By Rodney Lester
A bit of self-help is not a bad thing. However, these days, the world is awash with self-help Guru’s. If you have a problem, there is almost certainly someone who not only has an answer for you - but in many cases says you can help yourself (as long as you buy their book telling you how*). In this article, we take a look at some financial advice recently offered on a popular web-site and ask - Where Would You Go For Financial Advice?
Recently the popular website mammamia.com.au published an article with the headline:
Simone was $187,000 in debt. Within two years, she had paid it off.
The article was a book excerpt from an Australian writer who wrote a book about getting out of debt and (as helpfully explained on her website) is in some ways, like some fantastically successful entrepreneurs:
'Similar to other business revolutionaries such as Steve Jobs or Richard Branson, Simone has never claimed to have a traditional business degree or typical financial credentials. Instead, she has lived an awesome, adventurous life that has given her the life and business experience to create a totally different financial reality.'
The article has been shared over 3,500 times from the original website and was also picked up by another site, which published an article complete with FULL CAPS and catchy, click-bait title:
'MAMAMIA HAS PUBLISHED POSSIBLY THE MOST INSANE FINANCIAL ADVICE COLUMN EVER'
This has been shared over 4,500 times. Many of these “shares” have been by people objecting to the content of the article and particularly the language it uses.
The original excerpt listed 3 “tools” for getting out of debt and “having money”:
Tool #1 for having money: the 10 per cent account (save 10% before you spend anything).
Tool #2 for having money: carry around the amount of cash you think a rich person would carry (so you are more 'aware' of your money).
Tool #3 for having money: buy things of intrinsic value (buy valuable things that you can enjoy).
The method is couched in language like this;
People say, “I’ve got bills to pay! How can I put away 10 per cent of my income? I have to pay the bills first.” But, here’s the thing: if you pay your bills first, you will always have more bills. When you pay the bills first, the universe says, “Oh, okay. This person wishes to honour their bills. Let’s give them some more bills.” If you honour yourself by setting aside 10 per cent first, the universe says, “Oh, they are willing to honour themselves. They are willing to have more,” and it responds to that. It gives you more.
From what we could tell – neither site actually went to a qualified, financial adviser to get their professional opinion. So we did.
What Does A Qualified Professional Have To Say?
The cynics in the room may be surprised to hear that Kane broadly agreed with 2 of the 3 tools mentioned in the article (but not completely).
On "Tool 1" Kane writes:
I totally agree with setting money aside for yourself first. Is it 10 percent? Everybody is different. I would go by Warren Buffett’s motto: “Do not save what is left after spending. Rather, spend what is left after saving”. Having said that, you must always have enough to pay your bills. If you don’t pay your bills, you will have bad credits. And you won’t be able to borrow. Nowadays, not having the option to borrow limits your opportunity to grow your wealth! And lastly of course, whatever you invest in with the borrowed funds must be done prudently and carefully with proper due diligence and research.
Regarding “Tool 2”, Kane said:
I disagree with carrying the amount of cash you think a rich person would carry. Nowadays there are ATMs everywhere. You should carry the amount practical to you. Simone said “When you carry around a large enough amount, you will suddenly become willing to be way more aware of your money”. Well I am more aware of my money every time I find myself needing to find an ATM. I consider myself successful financially, and I don’t like carrying more than $200 in my wallet. I am aware of my money, every time I transfer my money across to pay bills. Every time I transfer my money across to buy shares, to purchase property etc. I carry $200 because I am aware there are plenty of ATM's everywhere, and there is a chance I might forget my wallet at a coffee shop, or drop it when I walk around at the shopping centre.
Finally, on “Tool 3” - "buying things with intrinsic value", take it away, Kane:
I totally agree with buying antiques and collectables. Yes, they don’t provide cash flow, but they give you pleasures as you can view them, hold them, touch them and adore them (unlike shares or investment property). And the right collectables which are rare and in high demand will likely increase in value overtime.
So there you go.
It was the language of the article which many people seemed to find confronting, or even "insane", but in a professional's view, some of these ideas have merit (done prudently and carefully with proper due diligence and research)!
Was this article something you think was worth the amount of shares it got - or maybe just another example of "haters gonna hate"?
There is an absolute plethora of places on the web and self-help books to find information on growing wealth, getting out of debt and other “financial advice”. Their proliferation plays on the individualist mindset that is predominant in today’s modern society – that you should be able to "pick yourself up with your own bootstraps and sort yourself out". As good as this may or may not be for the individual, we think - whatever happened to asking for a bit of help!?
We don’t want to stop you from reading books you may find inspiring and informative, but it’s great to have an expert in your corner to bounce ideas off. Specifically, when it comes to matters of financial advice, there is nothing better than going to a professional, qualified, financial adviser to help you sort the snake oil from the proper tonic that you need!
Why The Growth In Self Help?
Different messaging and language will appeal to different people depending on their own idiosyncrasies. There is certainly some snake oil out there, but much of what is written – particularly in self-help books, resonates with us because it appeals to our sense of “folk-wisdom” or common sense.
Social Theorists such as Professor Sandra Dolby and Associate Professor Micki McGee describe the phenomenon of the explosion in self-help books in terms of “de-traditionalisation”; the tendency of advancing capitalism to disrupt the cultures and traditions that may stand in the way of the accumulation of profit.
De-traditionalisation has been seen as underpinning the self-help phenomenon in two (overlapping) ways.
Firstly, Modern society removes the informal, communitarian transmission of folkways and folk wisdom. When self-help writers are accused of being simplistic, repetitious, banal, unoriginal and merely offering their readers platitudes, they are actually substituting for the role of “folk-wisdom”, and are providing a formal conduit for the conveyance of such "home truths" in an increasingly unstructured world in which society provides little moral guidance to individuals.
Secondly, the other result of the loss of "traditional behavior - everyday action to which people have become habitually accustomed" is an increased social pressure for Self-fashioning: 'while one's identity might have been formerly anchored in (and limited by) a community...the self-creating self must create a written narrative of his or her life'. Self-help books 'written and read for the purpose of helping people build a personal philosophy' contribute to that end.
So now you have an explanation for the massive increase in self-help books. And once again, those hippie academics have found another thing to blame on capitalism! ;-)