Financial Information and the Middle Class

In my morning roundup today, I made an offhand reference to a comment from Hayden Tompkins about passive income:

I think passive income, like most financial information on the internet, is aimed at keeping middle class people more comfortably middle class.

I think that Hayden is looking at the situation from a very narrow perspective.

Ask yourself this: what financial information would be useful both to a new millionaire and to a minimum wage worker? Most things I write about wouldn’t be applicable to both, but there would be a few pieces that work. Both should be striving to spend less than they earn and conserve the difference. Both should still be looking for maximum value in what they buy, even if the millionaire is looking at fuel efficiency in luxury cars while the minimum wage worker is trying to find a used bargain.

But there are obviously big differences, too. The minimum wage worker would like to know how to make nutritious and tasty meals for just a dollar or two (hint: start with beans and rice), while the millionaire is probably curious about investment advice (hint: start with Vanguard).

Personal finance advice speaks to a person’s current life situation. What resources do they have on hand right now, and how can they maximize those resources? In the most narrow sense, I’m talking about money, and that’s where most personal financial advice stops.

If you look at just money issues, the reality of the situation is that there’s not enough pure money advice in the world for the minimum wage worker to transform his situation into that of the millionaire. The minimum wage worker can do everything perfectly with his money for twenty years and still not be in the situation of the millionaire.

In short, when you look at personal finance advice as being strictly about money, Hayden is absolutely correct – it’s not enough advice to lift someone into a different financial class.

But money advice is just the start. Time is another important factor – an effective time manager can get more done in a day, thus increasing their earnings potential. Personal talent is another piece of the puzzle, as is education – what do you bring to the table that sets yourself apart? Natural drive and ambition are also important – when you come home from work, are you willing to spend the evening trying to build your dream, or are you content to watch American Idol? It’s about entrepreneurship, about using everything available to you to get ahead, not just your dollars and cents.

That advice goes far beyond mere “money” advice – but it’s the advice that’s needed to make the really big financial leaps. You can massage your money until the cows come home and make your life very stable and comfortable, but until you start applying those other attributes, you’ll never be able to make a giant leap.

That’s not to say money advice isn’t useful – it is. It can make the difference between sinking and swimming, and it can also provide the foundation to make other moves in life, and it’s those other moves that can build your current financial state into something truly transformative.

With The Simple Dollar, I try to mix all kinds of advice. I’ll write about an inexpensive bean soup recipe and good investments at Vanguard until my fingers hurt, but I also mix in time management, self-education, and pushing yourself to be something more. Some people tune in for the frugality, others for the investments, and yet others for the push towards building something great. I hope that the frugal folks learn something new from the time management stuff, and the investors pick up something from the bean recipes, and maybe a person will read a piece about what it takes to succeed, jump up, and take charge of their situation. They all go together in assembling whatever you want out of life (and figuring out what you want is another big part of it, too).

Money advice, though, is just a small part of things, and while money advice can save you from drowning in debt or help you to stretch your paycheck a little more or put your money in a smart place, it’s only one piece in a larger puzzle of living out your dreams.

As for me, I don’t want to make that leap into fabulous wealth. My goal is to put myself in a position where I can just completely chase my muses and I’ll be happy. I have no desire for the trappings of luxury – I just want freedom, emotional happiness, intellectual engagement, and the ability to go fly a kite in the park with my son and daughter whenever the mood strikes me. I know what I want, and I constantly seek out the answers I need to get there. That’s what The Simple Dollar is about, and I think it’s a journey that many others share, at least in part.

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