“The Two-Income Trap” by Elizabeth Warren and Amelia Warren Tyagi is a must-read for anyone interested in modern finances. The great part is that they released the book in 2003.
We have been sold a lie. Sending two parents into the workforce will cause more financial issues than it solves. I would have never thought this way before reading this book.
Two generations ago, most women would stay home with their children. However, they filled an important role as an emergency source of income. When needed, mom could earn money to keep the family afloat.
1) The important part of having a mom at home was that the family lived off one income. If trouble arose, mom could earn some extra income to support family operations.
2) As national news made people fearful of school crime and neighborhood violence, there was a push to move to better communities with newer, safer schools.
3) Now, moms needed to work, and the family used her income to pay for the mortgage, the second car, and school activities. The family was middle-class but essentially living paycheck-to-paycheck.
4) When disaster struck—a medical emergency, house maintenance, or job loss—the family immediately fell underwater. They barely survived on two incomes; now, they had one. This was a disaster waiting to happen.
5) Finally, the family decided to file for some mixture of divorce or bankruptcy. Financial issues genuinely take their toll on middle-class families over time. These families never stood a chance.
This book opened my eyes to how the world changed overnight. Women went into the workforce feeling empowered, but they are actually in a worse place today.
Today, the structure of the world is for a two-income household or for one person to be a high-value earner. That is truly the only way for this story to function correctly. Hence, so many women seek a man earning over $100,000/year.
It’s not anyone’s fault; it was a combination of bankruptcy laws, fear-mongering news, women’s movements, and advertising. We never stood a chance, and no one saw this coming.
The end state is that families need to understand money, save every penny, live below their means, and build passive income streams—everything I discuss.
Without taking these measures, the writing is on the wall. Having two workers in the household, trying to raise kids, and living paycheck to paycheck will fail. It’s not a winning formula for families—maybe for banks and creditors.
I would have loved to read this book before I married. My wife and I fell into this trap early, but we never spent past my primary paycheck. That saved us in the long run, although we accumulated debt.
We were able to get ahead by getting roommates, living below our means, eliminating debt, and investing. All things that no one told us to do, as we went against societal norms.
This book is impressive and should be required reading for everyone considering marriage. We must avoid the two-income trap. Both parents can work but live on one income, invest the other. That’s the only way to prevent disaster and stay out of debt.
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