The Stark Reality Of The Financially Uninformed

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Why don’t they teach this stuff in school? Is there some sort of conspiracy to keep us working our entire adult lives until our bodies give out and we’re forced into a retirement that almost perfectly coincides with the social security benefit age? Oh wait, maybe that’s the way it IS intended to be. You go to school, you work, you retire for a few years, and then you check out. If you ask me, that sounds like a completely uninteresting and grim prognosis. Why am I babbling on and on about this? Because it’s no secret that most people, and especially young(er) people, have no idea what the heck they’re doing with their finances. This very thing was thrust into my face this evening when I was enjoying a nice dinner with a friend who is in her late 20s. Somehow we got on the topic of money…this must’ve happened because I was there :) The conversation rolled on from there. And I experienced, first-hand, the uninformed state of our union.

“What’s An IRA?”

cats and beer 2

Zombie gingerbreads for your visual enjoyment

As we sat there enjoying our dinner and conversing about college, debt, and a combination thereof we drifted into unchartered territory for my friend. We were listing the pros and the cons of different career paths she was considering and when I threw out the idea of starting a ROTH IRA account to save for her future and safeguard against emergencies at the same time, she threw back this question, “What’s an IRA?” As I explained what the acronym stood for and how it could be used, more questions came my way. “What’s a brokerage firm? What’s Vanguard? How does the stock market work?”

 

Now I love talking about this stuff and passing along the knowledge I have taking up space in my noggin, but as I went on and on trying to explain the connection of one to the other, and how the biggest asset anyone can have is time, I realized that the my friend is only one speck in a sea of drowning ocean of misinformed people. How’s that for a visual? Unfortunately, it’s true. I also must add that this friend of mine is one of the smart ones. She is a smart cookie who can debate anyone under the table. Yet, somehow our public education system had failed her in this area.

“How Do I Start?”

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Here’s lookin’ at you, Mad Money Cat

After about 30 minutes of me excitedly laying out the basics of saving and investing (did I mention I love this stuff?), the next question was asked with enthusiasm, “How do I start?” I kept going. I gave her options and things to think about that she had never considered before. I was able to give her a basic idea of what’s going on in the financial world and what should be going on in her financial world.

 

The State Of Our Union

Before she left for the evening, I suggested she read (some of my favorite) financial blogs and listen to (some of my favorite) financial podcasts to jumpstart her financial education. She seemed happy to have had a tiny boost in the right direction. But how many other people never get that boost? Considering the amount of money people have saved for retirement in each age group (see below), I’m guessing not too many.

retirement-savings-chart

Being a young Gen-Xer myself, I see it all around me nearly every single day. I see co-workers who say they’ll never be able to retire and scoff at my lofty goals of having enough in savings to walk away from The Man in a few years. I see friends buying cars they can’t afford and I see those same friends wondering how they’re going to pay their rent. This is the unfortunate state of our union without financial education.

What do you think? Where did you get your financial literacy? Did you learn it in the classroom, at home, or in books and on the web? How are you teaching your children (if you have them) about money? We’d love to hear from you in the comments!

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Mad Money Pup Loving His photo Op

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14 thoughts on “The Stark Reality Of The Financially Uninformed

  1. This sounds a lot like conversations I’ve had with my friends as well. I try to only push them if they ask questions but it’s so hard to keep my mouth shut with their financial futures at stake!

    One friend has been asking a lot of great questions so I finally gave her a copy of Jim Collin’s book The Simple Path to Wealth. And she’s actually reading it!

    My parents started buying shares of stock for me when I turned 18, as birthday and Christmas gifts. But they stopped short of actually teaching me what they know for some unknown reason (maybe they don’t feel confident about this knowledge?). For the most part, everything I’ve learned has come from checking out books the library or reading personal finance blogs.

    Liked by 1 person

    • That’s awesome that you’re helping your friends as much as possible. Giving out The Simple Path to Wealth was a great idea! My friend does love to read, maybe I’ll give her one of my books. My parents didn’t have any knowledge to pass on. I just knew I didn’t want to be “poor” the rest of my life so I started reading about finance as soon as I started my first job. Of course that didn’t stop me from still making major mistakes in the way of money and relationships along the way. I’m finally on FIRE and don’t intend on stopping until I hit it!

      Liked by 1 person

  2. I definitely agree with you! There are plenty of people who are financially uninformed. Heck, it can even apply to many other areas of life.

    In this age of being connected to everyone, the answers to almost every question is everywhere because of Google. Maybe it’s just that people don’t put it very high up on their priority list.

    Liked by 1 person

    • I agree. It’s not a matter of not having access to the information; it’s a matter of not thinking the information is important enough to make it a priority. Or, maybe it’s more a matter of not realizing how important this stuff actually is.

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  3. It’s really amazing to me just how much people DON’T know about finance. Granted, I was like that as well a few years ago, until 3 months ago when I discovered the concept of financial independence. But I have been saving because I come from a very frugal family that didn’t earn much, so when I first got my job, my dad was like, put at least 10% of your wages into retirement. So, like the little good girl I was, I did that (it helped that I also lived at home that time). If I’d known back then what I know now, I’d definitely have maxed my 401k back then.

    But I know what you mean. My husband doesn’t know anything about finances, but at least he lets me take care of everything and he’s not a big spender (just have to convince him that we have to eat out less and buy less books). His parents are super smart and successful people, but they don’t ever talk about investing their money smart, just doing whatever their financial planner tells them to do.

    I really wish that financial literacy was a required part of our education system.

    Liked by 1 person

    • I’d like to think that financial education will be part of the public curriculum at some point in the future. I guess we’ll wait and see. My husband and I had similar upbringings…lower/middle class. Both of our parents were good at not spending much money but had not clue how to invest it and build wealth. That’s where we have been focusing our efforts, after making a bunch of money mistakes in our past, of course. Glad to hear you got on the right track and that your husband lets you do all the money stuff. That’s certainly better than trying to convert a spender to be a saver. :)

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  4. Many times I have thought that I will need to be the one to start some sort of financial education program in our schools. Maybe this can be my retirement gig, when I finally have the credentials and the time. Maybe if kids see someone so young retired that will get their noggin’s flowing and grand ideas blooming!
    As for me, no one ever talked to be about finances. I was left to scour books (before the internet) and then the webs whenever a news story crossed by path. My financial plan came together like a quilt, but in the end it all clicked when I found the FI blogs. Happy to finally be here!

    Liked by 1 person

  5. It is crazy that so many people have no idea about how money works, and that by the chart, I have more money saved at 36 than the average 63 year old. But I get it. I was lost just a few years ago. I decided I’d drop this link here that tells the story about how I started to learn. This is me writing all the things I wish I would have known when I knew nothing. It’s a great place to start. Thanks for the article and discussion. http://www.wealthwelldone.com/money-and-investing/

    Liked by 1 person

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