Our Financial Education Stinks!

Ok, I know to many people, financial stuff is boring. And having to learn about it is even more boring. But, how bored have you been lately with all the horrible financial news? Our economy and markets have been in free fall lately, and no one seems to know what to do about it.
Well, I have no answers either – except on a personal basis. My financial life is in order – no large amount of consumer debt, a home I can afford, and some savings. I am putting money into a 401K each paycheck, and we have an emergency fund of cash available in case anything horrible happens (more horrible than seeing the stock market melt down everyday. So, in my household we are OK, even though I work on commission and my income has been reduced significantly recently.
How did we get in this good shape? I have educated myself in the boring details of personal finance, something I was not taught in any school I ever attended.
Did you learn about checking and savings accounts in high school or college? About compound interest and how it can help and hurt you? About how credit cards work? About the details of buying large ticket items like cars or homes? I didn’t and I doubt you did either. So, where did you learn it? Oh, I see, you never did learn it and you are going about your daily financial lives without knowledge that could help you immensely.
If you look at some of the root causes of the large financial problems we are having now, I think you will find a lack of financial education at the bottom. Congress pushed Fannie Mae & Freddie Mac to get EVERYONE into a home and home mortgage. Did Congress consider that many of these people buying homes did not know what they were getting into? I’ll bet not. And, here’s an even better question: Did members of Congress understand enough about basic finances to know what they were asking Fannie & Freddie to do? I will make a large wager that they did not.
Where are we supposed to learn about finances? If school does not teach it, we would have to get it from home or “on the street”. If your parents were not taught, and they tried to teach you, chances are you have large gaps in your knowledge.
Look, I am NOT talking about high finance – all those stocks & bonds and leveraged-this and debt instrument-that. I am talking about the basics of everyday life here. You make money decisions every day, and the more knowledge you have, the better off you are going to be.
So, do you have a savings plan? Do you have a monthly budget? Do you know how much you spend in interest every year – interest on credit cards, car loan, other loans and your mortgage, If you were to add it up, I think you would be shocked at how much it is.
This is not my typical rant, in that I am not railing about politics or something else in the news that caught my attention. I am ranting about something that has bothered me for a long time. Everyone talks about our “failing schools”, and in this case I have to agree. But, this is not something that has happened in or to our schools over time. This is something that has never, as far as I know, been addressed in our schools at all.
My suggestion? Learn all you can about your personal finances. Find someone who know – really knows – and learn from them. Build a monthly budget for yourself and try to live within it. Set up a savings plan, other than what you may be saving at work. Look at your credit card statements and see how much they are charging you in interest – both the rate and the amount (you may put that card away when you see how much they get of your money.
Here is one thing you can do today. My bet is that the results will surprise you - go through your bank statements for any month and see just what you spent money on. Write it down and then figure out how much was wasted on stuff you didn’t need or didn’t even really realize you were spending.