Talking about Personal Finances -- the Final Taboo?
One of the most radical things I've ever seen was posted on construction paper and hung on a wall at a San Francisco housewarming. Two friends of mine had purchased their first home and invited the community to a housewarming with invites entitled: "Two Black Folks Bought A House In Frisco!" (With the increasing rates of Black households moving out of San Francisco, this is in fact news.)
These two black folks both happened to also be community organizers, and their housewarming was on a warm October afternoon, filled with a mixed crowd spanning generations and all of life's diversities. In between the potluck spread of a brunch and the running children, there was a wall covered in construction paper squares, taped together and written on in marker. Upon closer examination, this wall was covered in incredibly detailed financial information, explaining how these two women came to buy that house. The exhibit highlighted their incomes, educational debt, monthly expenses, financial plans for an upcoming child and how much they had saved, as well as how much they had to put down for the house, and how much money they had to borrow, and from whom, to make the purchase. I had never seen anything like it before.
In 2009, America is still learning how to talk openly and honestly about race. We've moved forward a lot in talking about sex, religion, gender and sexual orientation, although there is still a lot of work to be done on all fronts. On the whole, however, over the last forty years, we have turned a lot that was once taboo into less taboo conversation topics. And yet, it is still rare to hear open conversations about financial details.
I remember being sixteen and being the first person I knew to go off to college. I had no money, but somehow figured out how to fill out a FAFSA and take out loans in my own name, and then secure on campus housing, although I had no idea what that meant as far as how those loans would possibly translate into paying for that housing or that education. Luckily, a mentor's wife sat me down at her kitchen table one night and explained the process, as well as the fact that I would need to (and then did) apply for a job even before the first day of classes started.
Years later I was accepted into Harvard for graduate school, and was newly trying to figure out how one moved across country, into an apartment, and started classes -- all before any financial aid was released. I had gained a bit of financial knowledge by that point, but had not equally gained in wealth, and my brain was wrapping around the reality of being a student at the most privileged university in the world. . .but being unable to afford snow boots or a warm coat that first Boston winter.
People in class cutting predicaments seem, at times, to speak in code and find each other in a crowd. My best friend at Harvard was also from a working class background, and we were lucky enough to support each other through the experience. It often does seem easier for people within the same class to speak openly about their financial situations to one another. I also found it easier to engage in such conversations once my own financial situation grew more secure, and I no longer had to bundle up in four layers of light coats to head out into a blizzard after talking to someone about finances shortly before they were to jet off to a warmer part of the world. Nonetheless, such discussions often still felt like a social risk and more than a bit frightening.
Since then, I've spent the last few years talking to all of my friends about this topic -- from billionaires to former foster care kids -- and asking everyone questions about their income, savings, expenses, retirement planning, wealth and charity giving. I've also been lucky to hear a wide range of honest and informative answers.
For the last seven years, I've had a particular friend repeatedly ask me about my retirement planning. I'm 28. These regular inquiries have had their desired effect, and I now give considerably increased thought to my retirement planning, which has led to a series of new conversations with other friends, who wonder why I talk about the topic so much these days. But those conservations have led to knowing how a friend, who recently finished the Peace Corps and then worked for two years, was able to buy her new five-bedroom house. Or knowing the income ranges, savings plans and rent or mortgage payments of dozens of my friends.
The recession might have made our country more open to having honest discussions about personal finances, at least in relation to the political conversation about the economy, but the recent economic crisis also highlights how important it is that these discussions become more regular and widespread. At the same time, all these conversations I've had have highlighted how rare it still is for people to feel safe to regularly engage in such discussions.
The recent Supreme Court case of Lilly Ledbetter highlights the importance of such honesty and openness. Ms. Ledbetter worked for Goodyear Tire & Rubber Company for twenty years before receiving an anonymous note informing her that she had long been paid less than her male co-workers.
On average, women in the American workforce still make less than their male co-workers. (On average, women earn 78¢ for every dollar earned by men, but African-American women earn only 62¢ and Latinas earn 53¢ for every dollar earned by White men.) As Lani Guinier has long documented, on average, Black and Latino families and individuals still have less wealth to support them in comparison to their White counterparts -- even when comparing those in similar income brackets.
There absolutely are many systemic injustices that need to be addressed to right this inequality, but the first step seems to be honest conversation and access to information about how those in a variety of classes and wealth predicaments financially exist and structure their lives.
I believe we're all assisting this necessary revolution in every conversation we have over a dinner table or water cooler, when we can talk honestly about how we live. The information I've gained has led me to make smarter personal decisions, which I can only hope will allow me both more personal security and a greater ability to give back to those around me who are not as well off as I am.
The doors and ladders between class levels still need to be made more accessible and equal, but, while doing that work, we also owe it to ourselves and our communities to illuminate the roads to greater financial stability. Alongside who I vote for and any political work I do, I fully believe this more personal work is equally powerful. We may not all literally post our financial details on the walls of our housewarmings. But I, for one, hope that I will have the commitment and courage to do the same someday.
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OMG, it's about time we come out of the shackles the criminals have put us in. We all need to let the press know how BAD OFF most of us are.
My son and his wife have lost over $80,000 on their house because he sold his previous home and moved to a newer and bigger home at the height of the market. They owe on both vehicles, they owe on student loans for advanced education.
THEY ARE NOT ALONE!
It reminds me of the old Tennessee Ernie Ford song that goes, ANOTHER DAY OLDER AND DEEPER IN DEBT.
What the selfish criminals and uber rich, with their lobbyists, have done to our country is unforgiveable!!!!!!
So, did "the selfish criminals and uber rich" force your son and his wife to not be content with their smaller, older, more affordable house? And not to make do with sharing a car, or driving older, cheaper cars? There are plenty of heart-rending stories of hardship to go around, but "I bought a bigger, newer house at the peak of the bubble and also I bought multiple vehicles on credit" doesn't make the grade.
There is no labor market. There are separate transactions, where one side has all the information and the other side usually has almost none. Advantage follows as would be expected.
Ideal markets would give optimal results. Real "markets" are all too often a cover for non-market systems that benefit the powerful at the expense of the majority.
More high schools need to have a financial literacy requirment for graduation. I know that parents are *supposed* to teach their kids about this stuff, but many don't (or they may give only basic advice like "Work hard and save", "A penny saved is a penny earned", or "Live within your means").
Kids need to know (before they plunge into adulthood): 1) the importance of good credit; 2) how to maintain good credit; 3) how to save money to buy a house; 4) that if a house or apt. costs more than 28% - 30% of your salary, that means you can't afford it (assuming you will live alone); 5) the dangers of taking out too much student loan debt; etc.
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I fully agree. I think it's as important as teaching Civics or other social responsibilities. It just can't be assumed that people will grow up and luck out in having someone teach them these things as early as they should know them.
A month ago I paid off my mortgage at the ripe old age of 32. I have yet to tell ANYONE. Some family members are struggling, two of my coworkers just got laid off a few weeks ago. How can I possibly talk about it without rubbing salt in the wound? I can't even think about my finances without a huge smile coming over my face, because my position is due to a lifetime of planning, saving and sacrificing today for a better tomorrow.
"On average, women in the American workforce still make less than their male co-workers." This myth has been repeatedly debunked, and I'm sick to death of it. As a kid I heard this and thought men got blue paychecks at one rate, and women got pink checks and were paid less for the exact same job. Most women won't work the kind of hours men do, meaning less overtime and fewer promotions. This is depicted as inherently unfair, when it is at the heart of capitalism. Men have to build a personal life around their career. Women expect their employer to tailor a career to fit their personal life. That mentality is not conducive to advancement. Getting more out of life comes from working for it, not presuming someone owes it to you to make life easier.
Women won't work as many hours as men? I suggest you don't make that comment to a waitress holding down three jobs to support her children after her good for nothing husband ran off. I worked in big companies for 30 years - women make less than men! If nothing else, my wife who regularly put in 60 to 80 hour weeks for 30 years at a lower salary than her counterparts proves that statement false. I know a lot of other women who did the same thing. I also saw nothing to make me believe that men worked harder than women. Individuals, some men and some women, worked a lot more hours than the general herd. That is where the 90/10 rule comes from that 90% of the work is done by 10% or the workers. Sad but true. But they sure weren't all men, probably not even half.
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Thank you for this comment. It should equally be highlighted that as far as tailoring careers around personal lives, the raising of children is not an equally shared duty, such that either a man or woman is equally expected to take off work if there is a sick child. There's lots of progress on this front, but the cultures of balance and responsibility structure it that women workers often have to carry more of a load of personal/home work in order to let the male workers in their lives focus so much on work. (Often while still balancing long hours at their official job!) This fact is changing all over, and absolutely varies by family unit looked at - but pay inequality is real and a problem that needs to be addressed, and is not something that is the fault of women not working enough.
It's bizarre to hear someone who is only 32 talk about a "lifetime of planning, saving and sacrificing for a better tomorrow." Please. .More likely you got an advanced degree in a technical field, made big bucks and had no one dependent upon you for support.
Please take a break from patting yourself on the back to consider the women who came before you who helped make your success possible. And should you ever start a family, maybe your words will come back to haunt you as you struggle to raise your children while holding down a job. I suspect you'll realize that someone has to raise the kids, and that men have historically been able to build a personal life around their careers because they had wives, not because they had a superior work ethic.
I'm an accountant. I worked at Target while attending a state university and living at home, and saved nearly every penny for a down payment on the condo I now own. I didn't own a car until I was 23 and never spent frivolously, which is why I'm doing so well today. Two of my three sisters opted not to go to college, despite my father's willingness to pay their full tuition. My third sister enrolled but simply stopped going to class her freshman year. I strongly suspect those coming from near poverty have a much stronger work ethic precisely because their path is harder. The people I grew up with are lazy yuppie stereotypes. I do apologize to those busting their behinds every day, it's just not what I'm used to seeing.
As for kids, no, I didn't financially handicap myself by having a child I couldn't afford to raise. And doing so would not be a badge of honor. It's staggering how people make life so much harder than it needs to be. I could easily afford to raise kids now because I put my own life in order FIRST. But in this "I want everything NOW" society, most don't consider that an option. In the race that is life, many people choose to tie their own shoelaces together, then scoff at me for not doing so.
These generalizations might otherwise be offensive, but as a female who's been at work since 9:30am, right now they are just funny.
The comment illustrates part of why we have trouble discussing personal finances in the US, though...many Americans don't do well at discussing without judging. [This is true in the arenas of sex, religion, and most of the other taboo subjects, too.] Why is the previous commenter so smug about owning a home? Is it any better when folks I know sit around our East Coast urban wine bars and make fun of the flyover-country mortgage-paying suburbanites in our age bracket?
"Why is the previous commenter so smug about owning a home?"
smug 1. contentedly confident of one's ability, superiority, or correctness; complacent.
Every life decision I have ever made has yielded a positive result, while others make different choices and struggle. Those people would rather act like I fell backwards into what I have than admit they could have it too if they made better decisions and showed some restraint. As I indicated, I don't flaunt my success in anyone's face. But when I am denied credit for carefully building the life I have, I do point to it as evidence that I know better than them. I suppose I am smug, but shouldn't I be?
The problem is if I say "just follow these simple principles and you would be far better off", people unwilling to show self discipline have to depict it as impossible to avoid admitting any shortcomings. I don't make fun of them, because it isn't funny. I'm researching charities to give some of my disposable income to. How much less need might there be if the average person showed just a little financial savvy? Not the responsible woman who just got laid off, the one who bought a new car every two years beforehand. I have a genuine desire for people to better manage their lives. I don't see myself as brilliant, I see others as missing the obvious. Not sure if that's better or worse.
You are are lucky and I believe you are correct about rubbing it in.
I completely agree that this is a taboo that should end. One thing to consider -- like always! -- is the corporate interest in muzzling talk of finances (usually enforced by 'human resources'), which leads workers to realize they are not getting paid as much as they should be, regardless of ethnicity, gender, orientation, etc.
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Good point. I know I've definitely been made to sign an HR form stating that I was not allowed to tell co-workers how much I made. Which, you know, seemed at the time, and still seems, insane to me. Needless to say, I was not the most popular employee there once I started talking to other co-workers about who had been given health insurance and who had not!
Ok honey, my job was outsourced, so you know my financial status...
WHAT'S YOURS?
Very well put Ms. Allison!
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Thank you!
Someone obviously missed what you were saying. You are not the only person in this country to be outsourced or out of a job. Maybe, if you took the time to listen to what she is saying-- you’d realize how much relevance her article has to exactly what is going on with you financially both now and in the future. Also, opening up a suggestion in obtaining the knowledge and resourcefulness to finding some sort of financial security. Or you could just choose to be shut off and be bitter about it and fail to move forward. Your choice. I am very sorry to hear about your situation nonetheless. Good luck to you.
I thank you for good wishes but you apparently have no clue as to how bad it is and what it feels like..
I suggest that you count your blessings....
Your job could be next.....
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