Know Your Living Standard Challenge

Families deserve top shelf personal finance advice. Here is what I am seeing:

A warm and fuzzy personal finance ad to go along with not drinking in January and signing up for a gym membership to lose 10% of your body weight.

The No-Spend Challenge😲

Sounds fun. Pain and no gain. Throw ‘em in the deep end and watch them sink.

Undeniably, Dave Ramsey is one of the most popular personal finance columnists in the U.S. He has built an incredible business model and claims to have helped 10 million customers. I wonder how they feel after the help?

Is one financially happier by paying off debt fast, denying spending for fun, and saving for some future date that may make you a millionaire on paper but for some unidentified objective? What are the economic outcomes of his followers?

In many instances, there are no standards underlying the advocacy. Yes, debt should be paid off fast….if the APR is too high, but “No,” you shouldn’t save some random amount without a clearly defined objective.

Offer guidance with care and assume people have a brain.

You may be a Ramsey or Orman disciple. I suggest that the current crop of personal finance writers rotate slightly in their orientation when offering their opinions. Offer personal finance solutions to households that result from first identifying a household’s highest living standard. We have the technology. When better exists, who wants to read the same old, same old? Money is a big deal.

Fortunately, some CFPs, financial advisors, and planners are practicing with modern methods, and as a reader of PFE, you know that is always our approach.

Because you have a brain, you may wonder why “rules of thumb” purveyors still exist? It is a great question.

Food for Thought

Research academics like to investigate reality. Yale Professor James Choi scientifically explored the disconnect between popular personal finance advice and financial economics in his paper, “Popular Personal Finance Advice versus The Professors.” Choi is really good at what he does and seeks to explain how much advice about money survives when it isn’t the best advice. In a prior post, I wrote about Choi’s work, which you may find valuable as you begin your new financial year.

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Know Your Living Standard Challenge

The challenge I am offering is to know your best living standard and have it inform how you spend this year. If you have a financial advisor, send them my way.

Are you on your own? You have me on Substack and paid subscribers DM with me as part of the subscription. In addition, I am adding short courses with videos through the Teach:able platform. I will have two courses up before the end of the month, and I will let you know when they are ready. It will be fun.