Let’s Be Clear: Financial Planning Is A Privilege

When it comes to financial planning, there’s a pervasive idea that it is somehow an individual’s moral failing if they are bad with money. In truth, being able to plan how you will spend and save is only possible if you have enough money to live on.

So while there are always things you can do to save or find the cheapest possible loaf of bread or electricity provider, let’s be clear: financial planning is a class privilege. It also intersects with gender. Women, on average, earn less than men so they’re more likely to struggle financially. 

This issue is more pressing than ever. 

If you’ve been to a petrol station, visited a grocery shop or dared to look at your utility bill lately, you’ll know we’re in the midst of the worst inflation the United Kingdom has experienced for 40 years.

Since the start of 2022 it’s been difficult to cover the costs of essentials like fuel, groceries and energy. Everyone has been affected in some way by this cost of living crisis which, at its core, is about two things: spiralling living costs and relatively low wages. 

But not everyone has been affected equally. Low-income people are bearing the brunt of this particular economic crisis. So are women who, as the Living Wage Foundation notes, are disproportionately affected. Earlier this year they published research which found that a fifth of women in work (20.4%) are paid below the real living wage. That’s approximately 2.9 million people, compared to 14% of men (1.9 million). Jobs held by women account for 59.7% of all jobs paid below the living wage, which is currently £9.90 per hour (or £11.05 in London). On top of that, low-income women are more likely than men to have fallen behind on household bills or skipped meals for financial reasons. 

One of the people struggling right now is 27-year-old Kate, a stay-at-home mother of two from East Hampshire. She shares with Refinery29 that since the cost of living crisis started, she’s had to make huge sacrifices to keep her family afloat. 

"I had no choice but to sell my car. I couldn’t afford the fuel anymore anyway and I could get around £750 for it to put towards everything else I needed to pay for," she explains. "We now have to walk miles to the nearest supermarket and carry all the shopping back, which is exhausting with two kids in tow, but I have no other choice."

Similarly, 29-year-old barista Emma* from Nuneaton, who earns minimum wage, says: "I’m so grateful the summer is here now. Earlier this year, in the winter, I was having to decide whether I was filling up my car or switching the heating on. I couldn’t afford to do both at any point." 

The immense impact of rising living costs is clear. Yet real solutions intended to help those who are struggling the most are few and far between. 

Worse still, politicians have been reinforcing stigmatising ideas about it being an individual’s fault if they can’t make it work financially right now, despite this incredibly hostile economic backdrop. 

Earlier this year, viral discourse surrounded the Conservative MP Lee Anderson for his comments blaming high levels of food bank usage on a lack of cooking and budgeting skills. 

"I think you’ll see firsthand that there’s not this massive use for food banks in this country," he told the House of Commons during a debate on the Queen’s Speech. "You’ve got generation after generation who cannot cook properly. They can’t cook a meal from scratch and they cannot budget."

One week later, government minister Rachel Maclean caused uproar when she said in an interview with Sky News that people struggling with the cost of living should "[take] on more hours or [move] to a better paid job". 

These examples of so-called financial advice boil down to the same oversimplified message: that being poor is somehow a product of bad life choices. Of course that’s not true but when hardship is caused by increasing bills and deliberate political choices not to help people in a meaningful way, it is convenient for politicians to frame it as an individual's responsibility rather than their own.

The impact of this narrative can be scarring, as I know very well myself. I grew up in Telford and my mum was a single teenage mother at the time. She budgeted because she simply didn’t have the money for certain products like branded snacks or regular dinners out.

It’s fair to say that saving, investing or coming up with creative ways to add revenue streams was not possible with a young child. Future planning was something my mum was only able to do when I went to university aged 18 because I had a student loan so there was less pressure on her.

Thirty-one-year-old Milly* from Belfast is earning minimum wage as a barber. Her younger years were similar to mine. 

"Growing up, money was so tight and everything seemed so expensive that I never really learned about how to properly save, or turn your money into even more money like rich people always seem to be doing," she explains. "Now that I do have some spare money occasionally, I don’t really know what I’m supposed to be doing with it. We don’t get taught financial skills in school so I genuinely don’t understand how so many people seem to know so much about it. And how can people save to help themselves if they have no money to start with?" 

Dr Harry Pitts is a lecturer in work, employment, organisation and public policy at the University of Bristol’s School of Management. He says that the cost of living crisis is definitely not down to individual lack of financial knowhow.

"Class divisions and inequalities are not an unfortunate outcome of an otherwise perfectly operating economy but are hardwired into it," Dr Pitts explains.

"It is not an unhappy accident that most of us are dependent on waged work in order to buy the things we need to live. Sadly, it is foundational to a society based on the private production of things for profit. This class status leaves workers in a vexed relationship with time and money that limits our capacity to choose and have control over our lives. Contemporary economic conditions compound matters: real wages have declined relative to the cost of living and this has left workers reliant on debt and credit in order to consume goods and services, exacerbating the financial difficulty we face."

So there you have it: in our economy some people are being kept deliberately poorer than others.

Dr Pitts further adds that expecting working-class people to know how to budget their way out of the worst cost of living crisis in decades is a huge and unfeasible request. "Big economic changes and crises are hard for even economists themselves to get their heads around." You don’t have to flick very far through the broadsheet newspapers to see economists disagreeing about how best to tackle rising inflation. Some are calling for tax cuts while others are begging the government to find ways to channel money to those on low incomes. 

Dr Pitts adds: "This is not a problem of the comprehension skills of working-class people, who understand all too well where value comes from and the real-world impact of the movement of money in financial markets. Rather, it is a problem of power and the inadequacy of our institutions."  

Because class is so often neglected in the public conversation about inequality, we tend to misunderstand and make assumptions about how people have landed in certain financial situations, and we often don’t have a strong understanding of how people in other social classes live day to day. Audience research from the BBC found that working-class people are regularly portrayed in the media as unintelligent and lazy so it’s easy to see how others have made this jump.

Dr Pitts points out that talking about class "seems to invoke awkwardness among even academics, commentators, policymakers and politicians in a way that, say, age or generational differences do not."

That said, it’s likely that better-off people and our government do understand that financial knowhow is a class privilege and impact of the cost of living crisis isn’t caused by this economic gap. They just can’t admit to knowing it because then they’d have to accept that it’s not people’s fault if they’re struggling.