Pay Attention Or Pay Up…

Last week, we talked about a touchy subject: financial education. Or, more accurately, a lack thereof.

We’re in the midst of a big education problem. People think that math is hard, finance is scary, and investing might as well be impossible.

This runs at least a few generations deep, too. Kids aren’t learning this stuff at home because their parents don’t understand it.

According to a study done by Northwestern Mutual, the average American family has $38000 in personal debt – and that’s not including mortgages.

Oh, and to make matters worse, 69% of these households have less than $1000 in savings, and the percentage of people who own stocks has hit a record low.

So in other words, people are spending more than they make, saving less than they need, and avoiding any kind of investment in their future.

No wonder Mom and Dad don’t want to teach little Billy about personal finance – they don’t have the first idea about it.

This education problem is further compounded because kids aren’t having financial education in school. It’s not part of the approved curriculum.

And if we’re being honest, it’s also because the teachers don’t have a good grasp of personal finance themselves. Many teachers are opting for more and more degrees. Over 50% of public school teachers have a Masters Degree, leaving them saddled with tens of thousands of dollars in student loan debt and no plan as to how they’ll pay it back.

As the tide of debt rises and the barrier to entry for jobs climbs higher and higher, we’re about to be in a crisis.

An Increase in Minimum Wage?

One popular but sadly misguided idea to help out with this is to raise the minimum wage. Then little Billy can get a basic education and still make a living wage by working at any company that will hire him.

Only… then, the cost of goods will go up…

The gap between the pay that skilled and unskilled workers receive will shrink, making the workforce unstable…

The number of hours Billy’s employers schedule him for will go down…

And the $15 an hour for flipping burgers, which seemed like such a great idea will be just another step towards financial disaster.

We All Need To Solve the Issue

Now, it stands to reason that with a little education and a whole lot of elbow grease, we could stop this trend in its tracks.

If we were to include personal finance education in schools, and make living with sound financial principles a priority, we could become solvent in a short amount of time.

But at the end of the day, we really don’t want to.

It’s more important to be temporarily comfortable than to do the right thing.

Maintaining the status quo is more important to us than being correct, moral, or successful in the long run.

On a personal level, status quo bias is actually a well-established cognitive bias. You do the things you like and stick to them because they’re convenient and this feels good. Change can be disconcerting, after all.

Maintaining the Status Quo is Nothing Short of Evil

You see, it’s no coincidence that financial education is not a priority. It’s a topic shrouded in mystery because the government and many businesses want it to be.

After all, as long as they keep the population dumb, compliant, and amused with bread and circuses, then the people will keep behaving the way they want: working at unfulfilling jobs, paying taxes, buying products they don’t need with money they don’t have…

These elite few think that they know better than we do when it comes to how money is made and spent. And right now, they’re right about that.

Right now, it is us against them, and the media only whips this sentiment into a frenzy. Instead of empowering us common citizens to know more and do better, they hype stories of corporate greed and politicians’ misdeeds.

This sensationalism only increases the divide between the rich elite and the middle class common people. Resentment breeds, and with it comes a growing distrust of all things capitalism.

This status quo mindset may create short term profits for the companies or moments of rebellious, “Yeah, they deserve to get in trouble – screw big business!” for the “commoners”, but in the end, it benefits no one.

We need a shift towards a new paradigm.

We need more conscientious capitalism where businesses serve us, where they don’t feel that it’s easy to take advantage of customers.

We need a media who knows it’s their job to educate and inform, not to sling mud and incite rage.

And we need a government who knows they work for us, not the other way around. (Remember – in the US, these people are considered “civil servants”. In what world should servants make over $200,000 a year? In what reality should a career politician have a net worth in the millions?)

This sounds like a lot to undo, and a lot to change. Maybe it is. But it’s doable.

Better Education Means Better Choices

It all starts with sound financial education for everyone. Once you know how to understand personal finances, you can then make better choices. You can look at the big picture and start to understand how it affects you and what choices you can make if you need to react.

One thing I can assure you? This education won’t come to you. It won’t just appear in your childrens’ textbooks, either. You’ll have to go out there and educate yourself.

Rather than sticking with the status quo because it’s what you’ve known forever, get out of your comfort zone and take the chance to learn more, do more, and be more.

And then turn around and pass that education on to the next generation, too. Everything from fair wages to work ethic to entrepreneurship to taxes, figure it out and then share it with your family. Encourage them to do the same.

Without self-education in finance, you’re doomed to repeat the mistakes everyone else makes, so dig in and find out what is really best for you.

Your life – and our society – quite literally depends upon it.


Brian Rose

Brian Rose
Editor, Brian Rose Uncensored

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Brian Rose

Brian Rose is an MIT graduate, with a degree in engineering. Upon finishing school, he immediately began working on Wall Street. An advanced technical trader, Brian was trading a book of $100 million at the age of 22. He spent years on Wall Street, working in New York, Chicago and London. He made millions, but...

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