Personal Responsibility or Financial Literacy?

[LivingAlmostLarge]

I read Joe's post about how we need to teach young adults and people about personal finance. We should require a course and have them learn the basic. I used to agree. I probably still do.

But today I realized something more important. That we need to teach personal responsibility and perhaps financial literacy will fall into line.

Example, I was working out this morning and was listening to a story and ended up participating. A woman "monica" said a teacher called yesterday (thursday) because my daughter, who is 15 and either a freshman/sophomore in high school, missed her final. Turns out the girl didn't realize/double check when her final was and missed it. Monica talked with the teacher and explained the situation and the girl was being allowed to make up the exam on Tuesday.

Now Monica says "I guess I have to get the dates of all her exams in the future to help remind her and keep her on track. I wonder if she meant for that to happen."

I had been listening and people commenting, and I finally say in dissent "this was a teachable moment. You could have let your daughter go and talk to the teacher and explain the situation and beg for his forgiveness. Then he could have decided if he wanted to allow her to take a makeup exam. The teachable moment would have been that forgetting to take a final exam means possibly failing the class. Then perhaps she'd never make the mistake again in the future. She had to take personal responsibility for the mistake. And probably the teacher would be generous but why do you have to remind her to study for exams and go? When does she grow up and take responsibility?"

A lot of responses from "it'll ruin her life if she fails the class." "She's too young to understand what happens when you make a mistake." "She didn't mean to miss the exam."

My response was "when in life as an adult do we get a "do over?" Seriously we make mistakes at work and pay for them.

I'm sorry for being pissed and judgmental but I wonder if the majority of our problems actually stem from people blaming everyone else and not taking responsibility for their decisions and actions?

That parents are coddlying their kids into being hopeless individuals. People easily say it's the credit cards fault I overspent. The bank gave me too much house. I chose to buy too expensive a car. Perhaps I shouldn't have taken out 6 figure student loans.

No wonder we're in a financial mess.

[breathemusic]

I completely agree with you, and frankly, at 15 I think you should be old enough to understand that there are consequences to your actions. If you think your kid is too young to understand, then that means you didn't start teaching them about responsibility early enough, or that kid just turned out to be a screw-up.

At 15 you're old enough to have a job, almost old enough to drive, and in this day and age, certainly old enough to accedentally get pregmant, or get a girl pregnant. And if you're old enough to do those things, then you should be old enough to understand when you need to step up and be responsible for your own actions.

[MonkeyMama]

Agreed.

Throw in basic common sense. Which I think is far more important and lacking (rather than specifically, financial literacy).

I have often been told it's unfair for me to "judge" (complain) when clearly I have such a knowledge of personal finance.

???

I bought my first home at 22. Ask me about how much personal finance I knew when I was 22. I mean, come on. What I did have was common sense, and a sense of personal responsibility. My spouse and I are very logical and practical, and we thought long and hard what it meant to either rent or own in the city we grew up and called home. We decided it didn't make any sense, and we moved away. What I see in my current city (which is much more in line with sanity and reason) is a lot of people who didn't give much thought to huge financial decisions. The foreclosure rate among our peers is something like 90%. I am pulling numbers out of the air, but am hard pressed to think of one person who hasn't lost their home, isn't losing their home, or is just putting off the inevitable. & literally you should see the looks of amazement when people ask "what we are doing in all this mess" and we reply "we aren't in a mess." I find it sad that people can't figure out how we are not profusely under water. 20% down payment; didn't borrow against house. IT's really basic and simple. People just look at us like we are alien!! & they do - they ask all the time - because obviously no one can afford the house they live in... I find it personally scary that we are so odd that no one even can begin to understand it. IT's a sad statement about our culture. My spouse is unemployed and we took a financial detour to have kids, so we haven't even been paying down the mortgage extra or anything like that (until maybe the past year or so).

[josetann]

But today I realized something more important. That we need to teach personal responsibility and perhaps financial literacy will fall into line.

I don't think financial literacy will "fall into line" just because you're a responsible person. I think of ourselves (wife and myself) as personally responsible, but we've made some financial boo-boos. But I DO think that if you teach financial literacy to someone who's not responsible, it's not going to make any difference (ok, so you KNOW that you shouldn't rack up tens of thousands on credit cards because of interest and all...but you just don't care).

And yes, I do think we (as a society) are coddling our kids a bit too much. I mean...ok maybe it wasn't the brightest idea to throw kids in the back of the pickup truck and go to town (though it was tons of fun)...but do they really need to wear a suit of armor just to go outside on their bike? I could rant all day on this, but I won't

[JoeP]

I don't think financial literacy will "fall into line" just because you're a responsible person. I think of ourselves (wife and myself) as personally responsible, but we've made some financial boo-boos. But I DO think that if you teach financial literacy to someone who's not responsible, it's not going to make any difference (ok, so you KNOW that you shouldn't rack up tens of thousands on credit cards because of interest and all...but you just don't care).

Finance is a complex subject that requires study, either from a structured curriculum, or from mistakes one makes. With the former, people can be equipped with knowledge as they would regarding birth control: you have the facts, now make your choices. With the latter, people can make very serious mistakes, and then if they are lucky, dig their way out and preach to other how to avoid the mistakes they made.

[Barclay]

As a parent, I find a lot of gray areas in "teaching moments". We want our children to be independent and hard working. BUT, we also want to protect them from mistakes that they will pay very dearly for. I don't want my daughter to charge up thousands of dollars on credit cards. I don't want her to fail out of college. I grew up pretty dirt poor so finance was easy for me. I knew that I never wanted to be like my parents. SO, I researched careers that paid a lot of money and had high employment rates. I knew I wasnt going to get any money for college from my family, so I got scholarships. It's different for my children. They've never gone hungry. They've never blocked off the rest of the house and huddled around a heater in one room so stay warm in the winter. They've always had everything. And they can't get financial aid because I work too hard.

My daughter wants to be a nurse. I sigh at the very idea. I know nursing is an admirable career but you will never be wealthy. She will have to marry someone who has a decent career. Now, we are talking about pushing what's important to me onto her. I want to tell her that struggling financially is NOT fun and it's NOT a good life.

Parenting is HARD. We want our children to be successful and HAPPY. But, you can't live their life for them.

[disneysteve]

I know nursing is an admirable career but you will never be wealthy. She will have to marry someone who has a decent career.

Why does she have to be wealthy? Can't she be happy in life with a job she enjoys and a more modest income?

The fact that you think she needs to marry someone with a "decent" career implies that you don't think being a nurse is a "decent" career choice. Why not? Is a job only decent if it pays at least a certain amount?

I know plenty of nurses. They do just fine. My sister-in-law is the nurse manager of a heart surgery unit. I'd say that's a pretty "decent" career. Obviously she didn't start out there but she worked up to it over the years and now makes very good money.

[Barclay]

I know that it isn't fair to say it isn't a decent career just because the pay is low. Careers are much more than the pay, I admit. I just think life is more difficult on low incomes.

She also has never experienced living on a low income. She is used to living on our family income.

This is all my personal opinion, of course.

[disneysteve]

She also has never experienced living on a low income. She is used to living on our family income.

I think this is a very important point and is a big problem today. Kids come out of school and expect to have the lifestyle that they enjoyed in their parents' home from day one. It really is the job of us parents to teach our kids that we didn't start out with what we have now. And that's a tough lesson to teach.

My first apartment was a one-room efficiency. I had no bed - only a sofa bed that I made up at night and closed up in the morning so I had somewhere to sit. I had roaches in my kitchen. That certainly wasn't what I was used to in my parent's home. But I dealt with it until I could afford better.

The problem today is that parents coddle their kids. If the kid can't afford it, the parents pay for it because they're afraid to let their little darlings go without all of the latest greatest stuff. They NEED a new laptop and iPad and cable TV and cell phone and nice clothes and late model car and interesting vacations and more. It really needs to stop.

[prf2009a]

The best way to learn is through experience and it is better to do it while young and the concequences are less severe from the mistakes you make. My wife and I have never had credit card debt and have only taken out one small loan on a vehicle which we paid back early. That didn't mean we were smart with our money though.

We purchased our first home w/ 5% down at a price point 4 times our income level when we were 23 in a location we found out soon was not where we wanted to raise our family. It took a year and a half to realize that it was a terrible decision. Sold the home after being there 2 years and took a $30K loss. Value of the home has decreased another $30K since we sold. That was 2 years ago next month and today my wife and I are renting a place in a location we love where we can handle the payment. Our emergency fund back in place and we are now beginning to save for a down payment on a home we can afford with 20% down while attacking student loans (our only debt) and retirement savings. I sure sleep better at night these days. (even with a 7 month old in the house )

Moral of the story.... It took that ridiculous experience to get our priorities straight and I'm glad that happened now instead of when I was 50 years old staring at retirement with no money saved.

Hopefully kids can be smarter than me and not take that drastic of an event to get on track. It was experiences like the OP stated when we were younger that helped my wife and I come to our senses quickly in our situation instead of continuing down the path we started.

[josetann]

My daughter wants to be a nurse. I sigh at the very idea. I know nursing is an admirable career but you will never be wealthy. She will have to marry someone who has a decent career. Now, we are talking about pushing what's important to me onto her. I want to tell her that struggling financially is NOT fun and it's NOT a good life.

My wife is a nurse. She works part-time. 2009 she worked full-time hours (or more) for nine months of the year. 2010 she worked full-time hours for eight months. 2011, six months. The months off, she got to visit family, go on a vacation, enjoy the holidays (had the whole of December/January/February off each year, flight arrived early Thanksgiving in 2009 but she was completely off for November the other years, etc.). We own our 3-bedroom house (in TN) free and clear. Have no debts (no mortgage, no car loan, no credit card balance, etc.).

Each year had time spent in Alaska (drove there and back in 2009). It was a bit cold in March in Fairbanks, but summer was awesome. Much more money there than in Tennessee (though she did work two months in Tennessee and got decent pay). We got to do things like walk on a glacier, drive the Dalton Highway, take a dip in the Arctic Ocean, go down slides made of ice, kids got to ride on a real dog sled (with real snow/ice...not wheels like they use in summer), etc. Visited Houston Zoo many times (3 months in Houston), touched a moon rock, saw rockets, etc. Could go on and on.

This year my wife is working part-time for the whole year (three 8hr shifts a week, plus one unpaid every other week). She's a student midwife, and will have her midwife degree at the end of the year. No student loan debt. And we're in the great country of Australia. Yet another adventure.

And her spouse's (that's me) career? Stay at home dad. Raising two kids. Yes, it's a decent career...but probably not what you had in mind .

Now, we're not rich by any financial definition. But it's possible to be a nurse and have a decent life. More than possible, if you're willing to think outside the box (and I don't just mean to travel...simply staying out of debt is thinking outside the box these days). And I'm not saying we did everything perfect; we made our fair share of mistakes financially (and continue to do so, just on a smaller scale). Just saying...live frugally, keep an open mind, and odds are you'll come out ok.

[josetann]

The best way to learn is through experience and it is better to do it while young and the concequences are less severe from the mistakes you make.

One reason why I advocate for an allowance. Let them make mistakes when they're young, when the stakes are small (to us). $2 wasted on a chocolate egg seems really major when you're 5, and realize you could have saved that to buy a toy instead. A decent sum of money when you're 5. Better to learn the lesson when we're talking $2 than $2,000, or $20,000. And yes...better to learn the lesson when we're talking $20,000 than later when it's $200,000.

We purchased our first home w/ 5% down at a price point 4 times our income level when we were 23 in a location we found out soon was not where we wanted to raise our family. It took a year and a half to realize that it was a terrible decision.

Some similarities with us...except we thought we were doing everything right (think the house was just over 2x yearly income). Didn't take into account the lower pay in the area, and other things. And it took us longer to realize it.

Moral of the story.... It took that ridiculous experience to get our priorities straight and I'm glad that happened now instead of when I was 50 years old staring at retirement with no money saved.

Hopefully kids can be smarter than me and not take that drastic of an event to get on track. It was experiences like the OP stated when we were younger that helped my wife and I come to our senses quickly in our situation instead of continuing down the path we started.

We had a similar waking up experience. And while it's rough thinking "if only (we had done this/saved money there/etc.)" the past is in the past. We turned things around, and are now doing fairly well. And better to do so in one's 30s than in one's 60s. I like to counter my wife's "if only..." with "at least we didn't (continue down the same path/get worse/lose everything)."

[LivingAlmostLarge]

I think steve hit it on the head. That parents like the one in my story are doing everything. Why do you need oversight on a 15 year old's test schedule? When she's 25 so you can bail her out with money to live in an apartment she can't afford and drive a car she can't afford?

When does it stop? My BIL is 32 and my MIL financed his car for him. Okay so he makes a decent living but wants a more expensive car than he can afford? Well then stop going out and buy it. Or buy a cheaper car. 32 and still mooching, I'm allowed to say that because we've allowed him to live with us to boot last year rent and financially free.

Trust me I know the irony of my last sentence, but when does it end? Absolutely no responsibility.

[ecoadapt]

I believe one is as important as the other. Come to think of it, if you aren't responsible enough to know even those basic knowledge about finance then how can you really call yourself financially literate? Now, looking on the other side, no matter how knowledgeable you are on finance but if you are not responsible then you can't really call yourself a good financial person.

[Barclay]

I agree. Some people are extremely knowledgable they just really want a new house and a new car and they are fine with signing substantial loans. It doesn't make those people financially uneducated, it makes them have different values than more frugal people.