From where did you learn most of your life skills? How did you learn to brush your teeth, read, write or drive a car? For me, it was my parents and school. What if there were something that affected just about every facet of our lives that our parents had limited knowledge of and was hardly covered in school? You, no doubt, have guessed it by now. I am referring to Finances. Finances are consistently listed as one of the top reasons for divorce and money is one of the biggest causes of stress for Americans(1). Additionally, it is my belief that financial illiteracy is one of the reasons for the widening inequality gap. If finances are so essential and money issues cause so many problems, why don't we have a greater emphasis on financial education? Why do we have kids graduating from high school who can do calculus but don't know what an IRA is or how credit scores work? To answer this question, we have to take a look back in time.
Once upon a time, not that long ago, you could walk out of high school get a good paying job with benefits, work for that company for 30+ years, get a healthy pension and Social Security benefits and live happily ever after. Large credit card balances, 401k plans and IRAs were non-existent. Then something changed. Organizations no longer wanted the long-term obligations of pension plans so the responsibility of saving for retirement was shifted to the employee. 401k’s slowly replaced pension plans, college became increasingly expensive, and the world (particularly our financial systems) has become very complicated. We now have countless tax rules and ways to get ourselves in financial trouble. Fifty years ago, many of our parents and grandparents did not need to learn about retirement strategies, student loans or tax strategies. Since many did not acquire this knowledge, they could not pass it on to us. Additionally, our schools have been slow to adopt adequate financial education.
I am passionate about this subject for two reasons. First, as a financial advisor, I have seen how having your financial house in order makes life a little less tough. It won't fix all of our problems but it can help your marriage, reduce stress and increase peace of mind. Second, we need a financial awakening in this country. According to a recent survey(2), 42% of Baby Boomers have nothing saved for retirement! Who is going to support these individuals as they age and can no longer work? Who will pay for their medical care and nursing home stays? You got it - the taxpayer. I personally believe something has to change.
Enough about the problem; let’s talk about the solution. Like so many other areas, it starts at home. The best thing you can do is take charge of you and your family's financial education. Join a finance-related course like Financial Peace University, read a book on personal finances, or meet with a financial advisor. A good financial advisor will not only provide advice but education as well. I spend most of my time with a new client educating them on budgeting, investments, retirement strategies, etc.
Most importantly don't keep this new found knowledge to yourself. Pass it on to your kids and grandkids. Have your kids earn an allowance and make them stick to it. If they spend it all on silly things, don't shell out more. The journey to financial freedom is not easy but it is very rewarding; and it starts with financial education. I hope this article will help you on your journey to financial freedom!
This commentary on this website reflects the personal opinions, viewpoints and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
This article is written by Brandon Carter.