Ignorance and Denial

Ignorance

No one was born with an inherent knowledge of how to handle money. And since it affects everything we do in life, you would think it would be on the curriculum of every school in the world. The truth is that even though the average American family will make over $2 million in a working lifetime, we teach nothing about how to manage this money in most high schools and colleges. That is stupid.

You wouldn't put someone who has never seen a car behind the wheel and let them drive. Yet, we give $2 million to people who have never had any education on how to handle it. It is no wonder that so many businesses fail and the number of personal bankruptcies continues to rise at an alarming rate. 

People make a mess of their money and wonder how it could have happened to them. It doesn't mean they are dumb. It just means you have to learn how to handle it. I have no idea how to fly an airplane, but simply because I've never learned how to. Same deal. The one thing you should never do is to blame your situation on your lack of knowledge. It is there for the taking.

Overcoming financial ignorance is actually easy. First, you simply have to admit to yourself that you are not a financial expert. Second, finish reading this course. Third, read something about money at least once a year or go to a seminar, but temper what you learn with common sense. What you don't know about money will make you broke and keep you broke.

The Jones

Human nature brings out the need to be accepted by our friends or families. Peer pressure and cultural expectation drive us to do some really stupid things. One of the dumbest things we do is to destroy our finances by buying junk we can't afford so that it makes us appear wealthy to others. In fact, recent studies have showed that 90% of us buy things we can't afford. 

But if you want to wealthy wouldn't it make more sense to do what the millionaires do?  Dr Tom Stanley detailed a study of America's millionaires in his book, entitled The Millionaire Next Door. He found that most people had a distorted view of the habits and value systems that millionaires use. Most don't have the big houses, new cars, and expensive clothes that we typically associate with wealth.

If fact, he found that the typical millionaire lives in a middle-class home, drives a two-year old or older paid-for car, and buys blue jeans at Target. What this means is that the goal of achieving financial security was what mattered. They hardly cared what anyone else thought.

It's not easy giving up the 'Keeping up with the Jones' life. We believe we truly enjoy all those nice things we bought. In addition, we are afraid to admit to everyone that it was all a fake. When you have big piles of stuff, no money, and lots of debt, you are a financial fake. Peer pressure is so strong, that telling your family or friends that going out to dinner or on a trip is not in your budget is a painful thing to do. 

Telling your family that you can no long afford to buy Christmas presents for the fourteen nephews and nieces is a hard pill to swallow. They will get over it. In fact, some of them that are living beyond their means may be thankful someone finally stood up and said, 'Let's draw names this year.'
You will never have control of your own life as long as what other people think is more important than your own security. Besides, most of those people you are trying to impress are also fakes. And having respect for yourself is a lot more important than having respect from others.

Denial

People are very, very good at rationalization. We can find an excuse for just about any actions we do. And since financial troubles tend to slowly creep up on us, we only have to make little excuses along the way. We had a very good reason to buy each of those things we did. It makes it so easy to deny that there is a problem. After all, you can make the payments, so you must be doing okay. For the vast majority, only until they lose their jobs or their businesses.

Taking complete control of your financial life is a hard thing to do. You have to look in the mirror and admit it is time to change. You have to stop paying attention to what other people think. You have to educate yourself to understand how money works so that there will be no more denials.