Why Are Some People So Ignorant About Money?
November 1, 2007
Some people are good with money and others make downright horrible financial decisions. What’s the difference between the two groups? Why are some people so bad with money?
My wife was watching Suze Orman give people advice on credit card debt and home loan issues last night on Oprah and I was amazed at how clueless some of the guests seemed when explaining their problem or asking questions. I imagine the majority of them have access to an abundance of personal finance materials such as online content, books, or magazines so why don’t they know more about money? I came up with several money ignorance factors:
They were raised in settings that gave no thought to money management and may have demonstrated unhealthy financial habits. People affected by this factor just never knew any better and it’s hard to break old habits.
In addition to family, another huge influence on most people’s lives are their friends. If none of their friends show any interest in money or ability to manage it well a person is less likely to be financially informed or make healthy financial decisions.
Life is busy. People get involved in their families, jobs, health, communities, hobbies, etc and just don’t make time to learn about money. The unfortunate part is that finances can have a big impact on all the parts of life I just mentioned so if people ignore money long enough, it will eventually affect other parts of their life.
Personal finance involves a lot of numbers and concepts that can be intimidating. If they don’t have friends or family they can ask financial questions of, they may not feel comfortable learning about money on their own. As they try and slog through all the details of confusing financial topics they become overwhelmed and just decide to make an uninformed decision.
There are a lot of hard working people that don’t get paid well, don’t have good benefits, and just have bad luck. I can imagine if I was faced with dire financial circumstances it would be discouraging to think about money. Rather than dwell on a negative part of their life, people choose to ignore it completely and hope the details will work themselves out.
What Can Be Done?
These factors don’t stand alone; a person could be affected by some or all of them so it’s easy to see why some people are so clueless about their persona finances. Unfortunately the reasons behind why someone can’t manage their money won’t help them when the bills are due. Debtors don’t want to hear “excuses”; they just want to be paid.
I guess the billion dollar question is how can our society help address these different factors so more people are knowledgeable about money and fewer people run into the sad stories we hear about on Oprah.
All posts by Ben Edwards