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Personal finance experts don’t get wealthy by following their own advice

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Re: Personal finance experts don’t get wealthy by following their own advice

#21

Post by Spivak »

I feel like this is a pretty harsh take for what is good advice even if you do want to go down the starting a business route. Personal finance (i.e. managing your personal revenue, costs, and tax burden) is still necessary even when you’re running a business. You just have more tools as your disposal to manage your tax burden when you have a business.

I really don’t think anyone believes they’re going to get rich after reading a personal finance book. The hash reality if even if your expenses were $0 your total salary times x years still wouldn’t make you rich is unavoidable and known to basically everyone. These books are for people who need to get a handle on their spending, pay down their debt, and start gradually accumulating positive net worth.

Re: Personal finance experts don’t get wealthy by following their own advice

#22

Post by bdcravens »

Denvercoder9 wrote: post #4
bdcravens wrote: post #3

The biggest takeaway: it's easier to make money than it is to save it, and stacking cash, rather than aggressive budgeting, is the key to wealth.

Isn't aggressive budgeting a way to be able to stack that cash?

Maybe (depends on your income and what expenses you currently have). However for many, pouring that energy into an income-creating task will create a larger amount.

Re: Personal finance experts don’t get wealthy by following their own advice

#23

Post by BeetleB »

If you give "start a business" advice to people, the majority will end up poorer than the advice he is complaining about. Sure, you may have more options to invest and pay less taxes, but that's only if your business is making money, which most don't.

Re: Personal finance experts don’t get wealthy by following their own advice

#24

Post by pushrax »

dragontamer wrote: post #2

I dunno who his target audience is, but I assume that the majority around here are computer programmers with anywhere from $70k/year single income to maybe $500k/year dual income ? Financial advice in general sucks. But when we get into the specifics... such as any say $150k/year programmer or higher, the generic financial advice of 6 months saving + max out 401k plan works. ------- The plan for people at average, 50…

Owning a small slice of a business where you're employed can also help make you rich if it grows a lot. In the tech world there are probably more financially independent employees than founders, because of the growth of some massive companies over the last few decades and high salaries. Probably a different story in the UHNW category though, very few employees can get to that level.

Re: Personal finance experts don’t get wealthy by following their own advice

#25

Post by giantg2 »

gonehome wrote: post #8
dragontamer wrote: post #2

I dunno who his target audience is, but I assume that the majority around here are computer programmers with anywhere from $70k/year single income to maybe $500k/year dual income ? Financial advice in general sucks. But when we get into the specifics... such as any say $150k/year programmer or higher, the generic financial advice of 6 months saving + max out 401k plan works. ------- The plan for people at average, 50…

The r/personalfinance and r/financialindependence subreddits are quite good and even cover more exotic details like the “mega back door roth” otherwise known as “after tax 401k contribution in plan conversions to roth” (which can let you add an additional 36k to a Roth IRA over the 6k limit each year in addition to the normal 19.5k for a traditional 401k). They’re mostly bogleheads so are a little risk averse, but fo…

$61.5k in yearly contributions is out of reach for most people. I can't even max out my 401k due to high cost of living (with a family) and mediocre income.

Re: Personal finance experts don’t get wealthy by following their own advice

#26

Post by MattGaiser »

The goal of most personal finance experts is not to teach you to be mega rich, but rather to be average and while still being pretty average in terms of income, hours worked, and capability, remarkably comfortable to peers.

> Yet you almost never hear the financial experts recommending that you start a business.

Is the average business owner any better off? I know that there are plenty of successful business owners, but we tend to completely ignore the many that filed bankruptcy after taking cash advances on credit cards to live one more month.

> Nor do these guys tend to mention the importance of understanding how taxes work.

Only really matters if you make a lot of money. My Dad is a tax accountant. We optimize the heck out of our personal taxes. But at our 100Kish incomes, it doesn't make a big difference beyond what the personal finance people say.

Re: Personal finance experts don’t get wealthy by following their own advice

#27

Post by bdcravens »

cardosof wrote: post #6
bdcravens wrote: post #3

The biggest takeaway: it's easier to make money than it is to save it, and stacking cash, rather than aggressive budgeting, is the key to wealth.

While I generally agree, I think for many people it's easier to cut 10% of their annual spending instead of getting better return rates or a salary raise.

For the readers of this forum, perhaps, but for the typical person making $40-50k it maybe easier to get a side hustle.

Re: Personal finance experts don’t get wealthy by following their own advice

#28

Post by hesdeadjim »

Tldr, you’ll only get rich by starting a business. Great advice for the tiny population of people who have the skills, the means, the discipline, and the time.

That person he describes with $50k annual income, little or no savings, and significant credit card debt sure as hell isn’t starting a successful business, especially since they most likely have children and are working hard hours.

He’s dismissive of being “less poor”, but for anyone who has actually been in or witnessed this average scenario, less poor is way the hell closer to rich than not.

The real problem on display here is the capitalist dystopia we live in. Fifty years ago that average person would have been able to support a family, buy a house, and not live under the constant threat of bankruptcy from a surprise medical bill.

But yea, start a business!

Re: Personal finance experts don’t get wealthy by following their own advice

#30

Post by MattGaiser »

giantg2 wrote: post #14
PKop wrote: post #5

Part of the discussion should be, can the 'masses' "Generate income not based on hours worked", "Minimize taxes", and "Leverage time and debt to become wealthy like the personal-finance gurus themselves did?"... in other words, is becoming wealthy possible? It is worth being honest about the false hope these authors are peddling about "becoming wealthy", instead of what they are really advising which is, to become ab…

I think an even deeper question is, is it possible for the masses to get rich and what would the macroeconomics look like? I would think competition and resource scarcity would prevent this.

I would argue that middle class today is a lot richer than 50 years ago. Larger average homes. More cars. More trips. Better healthcare. Food is cheaper as a percentage of income.
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