If the employment picture is so great, why are people unhappy?

Don’t believe everything the President tells you. In fact, it’s a generally accepted principle that for anything he says, the opposite is true. Which is really chilling when he announces that we have the best employment and economic picture, well, since forever.
That’s not the felt experience of nearly every client (or family member, or friend) that I see. Although most people I see do have a job, I see certain factors that paint a far less rosy picture:

• Even if you have a job, you’re scared that it may evaporate. Corporate and institutional loyalty to employees is long gone. People definitely get fired at will, or on a whim.• If you’re young, you’re expendable. They can definitely find someone with your (limited) skills.
• If you’re old, you’re also expendable. They can definitely find someone younger for far less, and who cares about your experience. Your skills are probably out of date anyway.
• Ha-ha on worker protections. Do you really think this administration is going to go full throttle on discrimination claims, disability accommodations, or workers’ rights?
• You probably don’t have a union to protect you. Somehow employees were convinced that unions weren’t for “professionals” and that union dues would send them into poverty. Being on your own with no backup is certainly worth it, right? To the employer, that is.
• If you just graduated, you may feel hopeless about finding a job at all, and therefore aren’t counted as in the labor market. Congratulations if that $120K-$250K you just spent got you any services at all from your school’s Career Services office.
• The gig economy has infected even so-called full time, in demand jobs. Staffing companies have appeared like cucarachas in the so-called in-demand fields like health care and computer services. They may offer you a tiny bit better hourly rate (and it’s always hourly, not a salary), but your benefits are non-existent, they probably aren’t going to contribute to any retirement plan, your paid days off may not exist, and you’re very likely to be held to unreasonably high “productivity” standards. You’re working for Uber, whether you know it or not. So yeah, I guess you’re in demand.
• We have a miniscule social safety net nowadays. Social Security is unlikely to be anywhere near enough to cover expenses. You’re a unicorn if you still have a pension, and even if it exists you’ll have to work longer to qualify than indentured servants in the colonies did.
• Good quality childcare is so expensive that it’s not even worth it to work in some professions (you know, the helping, socially useful ones).
• Make me laugh, let’s discuss health insurance. If you leave your job, once it runs out you’re back on the exchange. And if you take a new one with group insurance, unless the employer has the same insurer, you’re probably going to have to meet a second deductible. If you do find yourself in this situation, be sure to discuss this with the new insurer—some will give you credit for having met your deductible. Despite how it looked when the Affordable Care Act went into effect, most of us are afraid to leave our jobs because of the cost of insurance. Oh well, at least we can get it now.

Except for the childcare (mom stayed home until I went to school) NOT A SINGLE ONE OF THESE POINTS was true for my parents (born in 1913 & 1915). Sure, there’s lots that was wrong in previous eras (discrimination, worker safety), but full employment under Harry Truman (I just finished David McCullough’s biography) looked a lot different than what “full employment” means today. And not in a good way.

Cup of latte

Maximum financial firepower

Is it better to cut your expenses or focus on earning more?


We’re talking here about most of us, not billionaires. If you already have more money than you can possibly spend in your lifetime, you probably don’t need to worry about cutting expenses, although you still may want to pay attention because you’re a prime opportunity for the art of the rip-off.

But let’s say you’re in the want-to-be-wealthy stage. What does that even mean? I think there are a few stages of what might make you feel wealth:

Stage one: Making enough to pay all your bills

Especially depending on your age, this may be a very satisfying stage to reach. For many millennials, and many people older than that, knowing that you have enough coming in to cover everything—without credit cards—would make for a very secure, if not wealthy, feeling.

Achieving this, or exceeding it, will mean keeping a careful watch on expenses, and having a solid repayment plan for student loans. Too many of us have an agenda for what we’re going to do with any cash gift, or tax refund, or salary increase. Achieving wealth means being very careful not to pre-spend anticipated windfalls, especially since if they don’t materialize you’ve incurred debt, and that’s definitely not wealthy.

In the experience of my clients, I’ve seen that it’s generally easier to increase your salary by changing jobs rather than convincing your employer to give you a significant raise, so keep your antennae up and be aggressive about managing your career.

Stage two: Having money beyond immediate needs

The descent into serious debt could have been stopped, for many people, by having an emergency fund. It can be very, very difficult to accumulate this. It seems the emergencies always occur before the fund is built.

Lots of pundits I admire scoff at the “latte factor” but often big wins are based on the accumulation of lots of little wins—so I do think change jars in your kitchen, carrying homemade coffee in a thermos, walking or biking instead of driving, whatever, and saving the difference can help build up this second crucial step. (Even if you’re “beyond” this stage, you can always give it to charity. And less consumption is better for the planet.) Because you’re spending less, you have some surplus to stash that isn’t earmarked for specific spending—so now you’re wealthier.

Savings and increased earnings can now be directed to accomplishing goals (house down payment, travel to dream destination, new car) as well as essential long-term savings for retirement (whenever you aim to retire).

It’s been my observation that no matter how much people earn, they can always spend more. Once you have a solid emergency fund and enough earnings to cover your expenses, you have a little more breathing room for charging ahead or changing your career, or developing a side business, or focusing on making well-thought out investments.

Stage three: making money beyond your time commitment

This stage, which many people never reach, is when your money or business venture is making money for you, without your everyday effort. If you have invested wisely, or have some sort of business that makes money without your continuous participation, your wealth level is enhanced.

This is the level that permits retirement. Of course, people who control their expenses can reach it sooner or more securely. The security is enhanced if you have some sort of guaranteed income (pension, annuity), have fungible expenses, or enough of a portfolio that a huge dip in the market won’t affect you all that much.

The absolute numbers for wealth don’t matter as much as 1) your spending levels and 2) whether you’ve found a way to build a source of income or an investment portfolio. So, someone who’s technically a millionaire, has a paid for house, controlled expenses, and the maximum Social Security may have a yearly income of about $70,000. Is this wealthy or scraping by? Depends on your property taxes, your health care costs, what repairs are needed on the house…for some, it’s a fortune; for others, unthinkable.

Stage four: Never spend it in this lifetime

Well, we can all dream, right? This is a real test of your soul: what do you care about? What good can you do in the world? Have you thought about who really deserves and will benefit by what you leave behind? Unless you’re the kind of person who views this wealth, and the ever-increasing hoarding of it as some sort of superiority marker, you’ll have to do something with it eventually (and please don’t decide to run for president). Think carefully not only about what your legacy will be, but how you pass it on. I’ve seen people whose spouses only married them for the money, who were busy spending the spouse’s money, who were never again taken seriously in a career, who were easy marks for exploiters, who were hounded for donations, and (in the case of trusts) made mostly the bank managers and attorneys rich. Those on the outside may think it’s a nice problem to have, but as the temporary steward of wealth (and we’re all temporary), it requires seeking guidance and developing thoughtful planning.

And for those in stages 1-3, I hope you get here.

Why you need an emergency fund–20 reasons

Read any financial advice article (including mine) and you’ll be told you need an emergency fund. Usually this is attached to some number (like 3- or 6-months’ salary or expenses) that will make you feel hopeless that you’ll ever achieve it. I’m here to say that even having $1,000 or $5,00 stashed is going to help out a lot, and help you avoid a lot of bad results. And, if you don’t have an emergency fund you’ll never get out or say out of debt: we don’t know what the emergency will be, but unexpected things occur regularly. Having some emergency is definitely predictable. Here are a few reasons you need something.

  1. You lose your job. This is the first thing everyone thinks of—and probably requires the largest emergency fund, since being without any income (even if you collect unemployment) is pretty scary and can last more than a few months.
  2. You have a health issue and have to cover your deductible and out of pocket expenses. Depending on when this occurs in the year, you may need to cover more than one year’s deductible. Let’s say you get sick in November, but it lasts into February—2 years’ worth of deductibles and out-of-pocket.
  3. You slide in the snow, doing damage to your car (bad), or to someone else’s car (worse) or both (worst of all). Neither of these expenses is worth claiming to your insurance company know, but given the electronics in cars nowadays, one came up to $700, and the not very happy person whose care you hit cost $500. Damages to your home and car that are near the deductible are probably not worth claiming (because they’ll raise your rates or drop you.)
  4. You have a fire. Even if you have homeowner’s or renter’s insurance, moving immediately to a hotel, eating out exclusively for any time period, or even couch surfing at a friend’s is going to cost something.
  5. You have a fire and it only wrecks the kitchen. You’ll immediately incur higher food costs.
  6. Your refrigerator, computer, or other appliance suddenly goes kaput.
  7. If you’re a homeowner, the list is almost infinite: tree falls, sewer line gets clogged, hot water heater’s bottom drops out, furnace or air conditioning die, dog destroys couch or bed, cat decides they prefer your wall to wall carpet to their cat pan and you don’t discover it for a while…
  8. Pets need veterinary care.
  9. Someone dies and you have to travel to the funeral, or you have to bury someone.
  10. You lose your job and have to buy temporary health insurance.
  11. You lose your job and need assistance (coach, networking groups, lunches out, etc.) in helping you find a new one.
  12. A loved one needs immediate residential care or home assistance not covered by insurance.
  13. You or your child need a divorce.
  14. You need to hire a lawyer for any reason.
  15. Your child needs special testing or tutoring not covered by insurance or the school.
  16. You have to buy a car, unexpectedly.
  17. You have to move.
  18. You need dental work, glasses, or a hearing aid (which are not usually covered by insurance). Check your insurance, especially if you have children who need any of these.
  19. You have an accident or illness that requires you to pay others for services you routinely did for yourself (grocery shopping, rides, home maintenance and cleaning).
  20. You work for the federal government.