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Chase’s controversial tweet about making coffee at home is actually good advice

Yesterday, JP Morgan Chase sparked Twitter rage when it tweeted (since deleted) the question: “why is my balance so low” and responded that people should be more mindful with their spending, by cutting out coffee, dining out, and short taxi rides. Chase may not be the best messenger, since its history of charging high fees to low-income customers is one reason their bank balance is low. It also pays executives, like CEO Jamie Dimon, lavish salaries. But the bank’s tone-deaf tweet contains some good advice.

Managing your personal finances is hard; even for experts it’s an extremely complex risk problem, one I’d argue that is harder than managing assets at a hedge fund. We must take our income today and make sure it lasts a lifetime, all without knowing how long we’ll live, what will happen to markets, if we’ll lose our job, if and when we’ll have an expensive health event, if we’ll divorce, or even a car break down. Life is full of uncertainties we must finance.

To make matters worse and unfair, the less money you have, the less margin you have for error. We all make financial mistakes from time to time, but the richer you are, the more you can afford to make them. The less money you have, the better you have to be with money. The risks are greater since low income people tend to have less comprehensive health insurance, cars more prone to breaking down, and lower incomes. It’s not only harder for them to save, they need more savings. And it’s not only low income people: 40% of American adults would have to take out debt or sell something to cover $400 in unexpected expenses, according to the Federal Reserve.

The smaller your income, the more every penny counts, which is why watching your budget and cutting down on small, unnecessary purchases that add up is great advice—even if it comes from someone who doesn’t have to make these same sacrifices. Mindful spending won’t make you rich like Jamie Dimon, it won’t combat income inequality, but that doesn’t mean it’s not a good idea. Perhaps America needs a more comprehensive social safety net instead, but until we have one, most Americans need more emergency savings.

Even before the Chase tweet there has been a curious backlash to advice that tells people to be mindful of spending, or to any financial literacy. The argument made by Washington Post columnist Helaine Olen, for example, is that because cutting out Starbucks won’t solve all your financial problems, admonitions to stop buying lattes is bad advice. Clearly, anyone who tells you the key to riches is eliminating spendy coffee is misleading you, but cutting out small, inexpensive luxuries may be the best insurance against a catastrophic financial event. Financial literacy also won’t make you rich. Many programs are not successful because they or poorly taught or don’t teach people what they need to know. But a well-targeted curriculum can help people be more mindful of their spending, increase saving, and be aware of financial predators—and those are all important skills.

Making your own coffee or improving your financial literacy won’t make you rich, but it will lower the odds you’ll be poor.

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