Money and Ignorance

Posted: 20 Jan 2011 04:00 AM PST

Financial literacy – what does it mean? When questioned about their finances, why is it that the majority will state something resembling: "I put fun before money" or "I don't know, I've always been bad with money; my family has always said that friends and family are more important than money." I know that I used to fall into the same boat; I was almost totally ignorant of the practice of using money wisely that these 'sayings' were almost second-nature to me. Let's find out why!

Photo: Colchuck

It has been my experience that nearly everyone that I associate with in my personal circle of friends, colleagues at work, and even most people in public have no idea when it comes to money! With absolutely no knowledge of finance, economics, or even basic accounting these same people shun high gas prices, get mad when their grocery bill goes up, and think 'CPI' is a brand of shopping cart. People will complain about price increases and taxes and all the while not realize how much their ignorance taxes them!

The elementary maxims of finance are extremely easy to communicate and learn, but why are most people so isolated from this knowledge? In my own life, I had no idea whatsoever about finances before I started reading [about them]. I didn't know where to go for information, what to do, etc. Most people are so excited about 'being a millionaire' or 'winning the lottery' that they have no idea there is a lottery coming to them in the form of a biweekly pay check – they just don't know the winning number combination!

I am not trying to put forth an idea for a crusade in the name of financial literacy. I think that would be extremely lame. I'm just trying to get some discussion going. My biggest fear is that the crux of the problem – if you could really, objectively call it that – lies outside of the circle of personal finance and stems from other things, with financial illiteracy 'en masse' being but a symptom.

Considering the above, and in an effort to stay on topic, let us consider a controversial question: do peoples' families' really "put friends before money" or are they simply uneducated when it comes to money? In essence what people are stating when they say this is that the cumulative $245.00 they spend each month on fast-food for their kids when "they don't have the time to cook" is worth it because they "value" their family over the money. My opinion – you're an idiot.

It could simply be that people don't know enough to know any better; in an effort to show that they aren't sure how to generate the money to be "well off" or the knowledge of how to save, etc, they realize that they are a good person and the culprit must lie elsewhere, maybe in their values. It then becomes rote repetition of something that leaves them looking like an angel when questioned about their hypothetical balance sheet from hell.

A lot of people seem to confuse emotions with the truth, and this seems to be especially true in the arena of personal finance. People are so grossly unaware of the facts and truths about the proper handling of money that they're not even speaking on the same plane as you when questioned about why they aren't good at handling money. The answer is that no one is inherently blessed with the genetic predisposition of flawless money management.

The truth is that being "good with money" is a skill just like everything else. It's sad that most people don't understand this. They seem to think that they're stuck with what they've been given, and that's almost always a family that simply has different values than those "smart savers" over there, who are so well-known for being great with money. I sympathize with these people and would like to not label them as "stupid people" but simply ignorant people. They have no idea of the treasures they could find if only someone could show them how! So the next time someone says "I'm bad with money!" – ask them why!

Dollar Matters: How Do You Make Money?

Posted: 19 Jan 2011 08:56 AM PST

We’re always thinking of ways that we can make more money. This is especially true at the outset of a new year. Here are some great personal finance posts looking at making money:

Top 10 Most Bizarre Freelance Jobs

Finance for a Freelance Life provides a great infographic from CreditLoan.com that offers some great insight into some of the strange freelance jobs available. Yes, you really can do these.

Live to Work, or Work to Live?

Canadian Finance explores the very interesting question of how you view work. And how your work affects your financial happiness.

What Do I Do to Get My First Promotion?

Green Panda Treehouse offers some tips on getting your first promotion. This, of course, could lead to higher pay.

Where I Keep My Emergency Fund Cash – January 2011

My Money Blog looks at how you can earn a return on the money you keep in your emergency fund. No, it’s not a big return, but it is a way to make a little extra money.

Dollar Cost Averaging (DCA) vs Dollar Value Averaging (DVA)

Million Dollar Journey explains the differences between two investing strategies for building wealth.

Life Insurance Blog