Here's why this kind of personal finance advice is so harmful

The New York Times recently published an article digging into how upgrading your smartphone could be robbing you of longer-term financial goals.

Similar advice has popped up over the years regarding other purchases deemed frivolous: avocado toast, Nike sneakers, and, of course, lattes, which longtime money guru Suze Orman equated to “peeing $1 million down the drain.”

On the surface, this is supposed to be helpful advice. Avoid these kinds of purchases and you could invest the money and watch it grow into thousands of dollars over decades for your retirement. At the very least, you could sock this money away for an emergency.

But this advice — let’s call it purchase shaming — misses the reality of many people’s finances and what is really holding them back from achieving financial security. It also perpetuates damaging stereotypes about poverty that allow the major culprits behind people’s money woes — loosely regulated financial institutions, bad policy, and companies that don’t pay workers enough — to escape scrutiny.

“Because systemic change is harder and requires a longer term investment, it’s easier to put the onus on the individual,” Mae Watson Grote, founder and CEO of Change Machine, a nonprofit dedicated to building financial security, told Yahoo Money. “It’s easier to counsel someone to save three months for emergencies.”

The real anchors on people’s finances are those items that have been outpacing wage growth for years: child care, health care, housing, higher education. And now, add to the list basic food items and gas, which are outstripping recent gains in wages. These are bigger budget busters than a latte or sneakers, or even an iPhone, but you can’t easily slash them from your life or find ways to make them cheaper.

Tips on eliminating small indulgences won’t help people who can't afford rent or health insurance.

“To achieve financial security, you need a base level of wages relative to cost of living,” said Rachel Schneider, co-author of the book “U.S. Financial Diaries” that documents how low- and middle-income earners manage their money. “How to manage money you already have, that’s secondary to: do you have enough money to live? For a lot of people, that answer is no.”

The bottom 20% — or 1 in 5 American households — have on average $15,140 in income a year, according to the Bureau of Labor Statistics, while the next highest quintile brings in just over $36,000. They have so little they can’t cover their average annual spending, which is not exactly living large.

And one of those expenses may be a reliable iPhone. Like virtually all people in the country, lower-income folks need to get online — internet access is key for banking, accessing social services and health care apps, communicating with school, and finding job listings. The device is also a phone! So what some personal finance experts call a luxury is actually a necessity.

That aside, focusing on the iPhone misses a larger problem with purchase shaming, which bolsters the idea that lower-income people can’t manage their money. That’s not true, Grote said.

“How our customers are able to make ends meet, the trade-offs they manage, the kinds of sacrifices they make, and how they are able to make dollars stretch are quite profound,” Grote said. “They earn an MBA equivalent dealing with their finances.”

Financial education and advice is packaged for the “middle income in a different era,” said Jonathan Morduch, co-author of “U.S. Financial Diaries.” That advice doesn’t account for lousy trade-offs many Americans have to make before even considering long-term planning.

Pay for the car repair or pay the heating bill. Go to the doctor or go to work.

“It doesn’t recognize that they may not have good choices,” Morduch said. “They may not have the slack to do the things they understand they should and want to do.”

This advice also doesn’t recognize how universal health insurance, mandated sick days, a minimum wage that keeps up with inflation, and paid family leave could meaningfully change their fortunes.

Finally the most damaging part of this type of personal finance advice is its subtext: Poorer people are undeserving of life’s little luxuries — that they must wait until they have what’s deemed enough money by the personal finance universe to buy that latte, sneakers, or phone. For many, that could be a lifetime of waiting.

“What are we asking from people? Do we think people can't do things that are enjoyable but cost money?” Schneider said. “We need to allow people space to celebrate the birthday party or when the weather is good, an ice cream cone. It’s part of being human.”

Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.