The economic outlook for the United States has been looking up in recent years. Corporations are reporting outstanding earnings as companies like Apple have surged to all time highs. Even the banking giant Bank of America (one of my core long term holdings) has seen its share price approach double digits. Corporate executives are back to making huge bonuses again at many of the firms troubled during the economic downturn. Even the stock market has almost doubled with the Dow Jones Industrial Average going over 13,000. There is however one group that has not made much progress over the past few years.
That group is the average consumer . Over the past thirty years, no matter how much money an individual has made there has been a failure to teach financial management. There are horror stories everyday of middle class people and wealthy celebrities that have declared bankruptcy and lost their entire fortunes because of too much debt. The problem in America is that people are not taught to save money and manage their financial resources properly. We are always taught that we need to make more money but are never taught to curtail our spending. So, the more money that we make, the more things that we buy.
Most people that were hoping to hit the $500 million dollars jackpot a few weeks ago wanted the money because it would allow them to buy everything they wanted. They could buy a bigger house, a better car, expensive jewelry, furniture, newer electronic gadgets, and anything else that their heart desired. We are taught that the only reason that you go to college is to make more money and that you need to make more money so you can spend more money. This is why so many Americans are in dire financial straits. It is time for everyone to learn the principles of financial management. We should start with the younger generation. Financial management should be taught at school, church, home, and other institutions.
The basic rule of finance that needs to be taught to everyone is to Live within their means. Buying on credit is not a necessity and should not become a traditional way of life. Overspending is a major problem for too many people. We need to teach that credit is something to only be used in emergency situations and is not to be relied on. This requires teaching patience and teaching individuals to know the difference between a must have purchase and one that can wait. No matter how bad you may want an iPad, new cell phone, Samsung TV, BMW, or trip to Italy; those are not necessities.
I believe that if people learned proper financial management principles at an earlier age, they would be a lot happier. They would spend less time working to pay off creditors and would have more time to enjoy their lives. They would be able to retire at an earlier age, stop saddling their children with extra debt, and decrease their stress levels.
I totally agree that buying on credit must be discouraged. For me, the wise way to spend lent money is for investment purpose only – or else, it will cause great financial trouble.
I agree very much with the title of your post because everyone has finances to manage whether you’re still a student, a worker or a senior, you still have finances to manage so everyone should at least have a bit of knowledge regarding financial management to be able to manage finances properly.
I totally agree. College and universities are extremely shortsighted for not requiring this. You would think this would be a great strategy for the fundraising efforts of the institutions.
Becoming rich isn’t how much money you make but how much money you keep. -Rich Dad
This post says it all. It’s a shame that schools aren’t teaching our younger generations the proper way of financial management. I wish I had grown up with teachers to tell me the truth about finances rather than learning myself. Anyway, great piece!