What Happens When You Follow Textbook Financial Advice?

Photo credit: Seth Mason, CC BY 2.0.

The Washington Post just launched a new series called “Growth,” and the first installment is titled “I was failing at my relationship with money. Here’s what I did to fix it.”

It’s a super-longread, but it takes us through three months in the life of a 29-year-old who wants to learn how to manage her money:

I’ve cried about money roughly once a month since I was 22. I’m a frustration-crier. Anxiety manifests as fat tears sliding down my cheeks, and thinking about money makes me feel like I’ve swallowed a peach pit whole. Money makes me feel lost, like I’m drowning and frankly, stupid. I’ve felt “broke” for as long as I can remember. I have virtually no savings, and I’m only now climbing out of about $5,000 worth of credit card debt — in addition to paying off nearly $30,000 in student loans. I’ve come to associate viewing my checking account balance with emotional terror.

What does she do? The same tasks you might find in any personal finance book. First, she tallies up all of the jobs and side hustles she’s ever had, as well as how much she earned at each job (a classic Your Money or Your Life technique). Then she starts tracking her spending. Then she makes a budget. Then she overspends her budget, so she starts figuring out what she needs to do to stick to it — and like Cirrus Wood, she uses a modified envelope system.

Is she successful? I’m not sure. After reading her story I got the impression that she had gotten better at pinching pennies (skipping happy hours, etc.) but hadn’t yet figured out how to deal with larger expenses — she attends one family event and three weddings, for example, and by the end of her story had promised herself that she’d balance her budget “by taking less cash out and spending less in subsequent weeks,” and trust me, I’ve been there. You end up with no money in your envelopes and no food in your refrigerator.

But what else are you supposed to do? Skip the family gatherings and the weddings?

The other issue, of course, is how much this woman is earning. She has both a job and a side hustle, and by the end of her story has a new job with a 30 percent salary increase, bumping her from $47K to ~$61K in Washington, DC. She’s putting her salary increase towards her debt, which is a smart move, but if her day-to-day costs continue to exceed her envelopes she’ll need to come up with a different strategy.

What do you think — and what non-textbook advice would you offer?

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.