4 Reasons Why You Are Not Good with Money
Do you believe that you are not good with money? Did you learn how to spend and save money at school? Did you ever have a class in high school that talked about debt, interest, investments, and practical money tips?
Well, I didn’t and most of us aren’t taught or exposed to how to deal with money in a positive way. Most schools completely neglect to teach personal finances, how to balance a checkbook and basic money-management skills.
If children aren’t taught about finances and how to manage money wisely by their parents, they are going to have to learn the hard way. It’s not a surprise that most people make financial mistakes, especially when they are young, because they just don’t know any better.
I remember during my first week of college there were tables set out by a few locals banks. They were trying to reel in all the incoming freshman and any other college students with credit cards by using some cheap bait. They tried to woo all of the broke college students with a free 6″ Subway sandwich and I almost fell for it. A $3 sandwich was the entry point into a heap of financial mess.
Banks and credit unions know that college students are an ideal target audience. College students are young and finally have some independence. Plus, they have no money and are paying for expensive tuition, books, food, and living expenses for the first time. Of course, they’ll draw these newbies in with an offer they can’t resist even if it’s a frisbee or a crappy T-shirt they’ll never wear.
Now, I know laws have changed and banks and credit card companies can’t go onto campuses like they once did offering frisbees and subs for new sign-ups. The CARD act is good first step. But how often do we get sucked into some ‘amazing offer’ that really isn’t that amazing? If we don’t know any better, we’ll probably make a lot of poor financial decisions just like a typical college student.
4 Reasons Why You Are Not Good with Money
Lack of Financial Knowledge
Knowledge is power if acted upon. If children, teenagers, and even adults for that matter learned the in’s and out’s of how money works and principles for building wealth, our society would change.
Could you imagine if people were educated on the power of compound interest in terms of investments and debt? The amount of debt and financial blunders would most likely decrease or be completely avoided.
People would literally run away from every cash advance store in the country. Maybe people would fully understand how much interest their student loans will accumulate over time. Fewer people would run themselves into debt.
So, if you don’t know much about money management, immerse yourself in research. You can find most answers online. Check out my posts and other resources that will help you understand these concepts more. And if you know someone who is good with their finances, ask them what they are doing. I’m sure they would love to share and be a support to you.
Schools Don’t Require Financial Literacy
Schools aren’t equipping students to understand and manage finances either. There are only five states in the U.S. that require all high schoolers to take a personal finance class. Those five states are Utah, Alabama, Missouri, Tennessee, and Virginia. Clearly, this is a problem. It’s no surprise that most people are not good with money, because they weren’t taught about finances.
We can’t rely on schools to teach children everything they need to know in life. As a parent myself, I want to educate my kids on finances because it’s important. I want to equip my children to be able to excel in life and in the real-world. So, I need to help prepare them by teaching them about personal finance. If they know better, they’ll more likely do better.
In an ideal world, all states would require personal finance classes and parents would also teach their children money-management skills at home. But we all know that the likelihood of that happening is as like winning the lotto.
So if you’re a parent, make it YOUR job to teach your children how to manage money wisely, because you can’t expect them to learn these skills at school. And the best way to teach these skills is by modeling them to your children and explaining to them what you are doing.
Let your kids watch you create a budget, calculate a tip at a restaurant, write a tithe check, pay bills, and the list goes on. The more we equip our kids to be competent adults, the better.
The Majority of Americans Can’t Pass a Basic Financial Literacy test
In fact, more than two-thirds of adults can’t pass a basic financial literacy test. That means that the majority of Americans don’t understand the math behind interest and other financial principles. It’s no wonder that people are drowning in debt and the weight of their financial choices. If you don’t understand financial principles, of course, your going to make some bad financial decisions.
Most people start making poor financial decisions when they leave their parents home. What would our world look like if high school students understood how taking out student loans will affect their lives?
I know so many people who regret taking out student loans on a degree they’ve never used. It’s downright tragic. The US has $1.5 trillion in student loan debt and 45% of those millennials wish they would’ve never taken out student loans in the first place.
Take some time to look at the interest rate you’re paying (debt) and earning (investments). Look at the math and see if you need to make changes. You might want to check into a financial advisor that will help you look at your finances and help you get to where you want to go. This is a financial advisor I’d recommend, Liftoff Financial Planning.
We Are Taught That We Shouldn’t Talk About Money
One of the biggest reasons why people struggle with money is because we don’t talk about it. We need to quit making money a taboo subject and start talking about how to manage our finances wisely.
People put money in the same category as politics and religion as a big no-no to bring up. This is yet another reason why most Americans have little to no financial knowledge base.
If people felt comfortable talking about money, they would be more likely to ask for help and ask questions. It’s just assumed that you just figure out money on your own, but it really doesn’t work that way. Finances are complicated. There are many different facets like investing, saving money, retirement, real estate and so much more.
So don’t shy away from talking about money. Ask questions. Talk with people who know more than you. Read and research what has you stumped. And if you’re married, TALK to your spouse about money. Look at your finances together, because you don’t want money to be the divide between you and your spouse.
Needless to say, we shouldn’t be silent when it comes to finances. The way we spend and save money must be addressed because money impacts every area of our lives. I wish this wasn’t the case, but finances make a daily impact on us and it’s our job to manage our finances well.
It’s time to stop saying that we are not good with money. You can have a different future. You can stop generational poverty in your family.
Talk to your kids about money, ask people who are making wise financial decisions what they do, research on your own the topic. Because if you want to see a better financial future for you and your children, you have to start being proactive.
What is something you can start doing today to help your financial situation? I’d love to hear your comment below!