance advice that leaves us feeling ashamed, worthless, hopeless, and filled with despair. And how can we move forward when the solutions we seek all turn into emotional and mental blocks?

In order to get to the bottom of this, I’m going to write separate posts for each of the above bullet points. We’re going to go deep so you can see the ways some advice might be doing you more harm than good — and then we’ll talk about what you can do about it.

If this sounds interesting to you, bookmark this page. I’ll link each post into its respective bullet point when published.

Lastly, I want to be clear: I am by no means painting the entire personal finance community with this broad brush. While the above describes a certain portion of finance experts, it by no means reflects all of us.

So many personal finance creators are doing their work well — discussing systemic issues and offering grounded money solutions and nuanced financial strategies. For examples, check the (non-comprehensive) list below of money media creators who, imo, are offering thoughtful, balanced money advice. If you have your own favorite finance creators who you feel fit this bill (or you are one yourself!), drop a comment linking to their work.

Recommended resources

• Helaine Olen of The Washington Post has been reporting on financial inequalities and realities in America for years. Her book “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry” is a must-read. Or check out her chilling recent column: “It’s Clearer Than Ever That Covid-19 Will Increase Inequality.”
• Melanie Lockert is breaking down the stigmas around two tough topics at once: money and mental health. She hosts The Mental Health and Wealth show, a podcast with honest conversations about how finances affect our well-being, and vice versa.
• Kristin Wong offers practical money advice that I first found years ago as a reader of Lifehacker’s Twocents blog. She’s since published “Get Money,” a fantastic book for anyone looking to level-up their money game, and is currently web editor of The Financial Diet. Check out these two must-reads: “Does Personal Finance Still Work in Our Changing Economy?” and “We’re All Afraid to Talk About Money. Here’s How to Break the Taboo.”
• Lillian Karabaic has been a lifeline for me in the pandemic, with thoughtful and in-depth money conversations on her podcast Oh My Dollar! Check out the timely episode, “How to Care About Money When Nothing Is Okay,” or tune into her weekly YouTube livestreams where she discusses current financial events.
• Gaby Dunn’s podcast Bad With Money is a can’t-miss, as she and guests dive into the complexity of money topics (I have her book of the same title on my to-read list!). Start with episodes, “How to Live on $2 a Day” and “The Gender Pay Gap (aka Why There Aren’t Any Female Elevator Operators).” 
• Kara Perez of Bravely Go often talks about the intersection of money, gender, race, and history. Check out the Bravely Go Instagram account for stories from Kara that explore the history, stats, and context of our financial lives. Also, check out her financial feminist podcast with Tanja, The Fairer Cents.
• Tanja Hester’s writing usually gets me thinking (I’m reading her book “Work Optional” at the moment). Her recent posts are standouts: “How the Personal Finance Sphere Upholds Systemic Racism” and “Retire Early Without Harming Others // A Hard Look at FIRE and Racial Inequality.”