Why Your Friend Can Take Financial Risks You Can't (And They Don't Even Know It)

Understanding the invisible advantages that shape financial outcomes

(This post is updated from one originally published on April 8, 2021)

Your college roommate just quit their job to start a business. Your coworker bought a house at 25. Your neighbor took six months off to travel Europe between jobs.

And you're thinking: How do they do it? What am I doing wrong?

Here's what you might not be seeing: safety nets. And the thing about safety nets is that they're invisible—especially to the people who have them.

The Conversation That Changed My Perspective

I had a series of conversations recently with someone close to me. We were looking at the same situation—someone made what appeared to be a risky financial decision—but we came to completely different conclusions about whether it was wise or reckless.

It took me days to figure out why we couldn't agree. Then it hit me: we were each viewing the situation through our own experience with safety nets. One of us had benefited from substantial safety nets throughout life. The other had experienced only intermittent support along the way.

We were watching the same movie but seeing entirely different plots.

This matters more than ever right now. Recent economic data shows that after a brief narrowing during the pandemic, wealth inequality in America is widening again. The gap between those with safety nets and those without is growing starker, even as it becomes increasingly invisible to casual observers.

What Actually Counts as a Safety Net?

When we think about financial safety nets, emergency savings usually come to mind first. And it should—having money set aside for unexpected expenses fundamentally changes your financial decision-making.

But safety nets extend far beyond your own savings account.

Financial capital includes: Emergency funds that let you handle a broken water heater without panic. A pension that guarantees retirement security. Retirement savings that are actually on track because your income allows meaningful contributions. Access to safe, low-cost investment options.

Human capital matters too: Your health determines your ability to work and earn income. Your educational attainment opens doors to different types of employment. These aren't just nice-to-haves, they're fundamental building blocks of financial stability.

Social capital is often the most invisible: Family members with financial means who could help in a crisis. Parents who can contribute to a down payment on a home. Relatives who pay for college, reducing or eliminating student debt. An inheritance you can reasonably expect. Friends who can provide practical help—a ride to the hospital, childcare in an emergency, help moving when rent increases.

During the pandemic, social networks became starkly visible in their importance. Who could help with groceries when you were quarantined? Who could watch your kids when schools closed? These practical forms of social capital directly impact your financial stability.

The National Picture: Inequality is Widening Again

For a brief period after the pandemic, wealth inequality in the United States actually narrowed. Lower-income workers saw strong wage growth. Housing price appreciation benefited middle-class homeowners.

But recent data shows that progress reversing. A Bank of America economist noted that lower-income wage growth improvements have "gone into reverse," and while it's early, "the divergence is quite stark." The gap between higher and lower-income households is now the widest it's been since early 2021.

Consider these realities:

The top 1% of Americans now hold approximately 31% of total household wealth, according to Federal Reserve data. The combined wealth of America's top 12 billionaires exceeds $2 trillion. Meanwhile, younger generations are accumulating significantly less wealth than previous generations did at comparable ages, according to recent analysis.

The Black unemployment rate remains roughly double that of white workers. The homeownership gap between Black and white families has actually widened from 26 percentage points in 1960 to 30 percentage points in 2020, despite increases in overall Black homeownership. Structural barriers including lower incomes, higher mortgage denial rates, and ongoing segregation continue to deny many families access to this primary wealth-building asset.

This isn't abstract economic theory. It's the daily reality that shapes which financial choices are available to you.

How Safety Nets Change Everything

Having a safety net fundamentally alters your relationship with financial decisions.

Safety nets give you options. When Plan A doesn't work, you can pivot to Plan B or C. You're not trapped by a single choice that didn't pan out.

They provide peace of mind. When your dryer breaks on Sunday night with all your work clothes inside, it's an inconvenience requiring a repair call—not a week-long catastrophe triggering a cascade of missed work, lost wages, and deepening financial fragility.

Safety nets create space for risk-taking. When you know resources or people exist to catch you if you fall, you might start that business, return to school, or take a stretch job where success isn't guaranteed but growth potential is real.

Without safety nets, the calculus changes completely.

You focus on the immediate present because long-term planning feels futile when the ground constantly shifts beneath you. If you try making long-term plans, you mentally prepare an escape route for when things inevitably get difficult.

You become risk-averse by necessity. Starting a business feels impossible. The hours required for further education would mean sacrificing current income you cannot afford to lose. You take jobs you can do with your eyes closed rather than ones that would challenge you to grow toward higher earnings.

Why This Invisibility Creates Problems

Here's what makes safety nets so pernicious: they're largely invisible to casual observers. And humans naturally assume others operate from similar circumstances to our own.

If you have safety nets, you encounter situations where people's choices baffle you. Why are they still renting when your parents helped with your down payment? Why haven't they finished their degree when your family could afford tuition? Why won't they pursue that exciting opportunity when you have savings to sustain you if it doesn't work out?

If you lack safety nets, you might struggle to understand how others achieve what seems impossible. How did they buy a house so young on a salary that couldn't possibly cover the mortgage? How are they supporting their household while starting a business—where is that money coming from? How can they take months off to travel between jobs?

When safety nets remain invisible, we default to explaining differences through personal characteristics. We attribute success to drive, ambition, or grit. We chalk up struggles to laziness, lack of intelligence, or fear.

But we're often getting the story completely wrong.

Building Your Own Financial Clarity

Understanding safety nets—whether you have them, lack them, or have some but not others—is foundational to making sound financial decisions.

This is where financial coaching becomes genuinely valuable. Not as judgment about your circumstances, but as clear-eyed assessment of the actual terrain you're navigating.

In coaching, we:

Identify which safety nets you actually have. Not what you wish you had or think you should have, but what genuinely exists as backup in your life. This honest inventory changes everything about how you plan.

Design strategies appropriate to your real circumstances. Generic financial advice assumes safety nets that might not exist for you—or fails to leverage ones you do have but haven't recognized.

Build the safety nets you can control. While you can't conjure family wealth or change your health overnight, you can strategically develop emergency savings, improve skills that enhance employability, and cultivate supportive networks.

Navigate decisions with realistic risk assessment. Whether to pursue that career change, start that business, or make that investment depends heavily on what safety nets exist to catch you if things don't work out as planned.

Stop comparing yourself to people playing an entirely different game. Once you understand safety nets, you can assess your progress against your actual starting point—not against someone who began the race miles ahead.

What Comes Next

The data shows wealth inequality widening. Economic forces are creating increasingly divergent outcomes for people with and without safety nets. Understanding where you stand within this landscape isn't pessimism—it's clarity.

And clarity enables strategy.

Whether you're working with limited safety nets and need to build financial resilience with that reality in mind, or you have safety nets but haven't been leveraging them effectively, the first step is the same: seeing your situation clearly.

That's what coaching provides—not optimism or pessimism, but clear sight. Not generic advice, but strategy built for your specific circumstances. Not judgment about your starting point, but honest assessment of the path forward from where you actually stand.

Ready to get clear about your financial reality and build a strategy that works for your actual circumstances—not someone else's? Schedule a free consultation to explore how one-on-one or small group coaching can help you navigate your financial landscape with clarity and intention.

Does the invisibility of safety nets resonate with your experience? Have you noticed this dynamic in your own financial decision-making or when comparing yourself to others? I'd love to hear your thoughts in the Comments.