There's a fundamental flaw with lots of financial advice: it assumes you have money. For some people, post-bills income just doesn't exist (and that number is only growing). So you just can't follow all the advice you get during especially hard times.
For a lengthy portion of my 20s, I didn't have the ability to save money. It was a bad situation, and solving this problem was a priority, but I came face-to-face with the unfortunate truth: most financial advice does not apply to me or anyone living under the poverty line. When you get down to your last dollar, there's almost no such thing as a good financial decision. Here are some of the most common pieces of advice I got all the time that I routinely ignored, how I approached the underlying problems instead, and how it worked out.
"Don't Eat Fast Food"
One of the first things that people will love to tell you when you're dirt poor is that you have to stop eating out. You're poor, remember? You can't go to KFC! You have to go buy food in bulk from the store, package all of your meals up in plastic containers, and bring leftovers to work.
To be clear, this isn't a bad thing to do. Buying food in bulk and planning your meals ahead of time is a great way to save money. However, "eating out" isn't the real problem. The problem is finding the right value ratio. It's unsustainable to eat $15 meals every night, but you also can't eat ramen three times a day, because that much sodium with no other nutrients could be really harmful.
What I Did Instead: The first problem I encountered when trying to keep my food budget under control was that it took a lot of food to fill me. Blame it on a fast metabolism, but that was the situation I found myself in. Cheap food like ramen would work sometimes, but I needed a plan for real meals. I attempted to figure out what the absolute cheapest meal I could make was. From here, I could calculate sacrifices and splurges easier.
For myself, I got it down to about $2-3 per meal (while this was a long and calibrated process for me, getting into that range is pretty doable for anyone). Whether it was soup, sandwiches or swill, I could ensure I kept myself fed enough to avoid malnutrition for this amount. Factoring in 2-3 meals per day, I could keep my minimum food budget between $1800-2200 for the year. This was a significant chunk of my money, but it's workable. More importantly, it meant that if I decided to go to a dollar menu, or buy a couple of hot dogs from my local petrol station (they were delicious), I could.
How It Helped: After high school, I was working a minimum wage job and going to school for video production. This meant seven hours at work, 3-4 hours in class, and then another six hours working on projects. Some days, not only would eating those hot dogs be the thing I looked forward to the most, it may have been the only meal I had time for.
Did I end up spending a bit more on food in a year than I could have otherwise? Possibly. Let's be real, there were meals that cost more than $3, sometimes. But saving time and keeping my spirits up were important as well.
"Don't Buy Expensive Things"
For the most part, I adhered to this advice religiously (or by necessity). There have been tons of things I wanted to buy over the years and still haven't gotten around to. For the most part, if it cost more than $200, I assumed it was outside my price range and forgot about it. There were some very specific exceptions, however.
What I Did Instead: I bought an Android phone off-contract at a time when I didn't have a car. At the time, I lived about 3km away from my office job and owned a scooter that was constantly in the shop. I'd lost my previous phone to water damage and was stuck using an off-the-shelf Windows Phone. From any reasonable financial advisor's perspective, the phone I owned worked just fine and getting reliable transportation should have been a much, much higher priority.
There was just one problem: I wanted to write. At the time, I was working as a video editor (which, thankfully, wasn't a poverty-level job, but was still paying a pretty measly $20,000/year), but I was enamoured with tech blogging. If there was one area I had any expertise in, it was Android and I wanted to write about the platform. However, I would be hard-pressed to get a job in that field if I didn't even have a working Android device. So, credit card in hand (another big no-no) I went out and bought the best Android phone I could afford for my network at the time.
Why It Helped: When you're making less than half of the median income, no amount of bargain hunting is going to get you stable. Only increasing your income can do that. There was no room for advancement at the company I was in and, simply put, I wasn't a good enough editor to get a job elsewhere. As stupid as buying a full-price, unlocked smartphone was at the time, it was an investment. Or, perhaps more accurately, a gamble.
I didn't quite understand it at the time, but what I was really doing was buying into a status symbol in the Android community. I was certainly not alone in this practice either. As sociologist Tressie McMillian Cottom writes, this habit of buying expensive things despite poverty is often a defence mechanism:
I do not know how much my mother spent on her camel coloured cape or knee-high boots but I know that whatever she paid it returned in hard-to-measure dividends. How do you put a price on the double-take of a clerk at the welfare office who decides you might not be like those other trifling women in the waiting room and provides an extra bit of information about completing a form that you would not have known to ask about? What is the retail value of a school principal who defers a bit more to your child because your mother's presentation of self signals that she might unleash the bureaucratic savvy of middle class parents to advocate for her child? I don't know the price of these critical engagements with organisations and gatekeepers relative to our poverty when I was growing up. But, I am living proof of its investment yield.
The phone I bought was easy enough to justify to those around me because everyone knew I was a tech nerd. Furthermore, I was a white male and, quite unfairly, my motives regarding indulgent purchases are less likely to be questioned. These circumstances didn't change the fact buying a phone when I didn't have a working vehicle was a stupid, stupid thing to do. But it paid off. Shortly thereafter, I got my first paid job writing for an Android blog and was on my way to making enough money to live on rather than just survive.
"Get Rid Of Luxuries First"
I've committed a few financial sins, but there's one that reigned over them all: I never got rid of my Netflix account. Never. Not even for a month. For a Bittorrent user, this seemed especially inexcusable. Why waste the money? While the $8 every month wasn't going to cripple me, you could easily make the argument that I should have put that money in savings or spent it on food.
What I Did Instead: If I'm honest, movies are more of a symbolic example than a pinnacle one. There were other, more expensive things over the years that I spent money on that I didn't need. I wouldn't spend $100 a day just to spend money, but I also wouldn't feel guilty for going to see a movie or a play occasionally. Financially, this was often a poor decision.
Perhaps to be more accurate, it wasn't a financial decision at all. It was an emotional one, which isn't always a bad thing. As we've talked about before, having one financial vice can help curb the others. While this idea can be used as an excuse to justify frivolous spending, the alternative -- never spending any money on anything fun or personal -- only takes life to the other, more miserable extreme.
Why It Helped: Money isn't just about paying for goods and services. Money is about dignity. When you get below $20,000/year, dignity becomes a luxury rather than a necessity and, when viewed solely through the eyes of financial advisors, luxuries should be cut first.
Finance blog Red Debted Stepchild explains the how the silent pressure that comes from being broke can push you to a financial life with less dignity, solely because you're broke. Namely that, if you're struggling to make ends meet, you don't have the right to decide what your money should be spent on:
Let's start with furniture. Guess what? You don't actually need almost all of it. Therefore, it is nonessential. A mattress on a floor is enough to live.
That just sounds silly, right? Well, I only have a mattress on a floor. It has white sheets on it and no comforter. I don't own a couch, a chair, a real desk (I use a refrigerator…), a table, or a dresser… But here's the thing. We have different priorities. You value having furniture. You value having a nice looking home. I value wine and pizza. Why can you have nonessentials and I can't?
To put it very simply, I didn't keep my chosen luxuries like those midnight showings I loved so much because I thought they were good financial decisions. I kept them because they made trudging through my job pushing trolleys at the supermarket (and even the later job editing videos) worth it. If that meant I went without some things that others felt were necessary (I still don't own a proper bed frame), so be it.
The Advice I Wish I Had Followed
Not every decision I made when I was broke was perfect (as you might expect). I don't regret eating fast food, buying a smartphone, or going to movies. However, if I could go back and do it again, there are some things I'd choose to put more emphasis on.
- I wish I'd saved more. It's almost a given, but back then, the pressure was immediate and the future was distant. Saving even a dollar a day seemed impossible. Looking back, though, it wasn't. It wouldn't have saved me when times got tough, but it couldn't have hurt.
- I wish I'd logged my finances better. Oh, I knew where my money was going, sure, but these days I track all my purchases and I can easily see how much I spent on petrol in a month or a year. That would have been valuable information, and I could have collected it myself to make better decisions. It was available, but I did nothing with it.
- I wish I'd valued my time better. I was frequently busy while I worked for minimum wage, but that didn't always result in making more money. While volunteering and doing charity work is great, I worked on video projects, did tech support, ran multimedia presentations and did all manner of things pro bono, even though I could have charged for them. There may be times when it's worth working for free, but I can recognise plenty of occasions when I worked for free and definitely shouldn't have.
Personal finance management isn't new and I'd be lying if I said that I knew better than the experts how to save for retirement or accumulate wealth. That's still a road I'm on. However, I do know that some financial advice, while valuable and important, doesn't take into account what life is like at the bottom. Not every financial decision can be measured in pure monetary value. Sometimes building a career strategy, respecting your own desires, and finding some small comfort is more important, especially if you ever hope to get out.