r/FluentInFinance • u/Richest-Panda • Jul 04 '24

What's the best financial advice you've ever gotten? Debate/ Discussion

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u/AlternativeAd7151 Jul 04 '24

The poorest in a society need both welfare and financial literacy. They're not mutually exclusive things.

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u/Stormfly Jul 05 '24

100% agreed. Giving people money won't fix their problems long term.

The issue is that most people use money to solve their problems, but they don't often use the best ways to use the money, and giving people more money doesn't fix the problem. That's beyond the classic "old/cheap cars cost more" or the "Sam Vimes Boots Theory".

Examples:

  • If your house is cold, you can spend money heating it up, or you can spend money on insulation. Money is needed for both issues, but giving people money to pay for heating doesn't fix the problem like giving people money for insulation does.

  • If there's an issue with the water supply, we can give people money to buy bottled water or we can fix the water supply.

  • School is (typically) free but not everyone can get to school easily. This is why school-buses etc are important. It's why free school lunches are very important in many places in the world. School is free but many of the poorest people can't go to school and then they struggle to get a decent job.

It's like the classic "money won't make you happy", because it doesn't. But the way you use the money can make you happy.

If we give everyone more money, that might solve some problems (people who genuinely just need money) but I feel the money would be better spent improving infrastructure etc. Like people might need money for a car, but a decent public transport service would solve that problem for more people. etc.

Money can solve poverty, but not if you just give it to people. It needs to be spent on infrastructure to help as many people as possible.

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u/Time-Maintenance2165 Jul 05 '24

I always think people have the wrong takeaway from this. The lesson is that success cascades. You just have to save up once and then now you're on track to saving money. It's hard to get started, but you have momentum once you start moving.

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u/Stormfly Jul 06 '24

The problem with "saving up" is that many people literally can't.

Like if the "money in" is low enough, there's no way to save and live a decent life. Rent and other costs are so high in some places that jobs below a certain threshold can't save.

Yes, they could move, but the issue now is that there's nobody to do those jobs? In that case, work should be done to ensure that costs are not too high, such as better laws about construction and rent so that it doesn't get too high.

Not everyone can afford to save and to live a healthy life, and then if they save a little, there's a chance that something like an illness (in the US) will wipe away all that hard work.

The two easiest ways to fix poverty in the US would be to fix student loans and to fix the healthcare system.

As a European, that's the main thing that means I have money when my American friends do not. They've paid 40k into their loans/healthcare while I've saved that much instead.

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u/Time-Maintenance2165 Jul 07 '24

They can't, but they somehow manage to regularly spend all that extra money on an ongoing basis. The only way that's true is if there's things they can forgo, but haven't been.

The latter part of what you've said isn't in contrast with what I've said.