Oct 29

people dancing

How many of you out there spend with your hearts and not your brains? Think about it, are you all about experiencing things now and then figuring out how to pay for it later, or are you a planner who makes sure the money is there with enough left over for bills and life before spending?

CreditDonkey.com, a credit card comparison company has done a survey of over 1,100 people and found that 41% of them had less than $500 in their savings account. YOLO (you only live once) right? Yet why does this statistic not surprise me? People will blame every aspect of life but their careless spending in order to not feel foolish about being one of those 41%.

I personally know that part of the problem with this statistic is that the people with no savings, investments, and nest eggs are able to live this way because there’s always a safety net. If it isn’t your brother who works 3 jobs then it’s your dad, if it isn’t your dad then you can call your wealthy uncle. Even people with no family connections tend to have friends who are penny pinchers with big hearts and if that doesn’t come through then there is always Uncle Sam.

We always blame financial education for people’s carelessness with money but shouldn’t 20+ years in the world teach an adult something about keeping something stored in case of emergencies? Suze Orman suggests 6 months worth of salary—this may have changed over the years. $500 though… really?

Remember this story from childhood:

There was a squirrel and a chipmunk who were pals. Every day the chipmunk would play, eat acorns and live carefree—the squirrel would be working, storing nuts away in his home, spending a lot less time playing. The chipmunk would continuously urge the squirrel to stop storing and come out and play with him but the squirrel kept at it.

One day the chipmunk went outside and there was snow everywhere, he found himself hungry and would have to scrounge for hours to find food while the squirrel who had prepared for the winter was warm, fed, and comfortable.

This is a children’s story yet so many of us don’t follow its principles. To the people who live fast and reckless the chipmunk is seen as “fun” and the squirrel is a “bore” but the chipmunk is always having to lean on the squirrel for help when the playtime is over and life comes knocking. We need to be more responsible adults if we are to be self-sufficient.

People as a whole are spoiled and get bailed out of disasters too easy for things to change. Fun is for people with little to no responsibilities yet I see people with children, families and debt playing life like the chipmunk. The squirrels in life are given nasty nicknames like: miser, cheap, tight, boring, greedy… I can go on. But when times get hard the squirrel is known as “savior” and “friend”.

If you find yourself being one of those with a high paying job but less than $500 in savings then it is time to reassess your life and become more of a squirrel. There are so many avenues of free information to do better with your finances that nothing outside of real debt—sick family member, several kids—can be a valid excuse not to take it.

Sites from people like Suze Orman and Dave Ramsey are a good start to get your life back in order if YOLO is keeping you from having money in the bank. 41% are living life dangerously and if you are employed and able to pay for concerts, video games, clubs and more then you should have a lot more than $500 in your savings account.

See some words or phrases that you don't understand? Check out The Dragon's Lexicon.
  • I think school needs to have some real life classes. Lets skip the sewing, cooking, and shop classes and substitute it for money managment. Yes, ppl should want to educate themselves especially as adults but honestly bad money habits are taught by your parents and bad habits are hard to break. Its especially hard to break when you feel you are too broke to seek that education. And have the mind set that you will learn when you get money.

    • I would agree with a class but for chibis not High Schoolers since I honestly believe that the atmosphere in High School is one that would not allow for kids to take money management seriously. 7th or 8th grade kids should learn the importance of balancing a checkbook and be graded on it with their ability to spend and keep money responsibly.

      Part of the reason you don’t see classes like this being pushed for the school system is because Capitalism strives on ignorance. If people were all as tight as I am with their money then who would you get to run out and spend their rent money on the new iPad, the new Samsung Galaxy S3, or the latest Playstation?

      It won’t be in classes, we have to treat in on an individual basis and I think that it’s up to parents who know they are terrible with money to get their children a mentor or tutelage to allow them to do better with their finances. In the famous book Rich Dad Poor Dad the author had to learn about money from his neighbor due to his father’s own shortcomings. Thanks for your comment!

  • McThick

    It’s deeper than ignorance about money, it’s willful ignorance about money. Like it or not, a huge portion of our cultural heritage is based upon English society. A society that, for centuries, has associated money and wealth with an individual’s worth as a human. If you worry about money, you are ‘common’. Your betters don’t worry about it…why should you.

    Also, readily available credit has replaced savings. People have credit cards now, so having $490 in the bank and another $3000 room on your cards is like having $3490 in the bank.

    Of course, it is not the same, but try teaching that to the vast majority of people who get the simple math problems on Facebook ( Like, 1+0*6 -1 = 0…not 5) wrong. Stupid is as stupid does, and America has a long, long history of rewarding the stupid.

  • Donkhote

    Japan remained (remains) in a deflationary abyss due to the thrift of its citizens. The discipline to save has been strong there. It’s not uncommon to have a 25% savings rate in a Japanese family. That came into conflict with a capitalistic push in the 80s, but cool heads prevailed.The older generation just didn’t go out and buy every bright and shiny thing that came up; however, this younger generation may change that somewhat as the lure of technology continues to permeate modern culture.

    In America, however, we are taught to be consumers from the time we can operate a television remote. Credit cards are marketed to college kids. Shopping malls are built for entertainment and leisure time. Negative savings rates marked the 80s for Americans in the US, and it lasted right up until 2008. So now…they’re all broke.

    I’ve been called tightwad, cheap and all that, but folks still come to borrow money when they “run short.” I’ve taken care of people and provided for family members too. It’s about discipline. Folks tell me how lucky I am to retire before 50 after working regular jobs for most of my life. I smile. The more I saved the luckier I got.