"Personal finance" was the lenders' name first

What the phrase meant in 1931

Count how often "personal finance" appears in printed books, year by year, and the phrase rises twice. The second rise is the one you would expect, peaking around 2000 with the advice industry. The first rise peaks in 1931.¹ In 1931 the phrase did not mean managing your own money. It meant the small-loan industry.

A news magazine in March 1931 described the trade this way: "Personal finance companies lend up to $300 on borrower's character, sometimes taking chattel mortgages as collateral." The article put the industry's volume at about $500 million a year, at rates of 30 to 42 percent a year, and named the two biggest lenders, Household Finance Corporation at 2.5 percent a month and Beneficial at 3.5 percent a month, with 318 offices and $66 million lent to 413,345 families in the previous year.²

The government used the phrase the same way. The 1933 industrial code for the trade was titled a code of fair competition "for the personal finance industry".³ A 1939 book by an industry economist was called Personal Finance Comes of Age.⁴

The trade body that chose the name

The lenders had a trade association, founded in 1916 as the American Association of Small Loan Brokers. Its own stated aim was to "standardize, dignify, and police the small loan business".⁵ It changed its name six times, and each name is a record of what the industry wanted to be called. In 1929 it became the American Association of Personal Finance Companies. In 1946 it became the National Consumer Finance Association. Since 1983 it has been the American Financial Services Association.⁵

So "personal finance" was the small-loan lenders' respectability word from 1929 to 1942, and "consumer finance" was the word they chose next. Both phrases that now name the household's subject were first adopted, in print and in law, by the people lending to the household at 42 percent a year.

Household finance too

The third phrase has the same history. From 1927 until about 1990, most printed uses of "household finance" were the name of one company, Household Finance Corporation: about four in five uses in the early 1930s, and still three in five in 1960.⁶ That company opened a Department of Consumer Education in 1930 and published a booklet called Money Management for Households in 1931.⁷ In 2002 it settled predatory-lending charges with all fifty states for $484 million, then the largest consumer restitution ever won by state attorneys general.⁸ Four years later, in 2006, academic finance adopted "household finance" as the name of a field.⁹

The household sense existed, and it was small

None of this means nobody used the phrase for what it means now. A seven-booklet mail-order "Personal Finance Course", with "simple instructions and advice on how to manage your household and personal finances", was copyrighted in New York in 1920.¹⁰ Nobody knows who its author was. Against the lenders' half-billion-dollar industry, with a trade association and an industrial code, that is the scale of the household's own claim on the phrase in the 1920s and 1930s.

What the name records

A name records who got there first and for what purpose. "Personal finance" was a lender's brand before it was a school subject. "Consumer finance" was the lenders' next brand. "Household finance" was one lender's trading name for sixty years. The field that now teaches households to manage money inherited all three names from the people the households were paying. It is a fact about where the words came from, and the first thing to know about the field.