Is Personal Finance Obvious?
Thu, 12/18/2008 - 11:58.
A friend of mine recently read my blog, and his comment was interesting – he said he liked it but that much of the information was fairly obvious. I admit, I wouldn’t consider myself and expert at this moment and frequently, the information I provide is anecdotal, but it begs the question – is personal finance obvious?
A MYSTERY?
Money seems to be a mystery to many people (myself included for many years) – they don’t know what to make of it, how to handle it, or why they don’t have much of it.
Why?
- We’re not taught about money in school.
- Our culture of entitlement has said that we deserve it all.
- Our want-it-now materialistic society has said that we need to have the latest goods and gadgets.
All of these factors combine to make money the ultimate puzzle …
Many of us our broke and we don’t know why.
WHY ISN'T IT APPARENT?
Then, whey don’t we get it? We all know that we should spend less than we earn, save for retirement, have an emergency fund, stop buying crap but we don’t do it … why?
Well, as it turns out, humans have many quirks that prevent us from seeing what is plainly visible – emotions, addictions, fears, regrets, character flaws, family issues … the list goes on! We’re fallible, weak creatures prone to constantly make mistakes until the day we die.
IS THERE ANY HOPE?
Of course, a large part of the picture when it comes to money is educating oneself on the markets and various investments that are out there, but the biggest problem is our behaviour.
I wonder what the percentage split is between financial education and behaviour? I’m thinking that financial success is 70% behaviour and 30% financial education … anyone have any thoughts on this?
Anyways, those people that seem to master their behaviour, always seem to come out on top. They understand their own strengths and weaknesses.
So, at the end of the day, is personal financial obvious?
Hell, yes … but unfortunately, human beings are not.
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From my experience...
When I first started getting into personal finance, it was then that it made sense to me to get an emergency fund, have savings and save for retirement.
Before that - NADA.
I never thought once about it before I was 23, and frankly it was an education thing considering my age, because my parents only told me one thing: never keep a balance on your credit card.
And I never have. But they neglected to tell me about saving money, earning interest, .... kids my age back then never cared about money other than getting more of it, because we didn't understand (even as teens!) what interest meant. And since I never paid interest I never learned about it.
If I had gone to a crash course personal finance seminar and they told me that I saved a $100/month I would have X amount at the end of the year + the interest of that, it would have clicked in my head a lot sooner and I wouldn't have been so late in the game.
The good news, is that now that I've been there and done that (2.5 years ago: $60k in debt and am now at an $80k net worth) I REALLY understand it.
And this will help me educate my kids and start them off on the right foot.
Thanks for the comment! I
Thanks for the comment!
I have to admit, before I got into personal finance, I never really thought about what I was doing - we're just not taught to think about money at all.
So ... it wasn't too obvious until I actually changed my mindset.
It seems that we are taught to spend and buy things we don't need rather than save.
Tom
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