Today, my husband and I are closing on our first home in one of the toughest housing markets in the country.
I’m so proud of us. We were both raised in economically depressed areas of Central New York, a region of limited economic mobility, and have managed to achieve one of the tenets of the American Dream.
I’m fortunate enough to have had a few of these financial victories already, and while each big milestone fills me with pride, I’m constantly aware of how they are as much the result of other people’s actions as they are of my own good decisions.
Certainly, good decision-making and hard work counts for something, but as I wrote last week, the value of that “something” is subjective based on the person or people in a position to give you money. The only way to receive money is for someone else to give it to you, and for various reasons your hard work may be seen as less valuable than someone else’s despite the same amount of hours and effort.
So how can you get ahead? There’s many reports out there talking about the gender gap and racial discrimination, all seen as possible causes for this variation in the value of a person’s hard work—but these reports just brush on the fundamental truth: It takes money to make money.
It’s nearly impossible to find actual helpful financial advice for people living in tight financial situations. And that’s because many are already at the limits of what they can personally achieve in their current situation. Working hard and being frugal can help make ends meet, but it’s not enough to get ahead—and that’s because we then need someone else to give us more money.
I wasn’t able to make progress on my student loans or open a savings account until after I was hired into a well paid position. My working odd jobs, 60-hour weeks, and living on one sub for a week in an apartment with no cable or internet wasn’t going to be my way up. The only way up is to make more money than you’re spending—and if your spending is as low as possible, you need higher income.
Not only is it out of touch for Bank of America and other financial institutions to post “money tips” like this one, that encourage you to “choose something to save for” (as if that was the barrier), it’s also completely ignoring the core problem that since the 1980s, economic mobility has all but disappeared.
Those who make very little money in their first jobs will probably still be making very little decades later, and those who start off making middle-class wages have similarly limited paths. Only those who start out at the top are likely to continue making good money throughout their working lives.
[…Boston economists Michael D. Carr and Emily E. Wiemers] used earnings data to measure how fluidly people move up and down the income ladder over the course of their careers. “It is increasingly the case that no matter what your educational background is, where you start has become increasingly important for where you end,” Carr told me.
Treating oneself to an occasional latte isn’t the problem. Eating avocado toast isn’t the problem. For those truly struggling to pay the bills, these are luxurious that aren’t even under consideration. For those squeaking by, these small savings can certainly add up—but $5 a week is no match against the crushing weight of American economics.
Instead of worrying about toast and lattes, Netflix and smart phones, we should be focusing on economic development, and on creating paths for opportunity and career growth for our working and middle class.
Image Source: GT Bank