This book challenged me to think differentially.
U.S. Financial Diaries is not about extreme poverty, but about the middle class. Before reading this book, I tended to think of poverty or financial instability as linear situations. If people only changed their spending habits, saved more money and did more budgeting/planning then they would have more money for essentials like food, rent and transportation.
Using numerous families as an example, U.S. Financial Diaries takes the reader through the reality of income volatility. Too often in defining poverty, we rely on national income data without realizing that what they get is a broad picture of income distribution on a yearly basis and that actually hides all the variations that occur throughout the year in people’s daily lives.
U.S. Financial Diaries explores the seasonal impacts on salaries and lack of access to financial services while arguing that the majority of poor experience illiquidity versus insolvency. Standard statistics do not show us any of this. Taking an annual income figure doesn’t reflect the rollercoaster ride families go through all year and the resulting stress and anxiety.
My only negative critique of this book is that the author focuses on those who are periodically poor and portrays this class in relatively positive terms. Hard workers and good parents suffering cash shortages due to bad luck, bad policy and macroeconomic changes. It leaves me questioning though, was their not anyone in the study who was suffering cash shortages because of poor decisions and bad spending habits/choices?
The author leaves us with a few suggestions on how we can overcome expense volatility. My own suggestions on this topic will be explored in a later post in this blog.
http://www.usfinancialdiaries.org/