And You Wonder Why We Have Financial Problems…
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Happy Friday friends! It has been a bit of a brutal week coming back from taking the latter part of Thanksgiving week off. Oh well, such is life! I’m glad to have work to come back to, as things could always be worse.
I read an article on NBC News a week or so ago that really got me thinking about values and how we spend our money as a nation. There is no doubt that we have our share of financial problems in our country, debt being chief among them. You’d think that we’d see this as a problem and would be working to find a way to resolve it. Shockingly (sarcasm dripping) recent numbers, according to the article, show that we’re doing nothing as a nation to help ourselves get out of these financial problems.
What are these numbers you ask? Well, here they are:
- $54 a person is spent on marketing financial products to consumers
- $2 a person is spent to educate us on all things related to money
Put another way, $17 billion is spent on hawking financial products per year and only $670 million is spent on financial education.
I am not idealistically distorted enough to think that we’ll accomplish some sort of balance between the two, but there simply needs to be more water guns allocated to us in the fight against the flames of financial illiteracy.
Is Financial Marketing Wrong?
I am not one to say that marketing of financial products – think mortgages, credit cards, loans, etc. is necessarily bad. Companies promoting these products need to make money and a good number of those products are “good” in that they can help us achieve the kind of life we want and benefit ourselves in the way we wish.
The problem, as touched on by the Director of the Consumer Financial Protection Bureau (CFPB) is that when so much marketing is done by companies trying to shill their products it leaves little room for us as consumers to make well informed decisions. Essentially, that leaves many to make decisions based off of information that is largely biased in nature.
What Makes This Worse?
If the massive marketing campaigns of financial companies isn’t bad enough, you add to it that little is done to truly educate us on how to use the products or what products to choose.
Think about the $54/$2 issue for a second. I could take Mrs. Frugal Rules out for a relatively nice dinner for $54. We have done it plenty of times, but for $2 I likely couldn’t buy a bottle of water. Something has to be done to narrow that gap.
What needs to be done? There are a number of things to be certain, but in my opinion, so much comes back to promoting financial literacy. I’ve discussed it before and if you want more on the topic then I suggest you check out my good friend’s site – The Heavy Purse as Shannon has taken up the battle cry of financial literacy and is working to make a difference in our society.
That said, I fear that we’re fighting a difficult fight in the war to improve financial literacy, friends. ‘Why,’ you ask? Take a look at these numbers from the Council for Economic Education:
- Only 14 States in the US require schools to offer courses on basic personal finance
- Only 22 States in the US require high schools to offer a basic class in economics
That is less than 1/3 and ½ respectively of States that require some sort of class on basic personal finance or economics in schools. We can get into the debate of whether or not financial literacy should be taught in the home or in school (I happen to say both, as more is only better in this case), but I believe that is overlooking the point that it needs to happen.
Is All Lost?
I apologize if I’m a bit on the pessimistic side today, I’d rather be realistic than gloss over the numbers. That said, I don’t believe all is lost and firmly believe that we can turn this around. The sad fact is that many are not financially literate for one reason or another. That is what keeps me writing day in and day out – I know that there is a true need for financial literacy. Providing access to financial literacy is of utmost importance in my opinion. If you’re looking to improve your own understanding of financial matters, then you can check out my blog roll for others that care about the same things.
Beyond that, we need to begin teaching the basics of financial literacy as early as possible. Teaching kids about money has often been considered taboo, let that be no longer. We need to make information available to them as early as possible – as appropriate to their age. Not only do I believe this should happen in the school, but parents should begin teaching their kids about money as appropriate.
Things may look bleak now, but I firmly believe that with a concerted effort we can begin to turn this around in the favor of our future generations – it’s one of the most loving things we can do.
What are your thoughts on these financial problems and what do you think should be done to stem the tide? Do you have anything fun planned for the weekend?
Photo courtesy of: Celestine Chua