Personal Finance – What’s Missing
I consider myself (with the help of my wife), as having a pretty good handle on my finances. Without her I know I’d be in much worse shape than we are in. All in all, our finances are pretty good. We paid both our cars off early, we have very little credit card debt, and we’ve been paying extra on our mortgage (it’s hard to get ahead when you keep adding on to your house, and use loans to do it). We were married right out of high school, but somehow we knew what credit was and how not to get trapped by it.
One of the major things I see missing in today’s personal finance is education. Every year thousands of children graduate high school, and are expected to make it without any formal training regarding finances. That may have been well and fine 50 years ago, but now so much depends on your personal credit score, it’s not funny. I know for a fact that when I was in school nothing was taught about credit, loans, or personal responsibility. Perhaps that has changed, but I don’t think so. I haven’t kept up with current laws, and I know there were some recent sweeping changes to credit card companies’ disclosure information, but when I was a freshman at college, there was some real scary things going on. Every day I would go to the “commons” area to hang out, play pool, or whatever, and there was always at least a dozen tables set up with “free” stuff, as long as you signed up for company “X”’s credit card. I never checked to see what the credit limit was or what the APR was, but I can imagine they were terrible. As much as I wanted a Frisbee, I knew better, but there were always a handful of students signing up. I hope that those students that signed up didn’t end up in too much financial trouble as the years went by.
This comes back to education. Our children need to be taught about credit, what it is, how to use it, how not to ruin it, and be financially successful in life (remember money doesn’t buy happiness). In my years of high school, there wasn’t a requirement for basic personal finance. I think there needs to be. The category could be under math, or home economics, or heck even sociology. Of those three categories, we were only required to take 2 years of math (there was a “practical” math class available, but from what I understand it was very limited), home economics was an elective that really only taught how to bake, and sociology was really about world demographics. So how are our youth supposed to learn about credit? I guess by imitation. Children will follow their parents’ example, so if you’re a parent, make sure you’re teaching your child about personal finance, because the schools aren’t. I didn’t learn that my parents were “wealthy” until my early 20s. We lived a frugal life, we had a decent house, my parent’s only bought cars when they were needed, and when they were needed they bought used. My first car was a used 1977 Datsun B-210 hatchback painted crap brown with a “I love unicorns” bumper sticker, that my dad and I rebuilt. I loved that car. Your child can have a good life without the shiny stuff.
If I may, I’m going to go on to a bit of a tangent for a bit. Your children are not entitled to anything (some things are ok). Now you may disagree with me and that’s fine, but hear me out before you go off on me. Every year I see more and more high school students driving brand new cars. Not cars given as graduation presents, but new cars because the teen has convinced the parent that they “need” one. Really? My ’77 Datsun certainly was a head turner?!? Today’s teens (at least what I’ve seen around my neck of the woods) have the latest fashion, latest gadgets, everything their little heart’s desire. Most of these teens didn’t pay for it, they simply asked for it, and received. What does that teach? Most of the people I know cannot afford what they give to their child, so it teaches children that all you have to do is put it on the credit card. This happens all the time. It’s time for you to stand up to your child, you are the adult, you have to tell them NO. Okay, so I said there were some things that are ok for you to give to your child. So what are they you ask? A college education*. I’m not saying you have to give them your life savings, but in order to give them a leg up in life it would be nice for you to pay some of the bill, otherwise they’ll end up tens of thousands of dollars in debt when they leave college, which can take many, many years to pay off. There are some good federal savings plans for saving for a child’s college, I suggest you look into them.
*Editorial Comment: Not every person is college material, and not every child needs to go to college. We need people that “do” things. So a leg up in vocational training would be good too.
If you read my blog, you know that I am about personal freedom, but I also understand personal responsibility. Back when I was in college I knew a guy that used either federal grant money, or student loans (I’m not sure which), to outfit his dorm room with a killer stereo, TV, and other furniture. Then 2 months later he was hawking it, because he didn’t have the money for school. Duh! At least I got some good deals. Many years went by and I recently found out that he ended up filing for bankruptcy, perhaps if he had had some education regarding personal finance he might have not done so many erroneous things.
It is this personal responsibility that I see lacking in today’s society. I understand that times get hard, trust me I’ve been there, but my bills always get paid. I talk to people all the time (usually younger than I am), and they don’t have any problem missing payments on their contracts. What? Really? Where did this attitude come from? Well it didn’t come from school.
It’s time to step up, regain some personal responsibility, tell our children no, and teach them the truth about money and credit.