opinion | Personal finance tips won’t really help Americans deal with inflation

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The internet buzz over a recent opinion piece on inflation illustrates a fundamental issue in the kind of self-help known as personal finance: it generally places the responsibility for dealing with major economic problems on individuals—even though they often can’t do much to change them. Situations.

A well-meaning Bloomberg column argued that inflation is a growing problem that particularly affects people making less than $289,000 a year. No dispute yet. The column went on to suggest what individuals could do to improve their financial situation.

Bloomberg summed up some tips in this tweet:

The flip line “Nobody said this was going to be fun” comes from the tweet, not from the article itself. But no one wants to be told to eat lentils and cut back on treating their sick pet, especially when the wealthy don’t need to do the same.

The big way the piece was missed in the boat was the assumption that these lifestyle cuts could lead to significant savings and lend the benefit of teaching self-control and increasing personal resilience.

Kathryn Rumble: Americans are unhappy with the economy. Not much on the left wants to hear it.

Inflation, of course, is a huge issue. February data showed prices continued to rise at the fastest annual pace in 40 years, with the cost of gasoline, food and shelter accounting for a large part of the increase. Food banks report an increased demand for assistance. Polls show that black and Latino Americans are more likely to say inflation is causing them financial stress than white respondents. Three out of four Americans said in a survey by Bankrat this month that higher prices hurt their personal finances. Public anger is growing.

But the political and economic issues associated with inflation tend to be minimized – if not eliminated – when inflation is framed as a personal finance story. In this treatment, inflation becomes just another challenge that individuals must face to improve their condition. Rather than offering policy recommendations — steps, for example, the Biden administration might take to alleviate supply chain shortages — the personal finance column describes the economic dilemma readers face and blames them for taking action again.

Under normal circumstances, personal finance books and articles are popular. Most of us, for example, would like tips for investing in our 401(k) plan, rather than reading about how the American system of retirement financing is already leaving so many of us at risk of running out of money in old age.

But when it comes to inflation, this approach is useless. Nobody can budget their way out of high prices quickly across the board, not when wage gains don’t keep pace with inflation. He calls for a deaf voice to be sacrificed because, no matter how well-meaning, they are.

News story: Inflation falls more heavily on lower-income Americans

Much of what Bloomberg’s column argues is true. vegetarian meals be Often cheaper and healthier than meat. It’s a good idea to review your credit card statements to see what monthly subscription fees you’re paying but no longer using. (I recently did this and found two separate Disney Plus subscriptions.) and pet owners should Think carefully, for ethical reasons, before subjecting a pet to chemotherapy.

But people know these things. This week’s Post Abha Bhattarai reporter showed how inflation affects those on fixed incomes. I talked to retirees who have been rationing hot water showers and, yes, shredding meat. Someone said, “I do most of my food shopping in sale boxes.” Another said many of her meals consisted of “oatmeal, eggs, pasta salad and toasted cheese sandwiches.” The issue was not ignorance of budget decisions. The problem is that they were shrinking and still They could not keep up with the rising costs of energy and housing.

And if rent on leases is up 33 percent — as it did in New York City, between January 2021 and January 2022 according to the property-in-a-list website — meat cuts aren’t likely, even several days a week. Make a big difference. The same is true for gas prices, which are increasing at the fastest rate since record keeping began in the mid-1970s. People may be able to get rid of the optional drives; But their commute to work and school is unlikely to change dramatically, and using public transportation to save money is highly impractical in most parts of the United States.

Offering some helpful savings advice can’t “solve” inflation or make navigation drastically easier, as the problem was solved when financial advisor Suze Orman suggested people stop “pissing” their retirement savings on expensive ready-made coffee. Or then- Rep. Jason Shavits (R-Utah) has told people to give up their iPhones if they can’t afford Obamacare premiums, or when critics suggest millennials can buy homes if they skip avocado toast.

Inflation is not just a personal finance story. Treating it as one does not change this fact.

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