8 New ways to think about financial security

Generation X is the first generation in American history that earned less than their parents. Generation Y is the most in-debt generation in American history (and the early American colonies were built on indentured servitude, so that’s saying a lot.) We are in an era of financial ruin. Generation Z will face this with a sense of inevitability. They will feel it is their job to stabilize the failing economy and acclimate to a much lower standard of living.

In the meantime, you are not Generation Z. And you are probably wondering how to adjust to the idea that you do not have the level of financial security you had imagined you would at this time in your life. I have done my own adjusting to this harsh reality, and here are some ways that I’ve shifted my thinking.

1. Your social clout is your credit score.
Do you know the site Klout? It measures how well you’re stacking up in social media land. It’s petty, yes, but its also a measure of how well you’ve established a brand for yourself. Does your reputation precede you? Because you can get people to cut you a lot of slack if you look accountable in a Google search. (Note: My Klout score is so high that I get into the Cathay Pacific elite airport lounge for free.)

2. Your ability to make money fast is your emergency fund.
I don’t have an emergency fund, which is surprising since I’ve had so many emergencies over the past few years. But each time I’ve needed money fast, I’ve been able to earn it. I’m scrappy and I have a really wide network of solid connections that come through in a crunch.

3. Your ability to stay engaged is your retirement account.
You are not going to retire in the traditional way because you won’t have the money, and Marci Alboher shows in her new book, The Encore Career Handbook, that the traditional idea of retirement is outdated.  Is there something you’d really like to do during retirement? Do it now. The best life is an engaged life, and people who are engaged in something they’re good at can usually make money at it. So maybe you won’t have a huge retirement fund, but as long as you keep working at what you enjoy, you’ll make enough money so that it won’t matter that you didn’t save.

4. Your kid’s level of determination is his college savings.
Your kids have a choice: they can work really hard to get into a top school, in which case the bill for college will be relatively low and it’s worth it for your kid to take out loans to have Harvard on her resume. But if your kid can’t show an ability to get into a highly selective school (there are ten of those, not 50) then your kid should get a cheap degree from online school so as not to be saddled with senseless debt. But I’d recommend your kid skip college entirely. Even if you have the cash for college – spend it on a franchise. Now that’s an education that will make a difference.

5. Your career is your investment portfolio.
It’s absurd that people spend time worrying about what stocks to invest in. The majority of this country does not have enough money to be investing in single stocks – it’s not diversified enough. And, anyway, you are much better off learning how to build a solid career than how to build a solid portfolio. You’d have to have an incredible amount of money to be able to increase your stock investments faster than you are able to increase your salary if you’re a rock star at work. So spend your time studying career management strategies instead of stock picking strategies. It’ll pay off.

6. Your high learning curve is unemployment insurance.
Unemployment insurance is scary. Because it’s not enough to live on, and also, it’s vulnerable to Congressional politics, so you never know when it will be terminated or suspended. Fortunately, you control your life in the unemployment lane by getting good at job hunting so you can get back to work. A high learning curve wherever you are ensures that you’re testing new tactics and new ideas in new arenas that continue to make you attractive to hiring managers.

7. Your patience for the nontraditional is your revolving credit.
I started building an addition onto our house. It’s not an addition, really, so much as an elongation of our front porch. It was coming apart so why not make it bigger as we fix it? But then I got distracted by a new tree house. And then I got distracted by planting 20, 000 bulbs. Yes, it’s gone from 15,000 to 20,000 because, did you know, you can plant straight through the whole winter as long as the ground doesn’t freeze?

So I keep buying them instead of finishing the addition, which most people would probably have put on credit by now, but I can’t because I blew my credit launching three start-ups.

My son said, “Mom, doesn’t our house look weird with the porch sort of blowing in the wind?”

“Yeah,” I said. “It does.”

And then I bought more bulbs. Because my ability to live in a house with an unfinished room is my credit card.

8. Your friends are your health insurance.
As health care costs keep increasing, you will have to get a higher and higher deductible. This is where friends come in: people who have friends are more likely to be mentally healthy, and mental health brings physical health. And the Framingham Heart Study has shown that if you pick healthy friends, you’ll be healthy, too. And if they’re really good friends, you can use their health insurance policy instead of getting your own.

So you should probably go make some friends, instead of  worrying about your money. Friends mean you have a better network for staying employed, a better network for understanding yourself, which is really what financial security is all about anyway. Because creating financial security is a mental exercise, not a money exercise.

106 replies
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  1. Don James
    Don James says:

    It might be that your diet also is an important component of “your health insurance”. I don’t think you can eat too many raw veggies.

  2. Darnell Jackson
    Darnell Jackson says:

    Wow i’m very impressed and I have to agree.

    Earlier this week the fed projected 0% interest rates for your savings accounts until 2016.

    If you’re using your grand mother’s strategy you are in for a rude awakening.

    • Andrew
      Andrew says:

      Here’s the thing about investment – nobody forces you to invest the same way as your parents did when Volcker’s rates were 14%. If you don’t like earning 0% at call, there’s millions of other investments in the world.

  3. Kathryn
    Kathryn says:

    Just last night I re-read part of the Happiness Project (which is ridiculously book-marked and I keep it by my bed for regular reference). Growth = happiness. If you retire, do your options for growth increase? Are you in a job where you are growing? Friends increase your growth. And, Penelope is a growth drug :>)


    • Penelope Trunk
      Penelope Trunk says:

      Thanks for leaving the comment, Lisa.

      I like knowing that 40 is average – I’m a 79 and I didn’t even realize how studly I am in the world of Klout. Hooray.


      • Elisa
        Elisa says:

        You made me curious about your score so I signed up for Klout to check it out. Your score didn’t mean anything until I checked it against Obama’s, which is 99. Oh yeah, and Jesus Christ, which is about the same as yours.

      • Patricia Rossi
        Patricia Rossi says:

        Loved your statement… ” I’m a 79 and I didn’t even realize how studly I am in the world of Klout. Hooray.”
        Love your Blog!
        Have a Festive & Feisty Sunday:)
        Fist Bumps,

    • CL
      CL says:

      I was about to say the same thing. My Klout score is currently high enough to get into the SFO Cathay Pacific lounge. I have nowhere near the amount of followers or blog readers that Penelope does and in fact the interactions that Klout measures go on with perhaps 10-15 people. I have a miniscule fraction of her popularity. With two more points, Penelope could get stuff from Gilt Group completely free, which would be pretty great.

  4. Harry @ GoalsOnTrack
    Harry @ GoalsOnTrack says:

    The best blog post ever read since the new year!

    Great advice on retirement, and investing in yourself/career instead of stocks, or whatever you ultimately don’t have 100% control.

    Love the last one, “Your friends are your health insurance.” So true!

  5. jen
    jen says:

    I’m so glad you wrote about Klout! I know it’s ridiculous, but Klout itself is a perk for me. And, the real-life perks are cool, too. I also like giving things a chance — seeing where something might take me. So what if I’m an early adopter of something that might fail? Eventually, I’ll get in early on something great if I remain open. Thanks for another informative post.

  6. Barbara Saunders
    Barbara Saunders says:

    I get the “diet is health insurance” and “support network is health insurance” concepts, really I do. But diet and exercise and health support networks doen’t prevent car accidents and they don’t guarantee against genetically driven disease.

    • redrock
      redrock says:

      Indeed, and the best way to get health
      insurance is to make it a priority in ones budget plan to actually buy health insurance whenever possible.

  7. Erin
    Erin says:

    Great post. Ground breaking, bold. I know it isn’t about abortions, domestic violence or sex but it is really soul-shaking and about time our generation started talking about this in a mature, can-do way instead of just bitching about our parents. Let’s face it, most of knew we were screwed from the get. I depend on you for key insight in to my generation, generation X that is. You just said everything that is true about my financial situation that I work so hard to keep secret from my older co-workers, family, etc. Now I think I can be more open about the situation because it actually highlights all my strengths. Way to reframe a dismal reality.

    • thatgirl
      thatgirl says:

      Whether you’re an X or Y, what really matters is testifying. I used to think that the career I’ve surfed (or not surfed well, having been part of layoffs often enough) was my shame to hide, vis a vis my parents, Boomer older brother, and others.

      Now that politicos are rather pronounced about saying they’ll work to destroy “entitlements” (the ones you and I pay into, and from which you’d like to collect, to the degree possible) when you’re not as employable/older, it’s important to remind people how we haven’t been able to feed off Boomer crumbs and that you DO very much mind that social security and other funds to which you contribute are this congress’ tetherball.

      I did this recently when my father started spouting some talk radio rhetoric. It led to a more constructive conversation, perhaps some respect for what we’ve had to do.

  8. Jill Carrico
    Jill Carrico says:

    I’m incredibly grateful that I found your blog; you share so many stories I just get and can relate too. It brings sanity to my life. For myself, I struggle everyday being in the middle between Gen Y’s, who are terrified to make a decision at work, or struggle with initiative, and then I have Baby Boomers who are … well, afraid they are no longer in touch with X and Y, which has it’s own set of uncomfortable moments, I call it the “cool kid” syndrome (sometimes embarrassing). I feel like I’m missing out because I can’t relate to anyone, I’m short on mentors, and no one to emulate (then again I’m not sure I want too … lol).

    I’m Gen X, and I feel completely isolated at work, especially when it comes to conversations related to work about social media, fiance, what people at watching, listening too, or reading (I work in a marketing dept at a college). I wonder all the time about people my age (40), and where are they? Are they having babies, raising families, on permanent work vacations, and I’m just missing out? Why is there a shortage in my workplace of people around 40? When is Gen Z headed out to the workforce? We might have something in common!

    Oh, and thank you for providing an incredible resource farm (no pun) of links!! They too have been a fantastic resource.

    • Lisa
      Lisa says:

      Those of us that are not on the upper management track, but excel, have gone out on our own and taken the plunge to work for ourselves. The others are staying at home, taking care of their kids – both men and women. I am 40-ish and you are right, we don’t want to necessarily emulate those older than us and the younger ones just seem foolish – you’ll find your spot.

  9. Sarah M
    Sarah M says:

    I’ve only lurked here for a couple weeks, but this is one of my favorite posts so far. Love it. I shared it to facebook and some friends had some pretty strong reactions (both ways, mostly about the college argument). That’s how you know it’s a good post!

  10. Lisa S.
    Lisa S. says:

    I think your blog should be called Penelope Trunk’s Instructions for Life! I wish I could have had your wisdom in my 20’s and 30’s. Fortunately, I’ve found you now!

  11. Jenn
    Jenn says:

    Agree, agree, agree. Already have started on or started thinking about most of these.

    All those 401K meetings I sat in in my early 20’s when they told me, “start investing now and you’ll be a millionaire at 60!” …….they all lied, lied, lied.

    • simon kenton
      simon kenton says:

      I started investing in my 20s, went through a reset in my 30s, and was a millionaire in my 50s.

      This is the only Trunk post I’ve read that is codswallop from beginning to end.

    • jim
      jim says:

      Are you nuts? I started my 401k when I was in my twenties, about 23 years ago. I only contributed 6% and got a 3% employer match. so I am no crazy frugal saver, just a regular guy. I put it into index funds mostly.
      I now have $500,000. Even with Barack Obama and his Klown Kar tax policies, I fully expect to be at over a million dollars when I am 65.

  12. Evy MacPhee
    Evy MacPhee says:

    I was a financial aid administrator before I retired, and even I know that we have to think differently in these changed times.

    I was very influenced by my mother who was a teenager during the Depression…I have to remind myself that times have changed.

  13. Daniel Baskin
    Daniel Baskin says:

    I’m glad someone important finally came out and said #3, 5, and 6. Well, I’m glad you said all of them, but those especially were ones that have been on my mind recently as “new truths”–annoyed at the fact that media, friends, and relatives still believe the old truths.

    Simply having the above new truths stated in writing is encouraging to me. It’s as if it was all saying, “Yep. Things really are going to change to and stay as the way things are going. It’s going to be okay.”

  14. Drew
    Drew says:

    Your investment advice is both good and bad. While investing in your career is undoubtedly the best move, you don’t have to pick individual stocks to have a great portfolio. Simply invest in an ultra-low fee index fund and you won’t have to worry about allocations and fees, but will still have a stake in the market. I’ve done this for 15 years, and what seems like small monthly amounts have grown into what I consider a fairly sizable amount. Young people have lots of time (before “retirement”, and that is way more important to building a large nest egg – more important then allocation, or even the amount set aside.

    • Leslie
      Leslie says:

      Great advice! I lost trust in the stock market because of volatility and management fees. Now I am with a discount broker invested in ETFs and the dividends are modest but reliable.

  15. Daniel Baskin
    Daniel Baskin says:

    I just showed my wife this and we had a conservation about how no one is getting a mortgage anymore because mortgages are stupid and make no sense in this post-financial crisis world. I mean, I know this fact is obvious. It’s why the Federal Reserve is keeping interest rates so low to tempt people to borrow again.

    Anyway, Amanda and I have been looking for land to build a house from recycled and inexpensive materials. Even though we already knew intellectually / statistics-wise that people aren’t getting mortgages and expensive houses aren’t selling, it has been funny to see first-hand how quickly any house under $100,000 gets snatched up.

    A large portion of Gen Y (maybe the younger side of Gen Y) is starting to get the message surrounding these new truths you posted.

  16. Lisa
    Lisa says:

    I like the article, and I suppose I should talk about that…but all I can think about is the poor digging technique in that second picture. You could really hurt your back that way.

  17. Kensington Pearl
    Kensington Pearl says:

    …the bulbs continue. I can’t wait is to see what you end up doing with them all after they grow. You many end up with a lot of bees and rabbits. Since the petals are edible, maybe you can run a tulip salad bar this spring!

  18. Lynn Lawrence
    Lynn Lawrence says:

    so so true. I was reading an article about gen y economic conditions the other day. The thing that really stopped me cold was when the attorney who had to reframe her expectations said the thing she hated most was the loss of her dignity. What? Who took her dignity? That is a headgame only. I moved from the SV to nowhere about 13 years ago. I don’t see too many people who have lost their dignity where I live, in fact, I don’t really think it’s a thing that is visible. The biggest danger, in these economic times, is our brains preying on ourselves.

  19. Christiano Kwena
    Christiano Kwena says:

    You know what you are saying, and it shows in how you tell it. I am starting out and love the choices I keep making.

    I would like to emphasize the emergency fund concept. I left campus without a college degree then had to go through the wrath of family and friends on how miserable I will be.

    Now, I am still on holiday, until tomorrow, and most of the people who wanted to build their emergency funds with a new job, good qualifications etc, are busy attending to a never-ending emergency (their job).

  20. Jacq
    Jacq says:

    Agree with most of the post – as someone who’s worked their butt off in their career or on contract and at 47 is planning on going on sabbatical (possibly permanent) this year. As someone who has always has been a single, female parent at that. The INTJ-ness helps.

    But people “should” also be saving and investing real money. You can have a great network (which I do – haven’t had to revamp my resume in 7 or so years and through 6 or so different contracts), but having saved up to 80% of my net income at times (easy enough to do when you’re making $200k+ a year though) allows me to be picky and to take time off when I feel like it. It’s also my version of STD / LTD insurance. The dividends keep rolling in whether I’m working or not. Isn’t that the best of both worlds?

    You can be incredibly financially secure if your actual cash needs are pretty small.

    • Simone
      Simone says:

      @Katherine…Cheers to our pointless little lives. Cheers to a long unbearable struggle ending in death.

      (Thank gawd my gen and all the misery we’ve endured as given us snark!)

    • Simone
      Simone says:

      @Katherine…Cheers to our pointless little lives! Cheers to a long unbearable struggle ending in death!

      (Thank gawd my gen and all the misery we’ve endured as given us snark!)

      • Pirate Jo
        Pirate Jo says:

        Does life have to have a point? People say their lives must have a “purpose,” like we are born with a purpose stapled to our upper left-hand corner. Can’t we just be creative and entertain ourselves?

        • Simone
          Simone says:

          I’m with you Pirate Jo… and Missy, I’m 35 and it hasn’t gotten old, not when its a state of mind… C’mon on, lean into it people….Alan Greenspan called this the “Age of Turbulence”… so if this is the sinking of the Titanic, I’d much rather sip my champagne, finger my pearls, smooth down my hair, and listen to the band play while others run around me in a panic… Watching the news and listening to these politicians stoke the fiscal cliff fires is like listening to Nero play the violin while Rome burns… no one is coming to save us, as Penelope has shown us here, we must save ourselves…. Alright people, off to stock my bomb shelter!

    • arlo
      arlo says:

      I watched a man being lowered into his grave who owed $8mil, and had shunted his family’s responsibility for the debt. Whatever your particular morals may have you believe, you have to have a grudging respect for a person who knew how to work the system. You’re well on the way!!

  21. Julianna
    Julianna says:

    When you talk about the bulbs and the porch of “our house” are you saying that property is in your name too? Because this post says so much about your lack of basic financial understanding it blows my mind.

    Why in the world don’t you establish some credit? Get a couple cards — even gas or a store — and pay it off each month. In six months you could get a real card. It’s not hard. It would take less time than this post took to write? Airport lounges? Please. I get in free lounge in nearly every airport because of my credit card and because I have “premier status” at several banks. Low klout score and perfect credit score. This opens doors. You know this right? Credit is meaningful. Equity is meaningful. Ownership is meaningful.

  22. Frenesi
    Frenesi says:

    Some interesting points here, but have you ever had to deal with a serious health issue? A Gen Xer here, and let me assure you — my husband’s condition, which is benign but nonetheless requires regular monitoring, required $20K in MRIs when it was first discovered. We are self-employed (in CA, one of the hardest states to get private insurance) and our insurance covered very little! Took years and years to pay off! Thinking that friends will take care of it is foolhardy at best.

    • Penelope Trunk
      Penelope Trunk says:

      Yeah. My kid was diagnosed with Autism. And we had great insurance. But insurance doesn’t cover Autism. So there are plenty of things that can happen to you that you can’t control for. Insurance doesn’t mean you’re in the clear.


      • Frenesi
        Frenesi says:

        Very true! How awful that your insurance didn’t cover your son’s condition. Yes, health insurance doesn’t cover everything (don’t even get me started on my feelings about the industry) but when I talk to friends who don’t have any coverage at all I practically beg them to get some kind of catastrophic coverage, which is why I had a strong reaction to your post. Hopefully with the advent of Obamacare there will be a safety net now. We’ll see.

  23. Missy
    Missy says:

    First of all, I can tell you are a Gen Y by your lack of discipline. Your first sentence and the article you link to are incongruous. The article you link to is referencing Gen Y, not Gen X. So Gen Y is both earning less than the previous generation and the most in debt generation in history. Almost all research supports this. Gen Y covers the generation that would be born approximately between 1970 to 2000. A man in his 30’s would have been born between 1973-1983. This makes him solidly Gen Y, not Gen X. Gen X is the post WW II generation born approximately between 1950 to 1970.

    • mysticaltyger
      mysticaltyger says:


      You are completely off base on your generational boundaries:

      According to the authors of the book Generations, here are the approximate boundaries:

      World War 2 Generation: 1901-1925
      Silent Generation:1926-1942
      Baby Boomers: 1943-1960
      Gen X: birth years approx 1961-1981
      Gen Y: birth years 1982-2000

  24. Crystal
    Crystal says:

    This post beautifully brings together all sorts of nebulous ideas I’ve had about finances lately. I knew in my gut that the old ways were not the future. You’ve given me some confirmation that I’m not unrealistic or living with my head in the clouds. Thank you!

  25. Missy
    Missy says:

    Next, ask yourself why this is the case. In the early 80’s I was just entering the workforce from college. There was a very deep recession at this time as well. That combined with being born near the tail end of the boomers (they got jobs ahead of me), I had a very difficult time getting a job. Although a typical phenomon was happening and that was that 50+ something’s were getting fired/laid off and 20-something’s were hired. Why? Because we were cheaper labor. This was alway typical behavior in an economic downturn (employers market). Now the situation is similar, only employers are hiring the more expensive 50+ somethings over the 20-30 somethings. This is a new trend that has never occured before. As someone who has done interviews and heard the backroom comments of management I will tell you why. The Gen Y’s have a poor work ethic, unrealistic expectations, self-entitlement issues, are difficult to work with, among other things. So accept responsibility for who you are and don’t project on the rest of us who work hard and plan. Gen Y is in the situation Gen Y has created for themselves. Just wait until the student loan bubble bursts.

  26. Missy
    Missy says:

    And your little post is a recipe for living off the government, living off someone else, or being homeless. Disgusting.

    • arlo
      arlo says:

      You say that like it’s something bad. I used to be caught up in the rat race, fighting for promotions, saving for my retirement, and trying to excel at my job until I realized what a fool I was. You people who think someone has to work for a living crack me up!

      • mysticaltyger
        mysticaltyger says:


        Living off the government WILL be a bad thing when the well has run dry and we end up like Greece. Too many people like yourself have deluded themselves that this can’t happen….but it is in the process of happening already.

        • arlo
          arlo says:

          Rest assured I’m still working my ass off trying to save something for retirement. I thought this whole article was full of snark, so I just jumped in. BTW, I think we’ll be more like Argentina instead of Greece.

  27. Rebecca@MidcenturyModernRemodel
    Rebecca@MidcenturyModernRemodel says:

    I was reading along and went “right on,” “right on.” Until I got to the health insurance. That was kind of lame. It speaks to an area that you aren’t as experienced in Penelope … the health problems that come as we age, whether we work out, eat right, take our vitamins OR NOT.

  28. Jacq
    Jacq says:

    Another thought – with employment or contracts, at some point, you always have to suck it up and do as you’re told. When you’re financially independent, you can say “go f_k yourself” – if not literally, then through moving on.

    Maybe it’s the difference between introverts and extroverts, but this klout score seems completely meaningless.

    • mysticaltyger
      mysticaltyger says:

      I, like you Jacq am an INTJ. I am 42 and have socked away a decent amount of money, despite the fact that I live in a high cost area and have never made more than 52K a year. My net worth (no home equity…I rent) is around 245K.

      I, like you, don’t care about social media. To me, it’s just one more way for Big Brother to further monitor and track our every move.

      All that said, I think Penelope brings up some good points here. The whole medical system is a complete failure and we need to start looking at alternatives for ourselves, because those in power are not going to fix it.

      As far as the career stuff goes…honestly, I just don’t think most people have the tolerance for chaos that Penelope does. But then, most people don’t create as much chaos as Penelope does. If you don’t create a lot of chaos in your life, it’s typically a lot easier to save money and (somewhat) less important to be “career networked” all the time….Penelope’s extrovert bias is showing in this post.

      I do think we need to prepare for a time when there won’t be a money system or for a time when money will be worthless. This is the current path we’re on. So networking and being more independent are still quite good ideas.

  29. BB
    BB says:

    So to summarize, Penelope has no access to credit, no emergency fund, no retirement account, no savings for her kids’ college, no investments, no unemployment, and no health insurance. But also no worries, since she has online “klout” and the Farmer to keep a roof over her head.

    • mysticaltyger
      mysticaltyger says:

      LOL, Well said. I have seen this OVER AND OVER AND OVER AGAIN…with people I know personally (as well as those I’ve rad about in news article) who could always “land on their feet quickly” and easily find another good paying job….until they couldn’t. That time usually hits in their 50s. They went through their whole lives thinking “there’s more where that came from” and then they hit a wall. It’s usually extroverts who entertain this kind of delusion. That said, Penelope lives on a farm, so she is more self sufficient than urban/suburban dwellers.

    • jim
      jim says:

      And if she owns that farm in Wisconsin, THAT’s her retirement fund. Farmland prices (at least south of the border in Illinois) are through the roof. Even a medium size farmer is a millionaire on paper, if not with money in the bank.

    • thatgirl
      thatgirl says:

      Except if you actually have been reading Penelope’s blog, you’ll know she doesn’t necessarily advocate the “one route” of college for all. She shares parenting with her ex, and hasn’t elaborated on what they “plan” for their children vis a vis higher education or investments in any granular way.

  30. Joyce
    Joyce says:

    Hi Penelope! I agree with Jacq and mysticaltyger. Maybe extroverts are better at raising money while introverts are better at investing money. Your list must the financial security list for extroverts. Your friend Ramit Sethi has cool financial advice so it could work for any personality.

    • Missy
      Missy says:

      Here list is for losers & to my knowledge there is no loser personality types. It’s a decision one makes that involves not accepting reality, doing the necessary HARD work life requires (that mostly does not involve the glamour of being a CEO of your own startup), and not letting OTHERS pay for YOUR mistakes and think its OK.

    • arlo
      arlo says:

      You might think this advice about investing due to personality type is helpful, but please note it disregards the effect of your Zodiac sign. Introverts make money. Extroverts make money. Cancers go to market.

  31. blondie
    blondie says:

    It’s crazy to advise someone to not have an emergency fund. Everyone needs one, particularly every woman. Not having an emergency fund means you make STUPID CHOICES, such as staying with people who physically abuse you.

    Likewise, everyone should have an investment fund. I’ve lived by much of the advice in this blog entry, yet I lived below my means. Every portion of my paycheck goes to investments. Why? Because passive investments are a good idea and shoudl be part of everyone’s income.

    • Karen
      Karen says:

      She didn’t advise people not to have emergency funds. It’s a metaphor.

      Her point is that that your ability to earn money fast is where your true safety lies.

      Make sense?

  32. Marc
    Marc says:


    Your financial advice sucks.

    Throughout, you conflate the notion of “insurance” with “preparing”.

    Insurance protects against the unexpected.

    When you speak of an alternative to an emergency fund, you are talking about a strategy to avoid using an emergency fund, no the lack of need.

    When you speak of friends as health insurance, you are talking about a strategy to reduce your expected cost of healthcare, not the lack of need of protection for random events.

    No one gets the “expected” outcomes, that’s why insurance exists: To protect from what could be, not from what you control, or even what you on average expect.

    In fact, even if someone wants to believe what you write, you suggest one massive, absurdly risky “I have no disability insurance” problem.

    • Karen
      Karen says:

      Mark, you’re being as clueless as Blondie above.

      Let me rewrite her headings for you (making them banal, but at least you’ll get them) and the rest of the blindly literal-minded:

      1. Your social clout is your TRUE credit score.
      2. Your ability to make money fast is your TRUE emergency fund.
      3. Your ability to stay engaged is your TRUE retirement account.
      4. Your kid’s level of determination is his TRUE college savings.
      5. Your career is your TRUE investment portfolio.
      6. Your high learning curve is your TRUE unemployment insurance.
      7. Your patience for the nontraditional is your TRUE revolving credit.
      8. Your friends are your TRUE health insurance.


  33. arlo
    arlo says:

    I assume the bulbs you’re planting are tulip bulbs. Nothing says more about financial security than investing in tulip bulbs.

    I think I like this blog. Got it bookmarked.

    • Penelope Trunk
      Penelope Trunk says:


      We talk all about Dutch tulip mania in our house because there was alpaca mania in the US for the last ten years. The Farmer kept telling my sons, “Wait to buy. It’s just like the tulips. The prices will crash.”

      And my sons waited, and by the time we bought alpacas, they were almost free!


      • simon kenton
        simon kenton says:

        Why, yes. A young friend has discovered that ebay and craigslist are filled with people willing to let a llama go “to a good family” for $150.

        Even the nasty, spitting, ill-tempered asshole llamas – which is most of them – are delicious.

  34. Foobarista
    Foobarista says:

    Many of this may be true if you’re extremely young, but at some point actual physical assets matter. If you’re in your 50’s and have lots of friends but no savings and a bunch of debt, you’re in deep doo-doo.

    As for emergency funds, many emergencies involve temporary physical incapacitation. You won’t be able to make a quick bundle if you’re laid up in a hospital recovering from a broken leg you got on a long bikeride – or if you’re having to go to deal with your old sick mom in the old country (in a place without good internet) for several weeks.

    • arlo
      arlo says:

      Hey Foobarista (making a square in the air with my index fingers), get off your old tired paradigm. We should take a lesson from the NAZIs in Hitler’s bunker who all had a drunken orgy the night before the Russians occupied Berlin. BTW, if your sick mom had paid more attention about her Klout rating, it wouldn’t be a problem.

      • redrock
        redrock says:

        …and then they killed all their kids and committed suicide. I don’t want to follow this particular lead.

  35. Joel
    Joel says:

    This was written by a young pretty woman whose life has been made much easier by her looks, youth, and lively intelligence. The first two will fade. The last, if not disciplined, will seem like no more than feathers on a peacock as the years go by. I know more than one smart, engaging, and financially strapped aging woman. It’s not fun watching that person or being that person.

    Ask your parents where this will lead. They know.

    • Yuse Lajiminmuhip
      Yuse Lajiminmuhip says:

      While not all of her advice is practical for every person (I’d prefer not to think of my Klout score as meaning anything, since its so darn low!), everything she has to say holds a measure of truth.

      • J Lowry
        J Lowry says:

        Most lies hold a measure of truth. The klout score??? Now that is surely a long term value play. The ideas in this post may be good for Miss P but as “rules to live by” they are poor advice for most people

  36. simon kenton
    simon kenton says:

    Humor me. I know you believe nobody needs to be taught math, but I have to offer some junior high algebra. Set the income you want to live on. The formula is:

    income/(return – inflation) = principal

    You want to live on $60,000 per year, you think you can make 8%, and you think inflation will be 2%; you need $1,000,000 invested. Good luck with those assumptions. Try it with some of your own. Even better luck with the idea that the government will furnish some of it via Social Security. To assess how likely you are to find someone who will pay you some part of that $60,000 each year, go visit a senior facility – fair’s fair, one of those active senior places, not an assisted living facility, where somebody is coming up with $120,000/year to help them veg out – and chat up the residents a bit. Then state truthfully that you want to hire one of them (us). You won’t want to, you won’t do it; neither will anyone else when you reach that age.

    Ceteris paribus, making allowances for content changes, you know where I have heard this post? Reading about the run-up to the 1929 crash, when it was a New Era and all the old rules no longer applied. If you think back even a little, it was a New Era in the run-up to the ’99 crash, and to the ’08 – 09 crash. Old standards of valuation are passe, no longer apply. Your house? Not a house, but a giant ATM, the best investment you ever made.

    It’s always a New Era, the old rules always don’t apply. Until they do.

  37. Meridian Hutchins
    Meridian Hutchins says:

    I don’t know that a single bit of this was true, and it certainly didn’t apply to me at all. I’m a Gen Xer with a substantial investment portfolio (and a very good career). I have some “Klout”, but I’ve got far more money, and expect to be just fine in retirement. Quite simply, this made no sense, and seems to be really bad advice.

    • J Lowry
      J Lowry says:

      agree the post is more psychobabble than the words of someone who really is a planner. If you get a serious disease, having friends is great but it is hard to pay for surgery with them.

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