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I spend a lot of my free time writing about personal finance. To stay informed, I spend even more time reading about personal finance. Some of the articles I read are inspiring, a lot of them are “okay” and occasionally, I read a personal finance article that makes me want to pull my hair out.

I read such an article today published in GQ titled “The Personal Finance Industry Is a Scam”. The first thing you see is Suze Orman photoshopped inside of a coffee cup. The author spends the first two-thirds of this article detailing an unpleasant exchange she had with Suze Orman at a work function several years ago.

She then goes on to pick apart Orman’s dubious claim that giving up coffee will make you a millionaire in 40 years. Suze Orman’s argument is that giving up coffee would allow someone to invest $100 per month in an Individual Retirement Account (IRA) and receive a 12% rate of return and save $1 million in 40 years. As the author of the article pointed out, assuming a 12% rate of return is completely unrealistic. This is the only point I would agree with in this article.

The next sentence reads as follows.

If two-thirds of Americans do not know what an IRA is that is a clear sign that we need more discussions about personal finance, not less. We need more people publicly talking about IRAs and other personal finance concepts on TV, in written articles, on radio and podcasts. We also need to have more private discussions about money with our friends, family and loved ones.

I am not saying, go listen to Suze Orman because her advice is often very flawed. But the author uses Suze Orman and her personal interaction with her as the only evidence to support the argument that the “personal finance industry is a scam”. Suze Orman does not represent the entire personal finance industry. She is a celebrity who uses her platform to dish “hot takes” and draw more attention to herself (a feeling I got while reading this article).

Saying the personal finance industry is a scam because you don’t like Suze Orman would be like saying that health and wellness is bullsh*t because you met a celebrity fitness trainer and didn’t like the diet plan, they recommended.

The author raises the very real issue of the current business model of the financial services industry. Since financial advisors get paid based on the amount of money they manage for you, if you don’t have much money, they have no incentive to work with you. Again, this is an argument for why we need more people talking about personal finance. If you can’t afford a financial advisor, you have two options.

1. You can accept that you are going to stay broke forever, which is the message the author is delivering.

2. You can check out the endless amount of free content from writers, Podcasters and YouTubers who discuss personal finance and educate yourself amount money.

If you want to learn about money it has never been easier. If you want to give up, that’s easy too.

The compounding effect of habits

This is how the article ends and what made me decide to write about this.

What a bleak and cynical message to deliver; you’re probably going to die broke so why bother worrying about how you spend your money?

Our choices are literally the only thing we can control. To suggest that they won’t make a difference is cynical and could become a self-fulfilling prophecy. I won’t lie, it is tough to be financially successful in 2019. Debt is rising, housing costs are increasing, and it seems like every day we inch closer towards a recession.

When we do hit the next recession, the people who will feel the most pain are the ones who never focused on their spending habits because they didn’t believe it would make a difference. Skipping your daily latte won’t make you instantly rich or even guarantee long term financial success.

But being conscious about how you spend and mange your money will maximize your odds of success. All your habits affect the rest.

  • If you don’t pay attention to how much money you spend on your daily latte run, you’re less likely to have a budget.
  • If you don’t have a budget, you’re less likely to make your loan payment on time.
  • If you don’t make your loan payment on time your less likely to have money left over to invest at the end of the month.

Negative habits breed more negative habits. If you want to guarantee you’ll die broke, let bad habits accumulate for a decade or two. Here’s the good news, the opposite is also true. Positive habits breed more positive habits.

One of my favorite articles I’ve ever written tells the story about a man who was dangerously overweight, massively in debt and stuck working the graveyard shift at a retail store for minimum wage. He was in a spiral of negative habits, both in his health and his finances.

Then he decided he wanted to start taking his health seriously and started the habit of going for a walk every day. That led to him making better choices about food. He kept building positive health habits until he eventually lost 260 pounds.

Eventually, these positive habits bled into all areas of his life including his finances. After a few years, he was able to work his way up to the career he wanted, pay of $50,000 in debt and end up buying several rental properties and reaching financial independence.

Not everyone will experience that level of success, but it’s possible. What’s possible for one person is possible for another. Those who focus on creating good financial habits will have the best odds of success.

So, in summation, NO, the personal finance industry is not a scam!

Here’s what I think is a scam; clickbait stories that lean on personal anecdotes and strawman arguments to conclude that we are all screwed, so there is no point in trying.

Consuming too much content like this will make you cynical about life and that’s when people throw in the towel on themselves, their family and their dreams. I reject cynicism and choose to focus on making the best decisions possible. I suggest you do the same.

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