The Inexcusable Trait Of Financial Illiteracy

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financial-literacy

Post written by Gordon B. Bleil.

Far too many times I have heard the lament that “I am simply not a money person.” And just why is that?  Is it an excuse for not having applied oneself to the challenge of money management, or is it some genetic flaw?  I suspect it is the former.

In today’s economic climate there is simply no excuse for not becoming knowledgeable about one’s own money affairs. Nobody is going to take care of you better than you are going to take care of yourself. You may say that your spouse or your children will look after you and that you don’t have to learn how to do it for yourself.  Let me tell you a story that points out the fallacy of this line of thinking.

From Well Off To Crisis

A financially quite well off female friend of mine who was widowed about six months earlier received a letter from the IRS.  They were informing her that they were about to seize all of her assets because her husband had failed to file tax returns for the past several years. She had no idea. He was the kind of guy who insisted on complete control of all of their finances and he kept her in the dark.

This was a crisis that did not have to happen.  Fortunately she had a good attorney and enough resources to solve the problem and so all worked out very well.

The message here is very simple: you must become knowledgeable about basic money matters and how it affects your life. Investing is just one aspect of finance that affects us all. But there is more than Investing to be considered. It is the day-to-day matters about money that concern us here.

A Change Of Attitude Toward Money

Early on we need to change our attitude toward money and believe that we can take control of all aspects of it.  Most people spend more time taking care of their teeth than they spend planning about money. So you need to resolve that you are going to learn about money. Take it one step at a time and you will find it is not all that difficult.

After a lifetime of dealing with financial matters I have come to the conclusion that the genesis of most money problems is living beyond one’s means.  And many times the people who do this are not even aware of the amount they are spending. So an early step is to get control of the money you spend and know exactly what you are spending it for.

Resources abound. You have only to surf the Internet to find lots of advice on how to get control of your money and prepare a sensible budget.  You should read regularly on money matters.  Being ignorant of money matters is simply inexcusable.

The Role Of A Financial Planner

Research has suggested that one of the leading causes of divorce in this country is conflict over money matters. One of the ways to address this conflict is to have more emphasis on setting mutually acceptable goals. Goals can be set for things that one wants to acquire, experiences one wants to have and the amount of wealth one needs to accumulate. Then the discussion shifts from money to goals.  This is less stressful.

Because most of us are woefully uninformed about money, financial planners have a role in nearly everyone’s life.  It is erroneously thought that financial planners are only for the wealthy. Nothing could be further from the truth.

Two things come to mind. One, we cannot possibly know as much as they do specialising in the field of money. Certified Financial Planners (CFP), for example, study 78 separate subjects. Two, they are completely unbiased.

When one thinks of how much money one is going to earn over a lifetime, and how much of that is spent on getting an education, the price for a CFP is minimal. Not having outside independent advice could be very costly indeed. And, the more you’re clear about your own goals the better they can help you.

A planner charges a fee for services.  Some of them specialise in investment advice and charge a percentage of the portfolio managed. Others charge an hourly fee, much as an attorney or accountant would do. What is most important is that the planner does not earn a commission for something they sell you. They have a fiduciary duty to you. They can set you on the path to a sensible control of your money matters.

Gordon Bennett Bleil is a financial educator, former banker, bank consultant, entrepreneur, business executive and business owner. He has been a professor teaching in MBA programs and he holds an MBA in finance from the University of Southern California. Gordon hosted a radio show in finance entitled The Path to Financial Freedom and has authored courses in personal financial management. He is renowned for his ability to present complicated material so that it becomes simple and understandable. Gordon is also the author of the book Give Yourself a Raise, 2nd edition.  

photo source: bet.com

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