Elizabeth Warren wants to fix the economy so it works for the average American. That was the through line of the Massachusetts senator's arguments and policy proposals during the first Democratic debate of the 2020 election season.
"I am in this fight because I believe that we can make our government, we can make our economy, we can make our country work, not just for those at the top, we can make it work for everyone," Warren said during her closing remarks.
And while many of the nine other candidates on stage made similar statements throughout the night, Warren is uniquely positioned to take on the issue — not only has she released more detailed plans about how she'd go about it, but she's spent much of her career researching personal bankruptcies and the factors influencing American families' finances day to day.
She also co-wrote two classic personal finance books with her daughter, Amelia Warren Tyagi, that focus on the pressing daily economic issues Americans face. While many of her policy proposals address large, structural change — breaking up the tech companies, instituting Medicare for All and cancelling student loan debt, among others — her books and research underline her understanding of the factors affecting American finances on an individual basis.
One of the things Warren is best known for, besides conceptualizing the Consumer Financial Protection Bureau, is popularizing the 50/30/20 budgeting system, which she and her daughter wrote about in their 2005 New York Times bestseller, "All Your Worth: The Ultimate Lifetime Money Plan."
The 50/30/20 budget works like this: 50% of your income should go toward "must haves" (your monthly bills: housing, transportation, etc.), 30% is dedicated toward "wants" (discretionary spending) and 20% is earmarked for "savings."
Rather than focusing on discrete actions, like skipping coffee runs or bringing your lunch to work, Warren and Tyagi write, you should focus on striking a balance in your financial life. That's what the 50/30/20 budget is meant to do. While cutting out coffee, for example, might work in the short term — i.e., you cut back for one month and save a bit of money — the 50/30/20 budget is meant to help you get ahead in the long term. Stick to it, and you'll be spending and saving responsibly.
Of course, it all sounds good in theory. But when housing is increasingly unaffordable, retirement savings rates are abysmal and wages are stagnant, how can the average American actually stick to the budget?
Warren recommends starting small by tweaking a "60/40/0" budget to a "55/30/15" budget.
"You will start getting ahead, each and every month," she writes. "Moreover, with those numbers, in a few years you will be in a better place than the overwhelming majority of Americans. And that will be something to be proud of."
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