Over the last couple of weeks, on separate occasions, I met at least two guys who must have *never* read anything about personal finance, or retirement, or health insurance. Interestingly, these are in my close-friends-circle…people with whom I interact almost every other day. Both of them are educated (”educated” = can solve complicated math problems, and/or mend people’s bones), work for big organizations, and are well into their twenties.
Here is the essence of our conversations.
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About retirement savings with Friend 1
Golbguru: It’s great that you are on a good job early in your life. You can sack a ton of money through 401K and other retirement related savings options.
Friend 1: 401K is “great”? But, doesn’t contributing to 401K reduce your take-home pay? I want more money with every paycheck, 401K is not for my types.
Golbguru: Huh !? What? (I really wanted to say: you got to be kidding me!)
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About health insurance benefits with Friend 2
Friend 2: My glasses are broken, I need to fix them or buy new ones.
Golbguru: Your company is known for good employee benefits; you must be having a great vision coverage through your health insurance. So don’t worry, you will get new ones for cheap.
Friend 2: Really? I haven’t read my insurance coverage yet. Honestly, I don’t even know if vision is included in my insurance, or if I have to get it separately.
Golbguru: What you mean by “don’t know”? Didn’t you read your health insurance documents before choosing your coverage?
Friend 2: Read all that crap?…it’s like hundred pages! I don’t have the time to read it.
Golbguru: Huh!? What? (Again, same reaction 
)
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Incredible. I felt like shaking them out of their slumber.
Many times, I have felt that personal finance bloggers just keep repeating a lot of basic things…and probably all that knowledge is either common sense or is readily available on the internet. But, when I meet people like Friend 1 and Friend 2, I am glad about repeating the basic stuff. There are probably many people (educated people who spend half their day on the internet) who don’t know (or resist) personal finance basics. I am not sure if such people even care to read personal finance blogs, but I am hoping that they stumble on at least one personal finance blog that shines a light in their head.
Have you come across such people? Wouldn’t it make you rethink the meaning of being “educated”?
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I am such a person. I am 34 and just beginning to think about/understand personal finance.
As far as education goes, people learn in different ways, and also have strengths in different areas. There are few people that know “everything” including things that can help them in their daily life.
Keep stating the “obvious”. It’s not obvious to all of us.
Kino Kid: You will find a lot of valuable resources around the personal finance community…and hopefully you will find it helpful.
While I agree with your thoughts on people learning in different ways, I am not sure about existence of people who know “everything”.
In my case, I am an investment-moron (just to state one of many deficiencies), and a lot of things are not obvious to me in that area.
I’m uber-educated and it has been just this last couple of years that I have paid attention to personal finance at all, for different reasons then the hypotheses below. Anyway, I don’t think their ignorance is a function of education or the lack of it. It may be instead a function of social class. If they were raised with the expectation that the “money would always be there” because they were middle or upper-middle class part of signifying class in the US is to profess indifference. Education plus indifference to money signifys “I don’t care because *I don’t have to…*”. It can also function as a slight put-down to the person who knows about money in the conversation, a little class slap, if you will. I don’t know what the answer is, but I do know that arching an eyebrow, expressing extreme but understated surprise at their response, and say, Hmmm, you are the only one of my friends that would say something like that…and leave that sentence hanging. Part of the burden of the middle class is conformity, and saying that will tweak them a bit. Hopefully, to action.
I love this post of yours. I think it is a reflection of reality! The funny thing is that I read your post while chuckling because it reminded me of myself when I was in my early 20’s just starting out. I was also one of those professionals with a good job but who had no idea about my then amazing insurance coverage. To this day, I can’t believe how silly I am sometimes about some PF matters. Even after 18 years of practicing this stuff I still overlook MANY things!
You have just mentioned something my mom always says. “Oh doctors/lawyers/etc don’t have time to do personal finance. They just make lots of money so they don’t have to worry about investing or savings it.” The stupidity of how my mom “invested” her entire retirement in a money market account.
Don’t ask me how someone so brilliant could be so dumb. And both my parents are like this.
I know very little about investing, getting started, etc. Everything seems to sound so EASY but, it seems so DIFFICULT to understand. I think that’s why it has taken me so long to even get started. *sigh*
Golbguru,
The irony of PF bloggers repeating “known” principles and ideas is that we are usually preaching to the choir - either each other or relatively PF savvy people looking for ideas. The majority of people who prefer to not know about personal finance aren’t reading PF blogs.
I will readily admit I’m an insurance ignoramus. Same thing with 529 plans. Working on it, but other things can interfere in the meantime.
Doesn’t surprise me. I myself never used to pay any attention to insurance coverage myself
(Not that I can say that I am a pro now, but still)
There is and has always been a disconnect between common man and (legal) terms, especially financial terms. Even now, when they are in relatively plain English.
I see a difference between your friends. One doesn’t know what kind of benefits he has. Which, whilst a bit dumb, is the kind of thing I can easily see myself doing, especially if the documents are long. I’m assuming he know what insurance is.
It sounds like the other guy doesn’t really get what a 401(k) is. Which whilst I get, would make me want to hit my head against a brick wall.
I often find that people don’t know things that I assume everyone knew. I sometimes try to educate them on the subject - I’m not sure how well that goes down. I wouldn’t say that they were un-educated though. Just not as educated as they should be.
Why isn’t personal finance taught in schools? People have a greater need to balance their checkbooks than to parse differential equations. I know it can be a “class thing” which is just crazy! Poor people talk about money, rich people talk about money…it’s only certain elements of the middle class who think discussing finances is declasse.
I guess I am just one of the crass ones…I have promised my 10-year-old (who puts her savings into I-bonds) that when she is old enough to legally work and to have an IRA, I will fully fund it by matching her wages until she is out of high school. Then, if she can avoid the temptation to withdraw any money early, she should have a Very Large Sum in her retirement fund. She is very excited about this (now) and tells her friends that she will have a million dollars when she retires.
I agree that PF bloggers are often preaching to the choir. That’s why I try to incorporate totally random topics, and tie them back to money. Generally, they are things that I am interested in, such as sports, weight loss, wedding planning, certain TV shows.
A couple of weeks ago, more people found my site through a google search of “Joaquim Noah” of the Florida Gators than any other source. Oddly, this was due to a post from last year’s NCAA finals, and Noah’s decision not to turn pro. The money tie in was essentially the risk of bypassing the immediate payday.
But hopefully some college basketball fans stuck around long enough to learn something about personal finance, or click on other pf bloggers to further their learning.
Guys and gals, thanks for the thoughtful input and for sharing your personal experiences. The comments have more “teaching moments” than the post itself…that means more food for thought for me. Appreciate it.
I’m no expert, but I am still shocked to find out just how ignorant many people are about personal finances, both young and old. And it’s not surprising - I received no education in school or at home. This seems to be the norm - I had a college roommate who was unaware that credit cards charged interest! Shocking - and scary. I agree with martha in mobile that personal finance needs to be taught in school- at an early age.
I know people like this, too.
Likewise my friend her lack of a 401k employer matching because she needs the 6% - right after she told me she spent about that much annually on clothes and shoes she never wears.
You know I’m with the guy that wanted more take home pay. Retirement is for people who aren’t self motivated enough to start a business or develop passive income before they’re too old to do anything.
Well education and intelligence aren’t the same thing at all.
It’s strange but a lot of my friends are of a similar mindset to yours. It is almost taken as a given that once you go to college and get a good education that you automatically know everything about personal finance. Unfortunately this could not be further from the truth
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