Editor’s note: A version of this post first appeared on LinkedIn Pulse.
I have had an obsession with efficiency from a young age. It is what drove me to study economics. To me, the human experience can be distilled down to one word: scarcity. Scarcity is the economic concept that we have unlimited needs and limited resources. It is a concept most people struggle to manage.
« Where scarcity exists, technology can bring efficiency. » John Larson, Director, Financial Wellbeing
Neil Gabler recently published his own story of managing personal financial scarcity in The Atlantic. I highly recommend you read it. In it, he details his « secret shame » of poor financial decisions made throughout his life. His writing is tremendously brave and I applaud him for his honesty. It is easy to read through it and think « You fool!, » but I’m certain every one of us has made poor financial decisions.
Mr. Gabler’s purpose is to illustrate that personal financial struggles are a systemic problem in the United States. Citing a 2013 Fed study on the American consumer, the author makes the point that 47% of respondents would struggle to produce $400 for an immediate emergency. A similarly focused Princeton study found that nearly half of those surveyed would struggle to produce $2,000 in 30 days for an emergency. Citing growing expenses and stagnating wages he concludes that this isn’t just a rough patch for America, this is now our way of life.
The message is clear – the American consumer is struggling with their day-to-day finances and middle America is in trouble. None of this is earth-shattering news.
So this raises the question: What can we do to fix the problem? There are large macro solutions that can be pursued including welfare, tax policy, or monetary policy changes; but these are slow moving solutions. We have a generation of Americans that need help now.
Where scarcity exists, technology can bring efficiency – but there has yet to be developed a comprehensive solution for efficient financial management and advice. It is a solution the market is demanding. The consumer has tremendous power in their personal financial data that is unutilized.
Personal finance has traditionally been a mosaic of fragmented solutions where the consumer struggles to fit the pieces together. It doesn’t have to be this way. These are the solutions I am building. Financial aggregation, advice optimization and benchmarking are the requirements of a comprehensive personal financial solution. I’m always interested in conversation, feel free to ping me with your thoughts.
We can build a better personal financial model and help Mr. Gabler throw off his « secret shame. »