Consumer Math

My husband and I had a conversation the other day. That conversation prompted me to write this post. Dan had been watching a television show where they discussed with two couples their financial problems and how to work through them. What he shared with me had me amazed.

Both of the couples had ample money incoming. The money they had would more then meet their needs. The problem lay in the fact that they just spent and spent without regards to how much they had coming in. The one lady bought herself and her children all new clothing every three months and tried to justify it by selling their old clothes in a yard sale. The other couple had two Lexus cars. Neither couple understood how they got into the mess they were in.

My question is this- does anyone teach real consumer math anymore? I asked my 8yo daughter a question- 'Should you buy a $400 toy if you only have $300 in the bank? What if you put it on a credit card?' Even she knew that you shouldn't be buying what you don't have money for. Why is this such a hard concept for so many adults these days? Where did the line get crossed between buying all we want and living within our means? It seems that people these days have no concept of self control and budgeting your money. We want it all and want it now. Affluence has run amuck.

Parents need to make sure that their children know consumer math. I am not just talking about how to buy stuff or how to pay your taxes. I mean running a household, balancing a checkbook (I can't believe the number of people I know who never balance their checkbook!), banking, investing, everything having to do with money and everyday living. I heard once of someone whose children, upon reaching their upper teen years, where given the family finances and had to run them for a year. The child would have to pay all bills, balance the checkbook, make financial decisions, etc. The children did make mistakes, but the mistakes were less costly then they could have been if the child was running his own finances without any knowledge behind him. I am not so sure I could hand over control like that, but the concept definitely would make a lasting impression on the children.

The government is having this huge debate about the privatization of Social Security. I am all for it, any time we decrease the impact the government has on our lives, the better it is. However, when I see how badly so many people handle their money, the last thing they need is to be given complete control of their retirement funds. I sure hope it will be a well thought out process if it does happen.