Published: Wednesday, Feb. 19 2014 4:00 a.m. MST
As with so many things, how we deal with money and financial decisions is
learned from an early age by watching how our parents dealt with those matters.
And it is very difficult to change the course of a person's life without
fundamentally changing the culture surrounding that individual.But
it is also a chicken and egg sort of problem (not unlike the war on drugs):
what is more predictive, the personal inclination to overspend (the demand side
of the equation) or the easy availability and marketing of excessive credit (the
supply component)?Both, of course, are important, and any solution
to overspending must focus on both. Merely trying to tackle the problem from
the supply side by regulating the financial services industries will ultimately
have no more effect than trying to stem the flow of illegal drugs into the
country. Likewise, limiting efforts to changing personal behavior ignores the
powerful, and known, effects of advertising and marketing (like the predictable
highs associated with drug use).It would be wonderful if all of our
institutional and personal efforts were focused on good, clean, responsible
living. Unfortunately, that is not the world we live in.
"Can people really learn to be financially literate?", asks the
headline. With equal sincerity I answer, "Of course not! Look at Warren
Buffett! Clearly, he learned nothing. He was born with the ability to make
billions."Yes, I consider this to be a farcical exchange. But,
when an article is headlined with such a silly question, I'd say it
deserves a silly answer.
As with any subject, there is no magic that comes from a semester or two of
coursework and suddenly personal habits and values are transformed. Information
is only information. Values are completely different. A high school class is one
small step. Family courses may be a better step (and several non-profits offer
these to low-income families). These can be a benefit to people on every rung of
the social ladder, if they are presented in an engaging way and offer continued
support. It's like managing your weight. Crash diets are not good for
your long-term health, just like short-term savings that just get spent and not
renewed are not good for your long-term financial health. It takes time and
family and personal training, in most cases. My grandpa lectured us all the time
about how to make our money work for us. Some learned, some didn't.
Everyone needs motivation that works for them, because, just like weight
management, financial management is also an emotional issue for a lot of people.
People need to be taught from a very early age to be Self Reliant.
Unfortunately in this day where our Government has us so deap in debt, that is
hard to do. In addition we have become accustom to Goverment taking care of the
poor. The poor have become dependent on the system. Government have taken over
what should be our responsibility!!
Why do you invite an answer to such a narrow question? Could not this question
be posed regarding just about any educational topic?
Our experience over the years has been, it is difficult to keep up with people
who refinance their mortgage, regularly file bankruptcy and live on LDS welfare
and the government. This was not something I wanted. For my husband, he would
say he cared, but the behavior just wasn't there. Until I convinced my
husband it was for our benefit to have goals, emergency savings, plan for future
expenses, and learn to be creative in the purchasing of everything, our life was
putting out one brush fire after another. Until one has a positive experience
with being self reliant, one is not going to change. Even then, it is difficult
to be patient when one is in the habit of instant gratification and entitlement.
Learning and applying info are two different things.
I wrote the headline "Change course: Can people really learn to be
financially literate?"Let me explain what it means.First off,
"Change course." This has two meanings.The first meaning of it
would be implying that people need to or can change the course of their lives --
in this case, to become more financially literate. The second meaning is that it
is a course about change (coins in your pocket or money). The second
part of the headline is about whether people can learn to be financially
literate. The superficial answer would be "of course they can." I tend
to agree with that assessment (particularly since I write with this intent on a
regular basis). Generally, a question in a headline implies a positive answer.
In this case, however, some critics are saying the answer is "no they
can't and we are wasting our money and resources trying to teach them."
They equate financial literacy with financially responsible behavior. The
critics of financial literacy would argue that the type of savvy that people
like Warren Buffett posses is not really teachable. That appears to be part of
their argument, at least. I hope this helps.
Nobody is perfect. Strengths wan weakness, some are better at somethings, but
there is one thing for sure there's always going to be someone better.
I taught my children to save, and some of them have.The problem today is
that it's VERY difficult to make an economic case for saving.If I
save $1000 at today's bank interest rates, I'm going to make just a
couple of dollars per year. It would take more than a lifetime to double your
money, by which time, your original $1000 would buy you a loaf of bread thanks
to inflation.The only way to teach saving is to teach the COST of
borrowing. We have governments, businesses, and consumers going into debt
daily. With those examples in front of us, it would seem the thing to do. Only
when we can demonstrate how much borrowing costs can we teach youth to avoid it
and save instead.
"Poor people have poor ways" and knowledge is the first step in changing
that, but in the end knowledge alone can't change people. People have to
make lifestyle choices that lead to change. knowing when something is a
"want" and when it is a "need" is a start. Learning the pioneer
saying "use it up, wear it out, make it do, or do with out" should be a
motto for all of us to live by.
All i can think of is "Of Mice and Men"
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