Scattered around FIRE Me: Financial Independence for Educators, I often write about my blithe youthful days spending as much as I made and maintaining a lifestyle that belied my paycheck-to-paycheck poverty. Thanks to the stable salary and cash flow afforded by educational employment and ready-and-willing credit, I sustained decades of what I would call artificial affluence. Thankfully, I didn’t suffer a catastrophic life event that could have quickly collapsed my financial house of cards. Along our streets and camped near highways and underpasses are many who weren’t as fortunate as I was. 

Luck, a stable job in education, and yes, privilege helped me safely get through many years of artificial affluence and financial dependence. What changed?

I’m sorry to disappoint you, but I didn’t have a financial epiphany or a made-for-blogging moment. Unlike the scorched earth approaches of the FIRE community (pun intended), my path to financial independence was less a fiery conversion than a patient hike out of financial dependence. It didn’t happen overnight, but I am in a different place than I was even 15 years ago.

What is true was that for many years, let’s say decades, I lived in a state of artificial affluence. What is also true is that a few seemingly small changes, choices, and decisions over time transformed my affluence from artificial to authentic — I became a Financially Independent Educator.

Artficial affluence is not unique to educators. But I suspect that many of my current and former colleagues live in similar states of financial dependence.

Artificial affluence is ‘poverty with benefits’

As educators, we see genuine poverty every day that we work in schools. Almost every school has students which qualify for free or reduced meals based on their household income. In class and during conferences, school events, and open houses, we witness the diversity of income and quality of life which our students experience.

Investopedia defines poverty as, “the state or condition in which people or communities lack the financial resources and essentials for a minimum standard of living. As such, their basic human needs cannot be met. People and families who live in poverty may go without proper housing, clean water, healthy food, and medical attention. In my community, there are students experiencing this level of poverty in almost every school.

In 2022, the poverty income threshold for a family of four with two children under the age of 18 is $29,678 per year. While I will frankly acknowledge that many paraeducators and some district staff are grossly underpaid for their important work in schools and that educator pay varies widely among administrators, teachers, and school or district staff, most educators don’t technically live in poverty.

Could a paraeducator be considered working poor? In some cases, yes. But most school employees have health care and disability benefits, work under union contracts, and enjoy significant job security.

Teachers and administrators are far less likely to live in poverty. According to U.S. Census data, teachers have a poverty rate of 1.1%, meaning that only about 1 in 100 teachers live below the poverty threshold.

For these reasons, I think it’s safe to say that most educators do not live in poverty, at least as described above. However, many more educators share something familiar to those living in poverty:

• being financially dependent,
• experiencing uncertainty about their finances, and
• living paycheck to paycheck.

According to the Reality Check: Paycheck-to-Paycheck Research Series, “As of January 2023, 60% of United States adults, including more than four in 10 high-income consumers, live paycheck to paycheck….”

While the most current number is a 4% drop from the last survey, this still means that 6 in 10 adults live in a state of financial insecurity. Educators are no exception.

Under the influence of income

I remember my first real teacher’s paycheck. After years of working retail (or not getting a paycheck at all), it was amazing to see not three, but four figures to the left of the decimal point! I also clearly remember the first paycheck after I completed my Masters and leap-frogged up the pay scale. Welcome to Marvin Gardens! (That’s a Monopoly reference.)

Good steady income is like a drug. And like all good drugs, it’s mind- and perception-altering. Here’s what can happen on an income high. (Even if your income isn’t really that high.)

While under the influence of income, you….

• Unleash the kraken of credit card spending,
• Become numb to monthly credit card balances,
• Start dreaming of a larger apartment or first home,
• Expand your personal ‘collections,’
• Buy a new or better car,
• Eat out more often, and
• Get more casual with keeping track of spending.

When the income is rolling in, it’s hard to not spend, eat out, buy new things, and live in the present. Planning for an emergency or for a distant retirement? We’ll do that next week….

Because of something called temporal bias, we have a hard time (or simply avoid) imagining our future selves. According a Milken Foundation study, “Temporal discounters tend to view their future selves as different from their present selves and cannot bring themselves to take actions that may discount present rewards in favor of benefiting those other future selves.”

Put another way, we tend to live in the fiscal present and cannot imagine being unemployed, disabled, or retired in our future.

Educators are even more subject to these symptoms because educators enjoy unusual job security. After a few years in the classroom and/or on the seniority list, educators can still lose their job, but are more likely to be on cruise control. Knowing this, educators can be lulled into thinking that they can take more chances and ride their income high without building wealth. What me worry? I’ve got a pension!

Artificial affluence is a fiscal hallucination

Artificial affluence is a hallucination of financial stability, even wealth, due to decent income and stable employment.

Artificial affluence is maintaining a lifestyle through deficit spending via loans or credit.

Artificial affluence neglects future needs by not saving sufficiently for emergencies, major expenditures, or retirement.

Artificial affluence is financial ignorance and dependence vs. financial independence.

I lived much of my adult life in a state of artificial affluence. I’ll now venture a hypothesis — I think many educators also live in a state of artificial affluence. This series of posts will examine what it means to be artificially affluent and help you assess your own financial situation.

Symptoms of artificial affluence

Artificial affluence occurs when one or more of the following are in place:

• Spending more or about the same as you take home each month,
• Lacking clarity about how much you spend on expenses each month, 
• A disproportionate amount of spending each month is toward debt — mortgage, rent, credit card debt, and/or student loans,
• ‘Covering’ extra or larger expenses with a credit card or other debt, 
• Sustaining or growing credit card balances, and/or
• Not setting aside any/enough money for an emergency fund, savings, and retirement.

If any of the above sound familiar, I suggest you keep reading by clicking on the links below to explore artificial affluence. In the next post, we’ll examine how income, costs, and net worth are essential to building authentic affluence and financial independence.

We’ll meet The Averages to better understand what artificial affluence looks like so that you can determine if you might be experiencing artificial affluence yourself.