The second day of every semester, right after I've bored my students with the mundane details of syllabi and endless reading and homework assignments they'll be "happily" doing, I ask them to think about their feelings and experiences with money. We discuss societal values related to personal finances...lament the never-ending stream of advertisements attempting to part us with our hard-earned dollars, the virtues of planning ahead for unexpected emergencies, and most importantly, what our own experiences with money have been.
I think it's critical to consider what values and attitudes we've adopted from our families, friends and society at large. Since birth we've taken for granted how the world works...how money works...how it should be handled and what it is used for. This in turn affects our choices and attitudes towards money when it comes our way, often subconsciously.
Personal finance is NOT taught in traditional education. Sure I teach an elective course in college, similar to other institutions of higher learning, but how many students actually take a course like this before they graduate? Not many. There have also been some efforts to incorporate personal finance classes into high schools and junior highs throughout the country, and it's a step in the right direction, but ultimately, the topic of money is taught in the home, in the media, in everyday life, and often by individuals or groups who know little about how it works, or worse, by those who financially benefit from dispensing their "knowledge" and "advice" to the masses.
Even so-called "personal finance" classes like mine, in my humble opinion, can be tragically flawed and self-serving to those sponsoring such programs. A bank or brokerage firm who provides a retirement planning class is, no matter what the company says, doing it primarily for their own benefit. They are offering the class to obtain clients. These firms may very well be concerned about financial education, but because of their position, they are inherently biased in what advice they give. This is acceptable as long as the students are educated enough to realize where the information is coming from; however, I've found that this scenario is usually the exception rather than the rule. Furthermore, even "unbiased" teachers or organizations often regurgitate money "truths" they've bought into because they don't know any different. I believe they are genuine in their efforts to teach correct principles, but because of their own lack of financial education, they end up indoctrinating others into a belief system that keeps people struggling with their finances.
Let me give an example of how a common money "truth" actually keeps people struggling. For the last hundred years or so, debt has become a natural part of life in the United States. Most people today assume that it is not realistic, or even desirable, to live completely without debt. As a result, we worship the almighty credit score, bow down to the demands of creditors, and spend our lives working to pay for our purchases long after we've thrown them away. This idea that debt is normal, or at least certain types are desirable or always necessary, has enslaved an entire population. We work hard every day just to give away most, if not all, of our compensation...not just for a few years...but for a lifetime!
The home mortgage is the perfect example of this. I'm not saying never buy a home or borrow to purchase one. I am saying that we are fed a myth from birth that this way of life is normal and to expect something different is unrealistic...or even undesirable...when the truth is the United States became the wealthiest nation in the world because the citizenry and government mostly did NOT borrow money to finance things, including homes. The myth is that wealth is built by purchasing a home...and always with debt.
Now I realize I'm generalizing a bit here, but I'm trying to point out a cultural phenomenon I've observed since I was very young. I too was caught up in this idea because I didn't know any better. My well-intentioned "money teachers" (parents, friends, teachers, etc) didn't know any better either. This "truth" was taken for granted. Yet I have come to believe that our cultural worship of the "home mortgage myth", as I call it, is keeping many individuals from financial freedom. It's not the only thing, but I believe it is a significant contributor to keeping the masses under the thumb of employers and creditors. What if everybody paid cash for their homes or paid them off much sooner than fifteen or thirty years? Financial problems certainly wouldn't cease, but I think many people would lead lives with much less stress and greater happiness because they would have more control over their income.
Sure I could be wrong, and every person has the right to decide how they will live their life, but I have found that eliminating debt from my life and creating sources of passive income, so I'm not dependent on a creditor or an employer's good graces to live my life, makes ME happy...
but to each their own!
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