#1 Reason Why People Are Bad With Money
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I’ve read a lot of articles and blog posts breaking down the top reasons why people are broke or bad with money – and I’ve even created content on this topic. Common reasons included bad money management, poor choices, overspending, etc.
But while I feel these are common culprits, I also believe there’s more to it. And underneath it all, there’s a “core” reason why people are bad with money. In my opinion – and only my opinion – I think we can trace a lot of this back to “not being taught about money.”
The reality is that many people don’t talk about money, and this is something that needs to change.
We (or at least some of us) have been ingrained to believe that talking about money is rude – which doesn’t make any sense. We talk about everything else with no problem…yet personal finance is off the table. 🤔
Everyone will manage money until the day they die. But for some odd reason, money is the most hush-hush topic among family and peers. As a result, many people never learn the basics of saving, budgeting, or credit. They wing it, and then hope for the best.
This applies to people of all income levels. Some people earning six figures don’t know the first thing about budgeting. And without a spending plan, they end up living paycheck to paycheck.
I will never understand why financial education is missing from most classrooms. Currently, about 29 states have a personal finance curriculum. The problem, though, is that it’s only one semester. And unfortunately, this barely scratches the surface.
Sometimes I’ll have someone ask a money-related question, and I’m always happy to answer these. But one thing I find interesting is that these questions are often asked in an apologetic tone. As if it’s a question they shouldn’t ask.
Although I understand why some people are uncomfortable with this topic, we need to normalize talking about money. If more people understood “even the basics” of money, I’m willing to bet that fewer people would be bad with money.
Granted, some people aren’t going to change. It doesn’t matter how much financial knowledge they receive, they’ll continue to make poor choices. But we can safely assume that a lot of people would make better choices.
So, how do we incorporate money into the conversation? Here are a few suggestions.
1. Break the silence, and don’t be afraid to ask questions
Of course, not all money advice is good advice, so consider the source.
If you’re struggling with money management, speak with someone who’s actually good with money. Ask questions and get their advice. Maybe they can share a sample budget or offer other practical tips.
2. Don’t be afraid to speak up and share what you know
If you’re good with money, maybe share your knowledge with someone who’s struggling to manage their finances. But tread carefully.
Rather than give unsolicited money advice to anyone who will listen, look for appropriate opportunities. For example, your friend might vent about a low credit score or their struggles with saving money. If so, jump in with a few doable suggestions. They’ll likely appreciate your ideas, plus breaking the ice helps them become comfortable with money discussions.
3. Be honest about your finances
Due to peer pressure and caring too much about the opinions of others, some people make poor money decisions to appear “not broke.” But you shouldn’t feel embarrassed about your financial limitations.
If you’re invited out of town for the weekend, yet you’re trying to build a down payment fund or pay off debt – don’t accept the invitation to save face. Instead, try this: “That sounds like fun. However, I’m saving my money to buy a house next year, so I’m unable to attend.”
Years ago I declined an invitation because I was close to hitting my debt payoff goal and I wanted to stay on track. I explained this, and to my surprise, the person asked about my debt payoff strategy. I don’t know if they used my suggestions, but my honesty created a conversation about finances.
Your thoughts? Do you think normalizing money conversations is the “secret sauce” to better money management?