This is the bigger thing. "Go to the movies, buy Netflix, buy Amazon Prime" etc etc etc. There's so much more things the financially illiterate feel compelled to buy these days.

Back in my college days I was able to live on minimum wage, including paying tuition. I knew several other people doing the same thing and even supporting a family on their income. Their housing expenses where a lot lower than you would believe possible: they lived in a tiny apartment in the bad part of time: they had a warm place (hot in summer: no AC), a dry roof, a kitchen and bathroom. We all had a cheap car, with enough money set aside to fix it as required.

Of course we were the minority. Most people live exactly at their means (including whatever they can borrow). I understand, I like more space as well: I like my toys as much as everybody. I just believed my future was better if I didn't get myself into debt now.

>because in practice the poor aren't that stupid

I think it would be far better defined as learned helplessness in financial matters instead of being stupid. They can be overall smart people, but past experience has taught them views of money that are not beneficial to financial stability. They might even be able to give a lesson on good financial decision making, but on an emotional level they have trouble applying it to themselves.

A much more jarring example of this is behaviors resulting from food insecurity in children. Children who come from very food insecure situations will hoard food even when they are now in a food secure environment. Often this will include hoarding food that does not keep, and any attempts to change this behavior just result in the hoarding being better hidden. From what I remember the advice of foster/adoptive parents in this situation is to provide food meant for hoarding that the child can stockpile and to let the next few years of food security slowly get the child to adjust, recognizing that some level of food hoarding might occur throughout their lifetime.

How is a living wage defined, precisely? Is it defined as the wage an "average" person would need to earn to live? Or the wage a "frugal" person would need to earn to live?

The education system does do a poor job of educating people on financial matters, however.

There was just a post on HN the other day about how the top priority for Millenials and Gen Z is travel, so I would say that the younger generations are not significantly better at financial literacy and in fact may have expectations even more out of line with their financial reality than other generations.

https://news.ycombinator.com/item?id=19963476

A difference I've noticed between myself and many of my friends is that I view savings as "Money you don't touch", whereas they view it as "Money you haven't spent yet"

That difference in perception leads to me having a constantly growing bank balance, while they have developed a habit of saving then splurging, repeatedly. Which isn't really building wealth, but more buffering for large pre-planned expenses.

I think a higher number of people taking out five figure 8% loans that aren't used to purchase an education making it relatively painless to pay back, is solid evidence of less financial literacy. There are still ways to get a college degree without taking out 5 figure loans. You just have to go to a cheaper school and work while in college. It's what I did.

They mostly do it with emergency funds from friends and family who are not necessarily any better off, selling things off, and putting off essential maintenance. Sometimes they can get by this way for a long time, but it's not sustainable.

What industry are you referring to?

Extracting as much money as possible from the financially illiterate absolutely is.

I didn't even sort of say that.

In the way I described, you're reversing cause and effect in many cases and putting the blame on people for being in a situation mostly out of their control. Poor people aren't poor because they spend all their money on avocado toast and fidget spinners, they're poor because wages have stagnated and the costs of housing, education, and healthcare have skyrocketed. The "welfare queen" stereotype of a poor person recklessly spending money doesn't reflect the evidence.

https://en.wikipedia.org/wiki/Welfare_queen#Gender_and_racia...

It costs a lot of money to be poor in the USA:

“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”

― Terry Pratchett, Men at Arms: The Play