You know, I am a huge advocate for talking about finances, budgeting and that kind of stuff. I think we can all learn from each other by being more open about something that every adult has to deal with and I am all for smart and savvy financial ideas and advice. It shouldn’t come as a surprise then that I do follow a handful of budgeting blogs and financial resources.
One of these blogs is called ‘The Financial Diet’, which is basically a “Thought Catalog “-type of blog for all things related to finances and money. There are a lot of different contributors. Some articles are worthwhile, others are completely useless. Every now and then, I wanna get into an argument with people because they’re so far up on their high horses that I can’t stand it for even one minute.
There was this article the other week titled “The Smartest Decision We Ever Made To Build Wealth Rapidly” and the article talks about how people spend too much money on housing (30% is considered the maximum amount, if you spend more than that, you’re ‘rent-burdened’) and how they (the author and his girlfriend) started building wealth (think: retirement funds, savings, etc.) by intentionally living below their means. So far, so good.
Now, that was followed up with the fact that according to their calculations, 30% of their income would come out to a maximum rent amount of $40,000/year or $3,300/month, and the decision to rent a smaller space and spend only 15% and put the rest into savings.
I wanted to stop and scream right there.
If you have a (maximum) budget of $3,300 to spend on rent, I can totally see how you can bring down the percentage and spend that money elsewhere. Valid point! But does this person realize that $3,300 is many, many people’s complete monthly budget, not just the allotted maximum amount for rent?
The author didn’t indicate if those $40,000 annually were before or after taxes, but simple math concludes that these people have a six digit annual income to work with. From the standpoint of someone who operates on a median household income, it seems fairly obvious to me that these people should be able to live more ‘frugally’ and spent less than 30% on housing and put that extra money into savings. Just don’t go around bragging about it like it’s the greatest thing since sliced bread, especially to people who have a hard time reducing their housing costs. Because this “smart decision” that they were able to make? Yeah, they were able to make that because there was enough money in the first place. It gets tougher and tougher the less you earn. It’s easy to slash your rent money in half when you’re a high earner, not so much if 30% of your own money can barely afford you a one-bedroom apartment.
One commentator suggested that people with (e.g.) $2,500 monthly income (I assume, he means take-home) should rent a two-bedroom apartment for $1,000 and then get a roommate to bring the monthly rent down to $500. That would be 20% towards housing expenses. His argument, “this could be temporary until you get on stable financial ground.”
I don’t know what kind of planet these people live on, but a) two-bedroom apartments for $1,000 are not that easy to find (depending on where you live) and b) for people with median household incomes, this is stable financial ground and this income often supports a whole family, not just a single person who can get a ‘temporary roommate’ to occupy the second bedroom.
This kind of thinking angers me. I do appreciate that someone with more financial means lives responsibly and tries to think of ways to save on costs, but sometimes it comes off as pretty arrogant, too. Because how easy is it to suggest to take in a roommate — something that you might do when you’re a young adult, but maybe not as a family? — when you yourself don’t have to do that? How about making housing more affordable instead?
I read another interesting article that feeds into the narrative: It costs money to save money.
The best deals are usually for people who have extra money to spare (e.g. buying in bulk, not financing, etc.), it’s good to invest into quality products, but you can only do that when you have the extra dollars in the first place.
Money advice is mostly geared only toward people who actually have at least a little bit of financial flexibility in their budgets, so the article that prompted me to write this post just sounds very condescending (even to people with a middle-class income) and really rubbed me the wrong way.
I am all for smart budgeting ideas for every budget, don’t get me wrong, but don’t walk around scolding how people live beyond their means when you’re working with a 6-figure income. Yes, of course, there are also high-earners who just can’t handle money, period, but that is a whole different story.
Do you like to talk about finances? Do you read any finance/budgeting blogs?