Why people are scared of finances

[questions]

I am 56, retired, financially solvent and appalled at the numbers around me that do not take care of their financial responsibilities. There is an epidemic and everyone wants to blame anyone but themselves. I financially managed a small school for many years.

I'd like to help people shift their comfort levels with finances. I am most interested in the personal dynamic that scares people away from taking charge. Are there trainings that specifically address this issue of fear and finances? How to shift a person into wanting to embrace their financial challenges instead of ignore them? Any direction would be appreciated

[mommyof4]

I can only speak for myself, but one of my issues is that I always have HATED math, I am terrible at it (scored in the 4th percentile in the mathmatics part of the GRE, 95%tile in all other areas), and personal finances involves a lot of math. Trying to understand interest rates, etc. was simply overwhelming for me. I just didn't understand it. I still hate "math," but I have discovered that I like $$. , so I have gotten over my math avoidance in order to keep my check book balanced, plan and track a budget, etc. For me, this is a HUGE mathmatical accomplishment in and of itself.

[maat55]

I think you will find Bigfoot, Nessy or John Galt before you find the mystery behind financial denial. Good luck.

[Phenomenal Woman]

I think some people are afraid that knowing the details of their finances will result in telling them they can not afford to go after what they want. Some do not realize they can make their desires come true using money as a tool while others needs to get off of their high horse.

In my case, I used to move every 2-3 months growing up and continued out of habit for several years after I left home. I felt I was never "settled" to get organized. I spent so much time filling out change of address forms and packing and unpacking that I winged out my finances.

I am so glad I do not live that way anymore and yes it helps staying put in one place longer.

[srblanco7]

I've always presumed that people just don't want to know the "answer".

For example, when you plug numbers into a retirement savings model and it says you need to stop spending, pay off debt, and start putting away several hundred dollars a month to maintain your standard of living in retirement - it's much easier just to bury your head in the sand, ignore the model results, and maintain your current lifestyle.

We are a society that loves immediate gratification and retirement savings is the perfect example of gratification delayed.

[Seeker]

I think it's part of everyone answer --

It's not "easy" to plan for the future. Many people live by the theme "eat, drink and be merry, for tomorrow is another day."

The future is an "unknown" entity, and planning for it just boggles the human mind. Nothing is 100% certain except one day, we will die. Between now and that day sometime in the future, what do I do?

How do you plan for retirement with rising prices and falling worth of assets? How can you plan for anything when your very job/career/income is or may be at risk? How do you deal with setbacks?

Our very human characteristics (our unique picture of who and what we are) determine our ability to push forward and try again in spite of all the setbacks.

As far as training for these... I'm not sure such a thing exists. I think it's a very subliminal part of our choices we made as an individual child growing up and watching others (either for better or for worse), that made us determine whether we wanted to follow that path or choose another.

"Taking charge" requires responsibility, and it's easier with training and knowledge. 100x more difficult without it.

[Goldy1]

My mother is frugal, moreso than she needs to be and I realize she taught me well.
I think it's like the expression "It takes money to make money."
When I was single, living paycheck to paycheck in college, I had the common sense to not get into cc debt but I had zero interest in finances as far as investing was concerned since I had ten bucks in the bank.

I married a man who had his own home already a few years and got a job. Now that I had some money to "work with" I felt inclined to school myself to protect it.
I now know I won't be young forever.

Then there are folks who are another breed. The people who don't balance thier checkbooks and have unopened late bills sitting around.
It comes down to instant gratification vs. planning for a future goal.
I try to give myself some of both or I would go nuts.

I don't really set goals for myself, but I love spending time with my husband. I would love to retire one day and just do stuff together like light travel. I like work too so getting us out of the 9-5 grind before our hips break is the goal. lol

[snafu]

My generation sadly seem to have an 'I want it...I deserve it...it will boost my self esteem and fill the hole in my heart' mentality. They avidly follow celebrities pathetic values and mimic what they see in the media.

[bjl584]

I think it's partly a failure of the learning structure of our education system. Personal finance simply isn't taught as part of the core class structure in our schools. Kids can graduate highschool with the knowledge of how to solve an advanced calculus problem, but they can't balance a checkbook.

[Russell]

Personally, the hardest parts of finance to me are:

1. All the tax codes and laws especially since I want to start a small business, just basics like capital vs. expense tax laws, the dos and donts etc

2. Investments, again mostly tax implications like

I have a pretty good handle on my finances in that I don't have any debt other than the mortgage and have emergency fund and short and long term savings I'm comfortable with - mostly thanks to my being lucky enough with my jobs in that they've been well paying.

[boosami]

Throughout history, people as a whole have always tried to escape reality in any way they can, because reality is hard. Today's fantasy escape is celebrity lifestyle. If we can convince ourselves that we're famous for a moment, we've become distracted from our broke reality. People are afraid to look at their finances because seeing it in front of them will "make it real" and they'll have to deal with it.

[kilapapipa]

Originally Posted by bjl584

I think it's partly a failure of the learning structure of our education system. Personal finance simply isn't taught as part of the core class structure in our schools. Kids can graduate highschool with the knowledge of how to solve an advanced calculus problem, but they can't balance a checkbook.

Blame it on education again. The education system is there for students to take advantage of and if you haven't guessed it, I am a teacher. As a parent and a teacher, there are certain things I teach my children as a parent that I don't expect the school to teach them. Like "Common Sense", "Manners", and "Finishing something you started". These things are not being taught at home today and they should be. In 15 years in the business, I have gone from about 75% support to around 50% support from parents. They are too busy to "finish something they started", and that is having kids.

[Chris____]

Originally Posted by questions

I'd like to help people shift their comfort levels with finances. I am most interested in the personal dynamic that scares people away from taking charge. Are there trainings that specifically address this issue of fear and finances? How to shift a person into wanting to embrace their financial challenges instead of ignore them? Any direction would be appreciated

So I googled "money forums," ended up here, and this is one of the first posts I read.

I actually attended a training last week that specifically addressed exactly what you are talking about. It was a workshop called "The Money Playground," by Laura Lavigne. I'm not a mom, and it was certainly "budgeting for living, breathing moms" - but I did get some tools that deal effectively with the personal dynamic of fear.

A big thing I took away from it, which I agree with now (although I certainly wasn't raised that way), is that:

Giving up things you want (caramel coffee),
in order to afford things you need (roof over your head) -
is NOT taking charge of your finances.

The major reason people are afraid to see exactly what they are spending on, is that in the cold, hard light of "budgeting" or reporting - they are going to see exactly how "irresponsible" they've been. Falling short on a mortgage payment by $200, then seeing you've spent $250 at Starbucks that month - hurts.

But it doesn't take away the fact that you want coffee.

I think that most of us have the idea, somewhere in the background, that sacrifice=responsibility. It makes sense - just give up things you want in order to afford things you truly need. But for humans, who have trouble eating just one potato chip, that sacrifice thing doesn't work long-term.

We simply avoid the sacrifice by NOT LOOKING at where we spend money.

And then we use more of those little coffee/"shopping therapy" joys to soothe the constant low-level unease about what will happen with our finances.

When I say "we," I'm not just talking about coffee. The entire mortgage and banking industry went into sub-prime shopping therapy mode for years.

The biggest financial institutions in the country are made up of people, and those people had the discomforting sense that the housing bubble might burst. But it was far too painful for any of these companies to actually LOOK at where money was flowing.

If we are a little more honest with ourselves, and more kind about what we really want - we can PLAN for it, play with the numbers and make it happen.

[adam_c]

I'm 31 and equally appalled. Looking at my generation, I've come to the following conclusion:

Gaining control of personal finances is like losing weight or getting in shape. The people who need it the most refuse to believe that a few basic principles make all the difference. They have no HOPE that they can actually pull it off.

People have this notion in their head that balancing a budget requires an MBA and they are convinced normal folks can't pull it off. Being broke is just part of the human condition.

What to do about that? Find a few people who are teachable. Teach them what you can. Use them as examples of what others can accomplish and dispel the myths.

[neatdesign]

Originally Posted by kilapapipa

Blame it on education again. The education system is there for students to take advantage of and if you haven't guessed it, I am a teacher. As a parent and a teacher, there are certain things I teach my children as a parent that I don't expect the school to teach them. Like "Common Sense", "Manners", and "Finishing something you started". These things are not being taught at home today and they should be.

If there isn't a standard of teaching personal finance in schools to begin with, then how can students take advantage of it? Likewise, you assume that this is an either/or situation: Either students learn about personal finance in school, or they learn it from their parents. But that's not really a realistic perspective, is it?

There are many reasons why parents can't or won't teach their children about personal finances. Some parents simply don't have and/or understand personal finance skills themselves, and therefore can't teach something they don't know. Other parents think money is a taboo subject that should never be discussed with children; my parents held this view, even though they were both college-educated, successful professionals who managed their personal finances extremely well.

Learning manners and common sense and how to finish something to its completion can't really be compared to learning about personal finance. I have written thank-you notes for as long as I've been able to pick up a pencil and write, but that doesn't mean I graduated from high school (or even college) knowing how to balance a checkbook, or how to read the fine print on a credit card application.

Unfortunately for many of us, we learn personal finance skills not from a class or from our parents, but as a result of making horrible financial mistakes in early adulthood. It would be wonderful if schools AND parents worked together to make teaching personal finance a reality for young teens and adults.

~ Jenney

[maat55]

Originally Posted by neatdesign

Unfortunately for many of us, we learn personal finance skills not from a class or from our parents, but as a result of making horrible financial mistakes in early adulthood. It would be wonderful if schools AND parents worked together to make teaching personal finance a reality for young teens and adults.

~ Jenney

I agree 100%. IMO, personal finance should be more important than history and english in grades 11 & 12. I don't know what needs to be cut, but PF should be added and highly stressed.

Unfortunatly, many adults will want no more to do with it than they do when discussing it with their spouse. Why it is not a major class is bizarre.

[neatdesign]

Originally Posted by maat55

I agree 100%. IMO, personal finance should be more important than history and english in grades 11 & 12. I don't know what needs to be cut, but PF should be added and highly stressed.

Unfortunatly, many adults will want no more to do with it than they do when discussing it with their spouse. Why it is not a major class is bizarre.

I have long stated the the only really practical thing I learned in high school wasn't calculus or advanced placement history or Spanish -- it was typing. If I had had the opportunity to learn about personal finance in school, typing would've been bumped down to second place.

~ Jenney

[Bluestreak]

People fear what they do not understand, plain and simple. It's due to lack of independence/experience. That is your answer in a nutshell. The priority of finances has gradually been lost over the last few decades but is and will be coming back with a vengeance as times continue to get tougher. This country needs some real tough times right now, for the better, for the long term. Spending is/was out of control and that will only be corrected effectively with tough times.

We have gone through multiple generations with many being handed everything on a silver platter, the government always being there for them when they stubbed their toe, etc. It is time for change yet it is not Obama that is going to accelerate the needed change though.

[woodie96]

I think also that it tends to be a procrastination thing, kinda take care of it later, not high on the priority list. When time is their best friend by far when discussing money matters.
Also I think it makes people take a look at their own mortality and see that some day in the future, they will have to address those issues also.
But burying their heads in the sand only prolongs the inevitable.

[manageME7]

Dealing with finances is really a huge task. Big companies have become insolvent in the absence of money management techniques. One should adhere to money management techniques from the early days only.
Parents should make their kids realize that money management is a vital part of life.
They should actively involve their kids in financial decision making. Children now-a-days I tell you are really smart. Therefore they are allowed to manage their own finances. this will help them to make money management a habit which will really help them in the long run.
Moreover the family member should actively involve them in financial meetings on regular intervals. They should discuss about their financial conditions and try to find out a rational solution.
One should always know that money comes to those who really respect it.

Life is so simple, do not make it difficult. Just try to manage yourself