Dave Ramsey and Suze Orman have more competition than they can imagine. People now turn to Personal Finance blogs on the web for the inspiration and advice they need to reduce debt and better their money spending habits. Moreover, many personal finance bloggers are currently fighting debt themselves, using their blogs as a motivational tool and motivating others in similar situations as well. As these bloggers have developed online communities devoted to sharing their experiences and inspiring others to blog, both the readership and number of bloggers joining these circles have grown enormously.
Growing from 381 in November 2009, WiseBread’s top Personal Finance Blog Chart currently lists almost 700 of this blog genre! As put by Yakezie Blog Network member AshleyB “I used to write a personal finance blog that ran from February ‘08 until May 09. At that time I was able to follow pretty much all the active PF blogs that were running… now there are so many I couldn’t possibly follow them all.” There must have been a sudden increase in the number of personal finance blogs during the years 2009-2011.
According to Greg Go, Co-Founder and CTO of WiseBread,
The biggest increase [of personal finance blogs] we saw was in the first quarter of 2010, where the submission rate grew by 64% over the previous quarter. In Q1 of 2010, not only did we see a jump in submissions, but there was also an increase in the quality of blogs being submitted. Based on our interactions with the new bloggers and emails from our users, we get the sense that a lot of the new bloggers from this period are well-educated professionals. Many of them were either getting smaller paychecks, recently unemployed, or foresee unemployment affecting them in the near future.
Thus, the first reason for the increase that comes to mind is the economic recession; Clearly the recession and the need for better information about how to manage debt and money has driven the growth of personal finance blogs. But blogs are not the only indicator of this effect.
The recession has also created more demand for better ways to track and budget spending. Many tech startups, such as Mint.com and Groupon, have created online tools for consumers to manage their finances and save money;
SEC Chairman Mary L. Schapiro stated “While we are experiencing a financial crisis that’s one of the worst in decades, the financial literacy of high school students has fallen to its lowest level ever…” (Investment News: SEC, Finra play show-and-tell). Consumer finance became a priority concern during the time period: In January 2008, George W. Bush created the President’s Advisory Council on Financial Literacy and during the years 2009 and 2010, and schools and lawmakers began pushing for early financial literacy classes for students, creating programs such as Project CHANGE.
All of these examples suggest a sudden shift of values towards consumer and personal finance in the years 2009 and 2010.
We’re all probably thinking the same thing: the main motivation for people to learn how to better manage their money is most likely the recession – and the words that come to mind when we think of recession are unemployment and debt.
[The increase in Personal Finance Blogs] might be related to unemployment data for this period. If you look at that Google chart, you’ll see that unemployment really skyrocketed in 2009, reaching its peak in late 2009 and early 2010. Our theory is that this unemployment growth caused a lot of the folks to seriously think about personal finance and began blogging about the topic in Q1 of 2010. (Greg Go)
The unemployment data shows around a 200% increase in unemployment from 2008 to 2009, reaching a high that we’ve only seen in the “early 1980’s depression.” Thus, a close look at consumer data reveals that, if there is anything that can be correlated to the growth of Personal Finance blogs, this would be it. Nothing else has changed so markedly in such a short period of time to warrant such a sudden growth of personal finance blogs. Unemployment Rate is probably a good means to “wake the general public” on savings and generate discussion.
Will It Last?
But will this newfound era of “personal finance enlightenment” prove itself sustainable? Robert Samuelson raises the question at the end of his article Insecurity Goes Upscale: “Is this a passing mood or an enduring shift? … That depends on how quickly – and whether – the Great Recession releases its stranglehold on the American psyche” (Washington Post: The Great Recession’s stranglehold). An eerie chart published by the FRBSF reveals that household debt is actually highly correlated with credit availability (figure 3).
On the one hand, it is quite possible that as soon as banks loosen their lending restrictions or if consumers find other ways to borrow, they will resume the bad habits they were presumably trying to break by consuming the information on these blogs.
On the other hand, the old adage may, and probably will, apply here: ‘what doesn’t kill you makes you stronger.’ It’s clear we have gotten a lot smarter about our personal finances, and given how deep and painful this recession has been, we’re likely to stay ‘smart’ for quite some time.
Stay with us for an upcoming series of posts on the psychology of debt: what gets us into debt? And what keeps us there?
Author: Christopher Skyi
Christopher Skyi is one of Peerform.com’s blog writers. He writes on topics concerning personal finance, banking, and peer-to-peer lending.