I thought I’d posted about this before, but I couldn’t immediately find anything. I read a post that was skeptical of the universal feasibility of a financial planner’s advice that everyone should have 3-6 months of living expenses saved up for emergencies. It also mentioned that a 29 year old should have the equivalent of a year’s salary in a retirement investment account. And elsewhere, of course, other experts make other recommendations about what a prudent person should be doing with their money: food, shelter, transportation, insurance of various kinds (auto, property, disability, health), saving for college for your kids, paying off student loans, paying off credit card debt if you have it. I’m sure I’ve seen other recommendations.
What I think would be helpful for a state’s population is some kind of model state household budget based on median incomes in the state and perhaps various percentages thereof. Obviously anyone is free to deviate, and it’s no guarantee of success in life. But, there is a lot of financial illiteracy out there, and it would be helpful if there was a model budget that your average citizen could look at and know that, if their family followed those guidelines, they’d be more or less o.k. You should be paying about $x for housing, $y for insurance, putting away $z into your kids college account, etc.
A skeptical part of me thinks that this would never fly, in part at least, because if we mapped it out in one place, there might have to be an acknowledgment that financial prudence isn’t feasible for the average citizen. It might make the economy-as-morality-play model where we blame people for their own economic misfortune a little less viable.
Most people spend more time planning a one week vacation then they do on retirement planning.
That’s well and good, but I’m thinking back to when I started teaching in 1965 and my salary was so low I could hardly survive, even though I worked in the summers. I guess I could have planned my household economy, but it would have been a useless exercise in arithmetic because I would have actually needed money to implement it — and I taught history.
Now I’m retired and know how to plan, but don’t need to. So it goes.