And You Wonder Why We Have Financial Problems…

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Financial Problems

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

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to GoBankingRates, Investopedia, Lending Tree and more.

Latest posts by John Schmoll (see all)


  • Teaching kids about money will have a big impact when they grow up. I have a daughter and I’m slowly teaching her about the value of money. And about this weekend we will have a movie marathon at home, I will cook popcorn and pancake. Have a good weekend ahead John!

    • John says:

      I could not agree more Clarise! It starts with teaching our kids so they don’t repeat our mistakes. Sounds like you have a fun weekend planned!

  • Those numbers are pretty bad. I’d like to think its not quite as bad due to basic personal finance being taught at home, but that’s clearlynot the case as the PF numbers continue to be ugly. I definitely think we can make a change but it’s going to be a long journey. The education needs to start at home and be reinforced at school, unfortunately money is such a taboo subject that even basic general terms don’t get taught. I think the change coukd actually come through blogs as more and more children are spending so much time on the internet and then struggling to find a job after school. At least I hope so.

    • John says:

      I agree JC, I do think they look bad but I do have hope. That said, it will be a long journey, but it can be shortened by it not being a taboo subject as you pointed out. I have the same hope as you. 🙂

  • We definitely need to get financial literacy in our schools! It’s long overdue. Beyond that I think people need to dedicate more of their free time after high school/college to actually sitting down and learning about personal finance. It’s a complicated topic and you won’t learn everything in just an hour or two.

    Hope you have a great weekend!

    • John says:

      I agree, it is long overdue DC. I also agree that adults need to learn some of the same things as well, the problem is many simply aren’t willing.

  • I agree that a two pronged approach emphasizing education at home and school is the way to go. I know the kids I teach personal finance to at school really eat up the subject. I’m just not sure the general public even cares to be educated though. It’s hard to teach financial literacy and motivate people who don’t care. It’s going to take a cultural shift in the way people think about money. That’s going to be along time coming…but still worth the effort for us bloggers. 🙂

    • John says:

      I imagine they do Brian – and thanks to you for doing that! You make a great point about the general public not caring. I wouldn’t use that as a blanket statement, but definitely know that it is the prevailing sentiment. It is going to take a cultural shift and hopefully one that we can start and fan the flames of.

  • We HAVE to start teaching kids about money for two reasons: the earlier they start to understand and practice good fiscal behaviors, the sooner those positive behaviors will become good habits, and because time is such a critical factor in building wealth (so the earlier you start saving, the better). It’s scary to think so much is spent on marketing, and so little on education – but we have the power to change that!

    • John says:

      I could not agree more Kali! I think we also need to do it so they don’t repeat our idiotic mistakes. That said, we do have the power to change that and there is strength in numbers. 🙂

  • I think a core part of the problem is that living beyond our means is a part of American culture it seems. Just look at the government raising the debt ceiling all the time. I agree that financial literacy is sorely needed in the US and around the world. I agree with others that the change needs to start at home. But it seems hard to do it when you’re fighting against that much advertising dollar. I guess this is why grassroots campaigns get started, huh?

    • John says:

      That is definitely part of the overall problem Dee. Then you add on top of that the marketing that occurs and it just intensifies the problem. You’re right as well, this is exactly how and why grassroots campaigns get started.

  • Love what Brian said about a two-pronged approach, and what Dee said too about this culture of living beyond our means. We glorify “stuff” primarily through the media and Hollywood, and then we wonder why people get themselves into hundreds of thousands of dollars of debt by buying stuff! Along with PF, we need to be teaching our kids that “stuff” will never, ever making you happy, not long-term. If we teach them the hard labors of chasing empty dreams, along with all of the PF stuff, they might have a shot at breaking the cycle.

  • When we were visiting with Jim’s grandma recently, she was talking about how private she and grandpa were with their finances and how hard it was to let someone help because she was in the hospital. I think older generations were often very guarded with their money. Maybe because of the depression? Anyway, there weren’t credit cards or all the crazy things we think are necessary back then, but our talks about money haven’t evolved to cover how to deal with all the consumerism either. Hopefully we will get there eventually. If they tested for financial literacy on standardized tests at school, it would be taught. Otherwise, I don’t see it happening in schools.

    • John says:

      Thanks for bringing that up Kim! I think you’re right on with that statement. I know my grandparents never had credit cards and they paid for everything they bought and financed nothing. That still can be done today, but so few do it. I think you’re right as well, if it’s not tested on then it has a much harder road to be brought in to schools.

  • Kathy says:

    I agree that a personal finance class at the high school level would be great, however, you’ve got to make sure the teacher practices what he/she teaches. Even adults think their bank balance shown on the ATM is the amount of money they have available. They don’t consider outstanding checks that haven’t cleared yet. No wonder the kids struggle when their parents are just as bad.

    • John says:

      I agree Kathy that you do need to make sure that the teacher needs to practice what they’re preaching, but we shouldn’t wait on that. If we did, then it would likely never happen.

  • Wow that’s a stark comparison between marketing spending and educational spending. I think the more we talk about money and finances as a culture, the better we’ll get at managing it as individuals. If only changing cultural norms were that easy…

    • John says:

      I agree Mrs. Pop, it is stark and do hope that our discussing it will cause change to occur. Like you said though, if only it were that easy. 🙂

  • I agree with many of the comments that we should definitely be teaching fiscal sanity in schools. But kids aren’t the ones the $54 per person are being spent marketing to — it’s adults. I think an interesting idea would be for the Consumer Financial Protection Bureau to consider developing PSAs to educate adults on money matters, particularly the debilitating effects of debt and other financial matters. I mean, the bureau exists now; why not use it to accomplish something good?

    • John says:

      I think that actually a good chunk of that money is directed at children. I tried to find the number, but couldn’t find it. Other than that, the point of starting in schools is to train children how to manage/view finances so they don’t repeat mistakes. That said, I think both children and adults need to be targeted. 🙂 Your point on the PSAs is a good one, and one that I hope they would start.

  • Wow, those numbers explain a lot. They’re also frightening.

  • This just shows our consumerist society. We all want things, but don’t want to be told what to do. Good marketers have learned how to push their products on people without actually saying that they need to buy it. Most people don’t worry about how they are spending their money, just if they can get cool things with it.

    • John says:

      I agree Grayson. Many do not worry about how they’re spending their money and it just feeds on itself. That’s why I’m so big on teaching kids, not that teaching adults is not needed, but I want to cut it off at the younger generations so they don’t repeat our mistakes.

  • Thanks for the mention, John. I truly appreciate it! Seeing those numbers just floors me. We have a lot of work ahead of us but what keeps me going is seeing how many people out there are wanting to become financial literate. There are more and more financial bloggers every day with growing numbers of readers as well. Like Brian mentioned, I am for a two-pronged approach. Right now, since so few schools even offer any type of personal finance course, it needs to start in homes. I talk to so many parents who are practically doing back-flips to make sure their kids have the tools to succeed as adults, but they are not talking to them about money – how to use it, how to think about it. When I kindly point out that gap, there is that moment where it clicks, followed by panic. 🙂 So the good news is when parents realize the need, they do want to teach their kids about money, thus improving their own financial literacy. We just need to help more parents and non-parents become aware.

    • John says:

      Not a problem Shannon. I appreciate greatly what you’re doing and it’s exactly what we need. I was floored by the numbers as well and knew right away that I needed to write on it. I agree, with so few schools teaching to it, it does need to start in the home. That’s interesting you see that dichotomy when speaking with parents. I know my parents taught me as well as they could to prepare me to be an adult, but the financial aspect just was not there. That said, that awareness you mention is key. 🙂

  • The bulk of the money is spent on advertising credit cards. There is a bit of coverage for mortgages and banking but beyond that, you have to watch the business news networks to see advertisements for mutual fund companies, brokerages, and wealth-management companies.

    The sad truth: the financial system is predicated on customers being almost completely uninformed. Financial institutions need to push “product” to make payrolls. They don’t have your best interest in mind… Only that of the shareholders.

    Pro-tip: become a shareholder of companies that sell these “products”. As they all pay dividends.

    • John says:

      I would agree that a big chunk of it is on credit cards, though there is still a lot done for a myriad of other products. We see that ourselves in our advertising business.

      That said, you’re completely right, it is focused on taking advantage of those who’re uninformed. Which, makes it even worse when there is little in terms of unbiased education.

      Yes, I could not agree more, much why we’re owners of some of those companies stocks. 🙂

  • Michelle says:

    We absolutely need financial literacy taught in schools but I also believe that most of the job should be on parents. When we’re kids, depending on the financial habits we see and are surrounded with, that will inevitably affect what we do with our money as we get older. If as children we are surrounded by luxury and given everything we want without working or doing something for it, we’ll think we’re entitled to everything. But on the other hand, if we are given an allowance and are surrounded by the “save to get what you want” environment, it will change our outlook on money.
    The numbers are scary, we need to stop the endless cycle of consuming everything we see. Nothing wrong with financial marketing, its just the message needs to change.
    I’m staying in and saving money in the process for the weekend…LOL! Going so far as to ban internet shopping for the weekend.

    • John says:

      That is definitely something that needs to be done Michelle. The problem is that many of the parents aren’t educated in financial matters either, though I do think it really should start in the home and be dovetailed by being taught in school as well.

  • Its so important that we teach kids these lessons at a young age. The money lessons my mom and dad drilled into head when I was a kid still stick with me to this day & I’m so thankful for that.

  • Micro says:

    I remember going through the financial class offered at our high school and was really upset when it was one of the courses on the chopping block for budget reasons. I understand that those and courses like cooking are looked down upon as easy A courses that someone might take to pad their GPA. At the same time, they actually teach skills you will have to use in your daily life. It’s sad that practical courses are moved to the chopping block first.

    • John says:

      That is sad to see. I think the same thing about art or music type lessons. At least with financial courses it’s applicable and you can use it and need it. I think it goes back to showing what our priorities are as a society.

  • I am always amazed when I see how much money is spent on marketing financial products (i.e., credit cards, checking and savings accounts, car loans, mortgages and home equity lines of credit). I do agree that companies should be free to advertise, but $17 billion is a lot of money. They have to be taking in scads more than $17 billion from all the people who utilize their products. I have to shake my head and then try to tell everyone I can how to deal with these products, especially credit cards, which I assume are the biggest advertisers. And the answer for credit cards is so simple: always pay credit card balances in full each month, don’t buy things with a credit card unless you have the money in the bank to pay for the items, and don’t apply for, or use cards with monthly fees. If a person can’t do that, then they should not use credit cards. Period.

    • John says:

      I agree, I think $17 is merely a drop in the bucket for many of these companies. You look at how many people carry debt from month to month and what their APR is going to be and I shudder to think at how much they make. Your answer on credit cards = spot on!

  • Imagine Christmas commercials that said, “hey, don’t buy anything! Spend some quality time with your family and friends!” Ah wouldn’t that be lovely? 🙂 I think basic personal finance should be a requirement in school just like math, science, and english. Probably started around freshmen year when teenagers are now starting to make some of their own money, and they are preparing for college. It just makes sense to me. Why is algebra required and not that?

    • John says:

      It would, though I think my wife and I would lose our business pretty quickly though. 😉 I agree though, I think it should totally be included along with the other courses. I personally hated anything above algebra and think it would’ve helped my GPA out a little more than algebra did. 🙂

  • Evan says:

    Not shocking at all. Look at the stats for education/preventative on any issue. Junk food advertising vs. education on food choices…beer advertising vs liver issues etc.

    • John says:

      Definitely agree Evan. There is some change on some of the fronts – food choices, but there is still a long way to go on basically all of the fronts.

  • I am not at all surprised at the discrepancy between spending on financial education and on marketing. We live in somewhat of a flawed system that depends on at least some frivolous consumption in order for our economy to flourish. I remember when president Bush approved his wave of tax breaks hoping that it would stimulate consumer spending it was literally as if he said “if you don’t spend money things go into the tubes.” I think we shouldn’t just teach kids about money, we need financial conversations to go away from being taboo. Talking about money isn’t like talking about politics or religions, it shouldn’t be off limits.

    • John says:

      Agreed Jon, it does take some balance and it’s difficult to reach that balance when so much is being spent on hawking products. I’ve discussed the whole taboo issue in several posts, and think teaching kids about money is just the surface. The problem is though that many view discussing money akin to discussing politics and religion, but it shouldn’t be.

  • I would love some financial literacy in the classrooms, but who would teach it? There does not seem to be one good role model that we can turn to and say to our children “This is how you do things and this is the benefit of it.” Most schools cannot teach basic education so I am not really sure I want them attempting to teach personal finance. As for the taboo nature of teaching our children, I have thrown that concept out and am gradually teaching my daughter the basics of having a savers mentality. She is only 4 after all 🙂

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