Veronica Duke knew what it was like to grow up in poverty, and she wanted to create a better life for her children. She became a single mom the summer after graduating high school in 1983 after her baby’s father suffered a traumatic brain injury.
“Between the time [my daughter] was one and about six, I was in school. I decided that would be the best way to try to make things better for both of us and get out of poverty,” Duke told me in an interview for my book, "You Don’t Need a Budget."
Duke chose to work part-time while going to school and supplement her income with government welfare programs rather than look for a part-time job she knew would keep her just eking by for the rest of her life. The assistance she received was vital to her family, but it required careful monitoring to maintain eligibility. Social workers were supposed to help her navigate these systems, but she said they “would give me a pamphlet and tell me how to grow a garden, how to budget my money better. Not very practical.”
“And then when I went to the food pantry…again, I would have to go through that shame and being lectured about not budgeting my money,” she added.
This practice hasn’t changed since Duke’s days as a young mother. One former case manager wrote for Healthy Rich in 2022 about the standard practice in a shelter program of making families create a budget and check in on it weekly.
“I was sharing the knowledge from training and the wealth gurus of my time, and I didn't know the emotions and insecurities I was helping to grow,” she wrote.
“So many of the individuals that I work with have been directly harmed by normative financial advice that makes them feel bad for not adhering to some unexamined ideal,” said Sloane Ortel, chief investment officer at Ethical Capital.
What this common advice ignores is that people experiencing financial hardship are, in fact, “budgeting” their money. When you’re choosing between paying rent, having a car and feeding your children, there’s just not room to be a frivolous spender.
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“Often the problem is just that there's not enough money coming in,” said Ortel. “And that can be for all sorts of reasons like disability, illness, caring for a family member or just plain bad luck. So it can kind of fall flat when someone recommends doing a bunch of spreadsheet work in order to solve a problem [that actually lies] with the income side of the household's financial equation.”
Duke shared that she cut costs any way she could when her daughter was young. “I did everything I could to save. I breast fed and used cloth diapers and made her baby clothes. I remember taking a calculator with me to the store because every penny counted. You could never buy anything that wasn’t a necessity.”
It’s cruel to tell someone to budget their money when what they really need is a livable wage and a viable social safety net — not least because budgeting doesn’t even work.
Despite a universal reliance on budgeting as the cornerstone of good money management, research into its effectiveness is sparse. I dove into this question for my book and was surprised to learn, after nearly a decade of writing about personal finance, that budgeting hasn’t been proven to improve your financial situation.
An analysis of multiple research papers and studies at the University of Minnesota noted: “Although budgeting is commonly recommended and many people do keep a budget, little systematic evidence exists on whether budgeting actually helps people achieve their financial goals over the long term.” The study found that budgeting reduces the enjoyment people experience while spending money, especially for people who already face financial constraints, like Duke.
Because there’s so little research on budgeting itself, I looked to similarities between budgeting and another restrictive practice — dieting —where research is much more comprehensive and conclusive.
We know dieting, like budgeting, is rarely sustained and typically doesn’t lead to its long-term goals. What’s less commonly known is that the restriction and shame associated with diets have the most detrimental impact on people experiencing food insecurity. One study found that participants with the highest levels of food insecurity met clinical criteria for an eating disorder at a higher rate than the general population. In other words, because of the effects of diet culture, people who lack access to food feel so much guilt when they overeat that they respond by further starving their bodies.
It’s not hard to see how a frugal mindset reinforced by years of poverty and shaming by our culture could yield the same mindset around money. The University of Minnesota study found a common restrict-and-splurge cycle in budgeters in the general population. Add financial insecurity to the equation, and that effect is likely to be even more severe when we prescribe restriction to people who are already struggling with money.
The trauma of that hyper focus on restrictive budgeting has stuck with Duke even as her financial circumstances have stabilized over the years. “You have that poverty mindset,” she said. “I think I still have it sometimes.”
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