Money Crazy and the Hazards of Financial Illiteracy
When I was growing up money was in short supply. We were constantly instructed to save it whenever we could, to use it wisely and to never spend it all in one place. We did not give our money to a sales person until receipt of the purchased item, did not brag about how much we had and kept it tucked safely away in our front pants pocket.
However, this was the extent of our financial training. We were not taught the difference between money, income and assets. We knew nothing about stocks, bonds, risks or investments. The phrase stock market was foreign to me and had someone mentioned the word liquidity I would have assumed they were talking about water.
And even though we all wanted to be rich, we had no idea of how to get there. We simply were not equipped to manage and grow our limited resources or to achieve lasting wealth and prosperity. Like most baby boomers we were only advised to go to college, marry a nice person, get a good job and eventually retire, hopefully in relative comfort.
Had I known then what I know now I might be a few dollars richer. But at least we were taught one thing; not to be a fool for money.
For example, we knew better than to take anything that didn’t belong to us at the risk of consequences we had no desire to endure. Gambling was also unacceptable as were cheating, lying, exploiting others, being exploited, prostitution, or any criminal activity. And we never dreamed of making money by putting our business in the street or recording ourselves engaged in intimate behavior. We may have been young, dumb and full of certain bodily fluids, but we were hardly stupid.
Ours was a healthy relationship with money. We knew that as important as it was, money was not more important than our self-respect, law-abiding behavior and good name. No matter how desperate our circumstances, there were limits to what we could do for and with a dollar.
Today, our attitudes, values and relationship with currency have radically changed and not for the better. The lack of money related ethics and information is especially relevant regarding our young adults many of whom will do almost anything for cash. In a world were everyone wants to be a star, we pursue increasingly prurient ways of achieving wealth and fame; the greater the attention, the more notorious the situation, the more obnoxious the behavior, even if destructive and humiliating to all involved, the better. And from pimping preachers in L.A., to sex tapes, to clowning on reality T.V., nothing is out-of-bounds.
There are two problems with this approach. First, once rung a bell cannot un-ring. If you put embarrassing, confidential information on the street, it stays there. Once your reputation is disparaged it usually remains so. And those who play the court jester for money usually remain the jester long after the notoriety and fortune have faded.
For example, what will become of Honey Boo Boo now that her show is cancelled? We caste no aspersions on the family. But how can the revelation that her mother is dating a convicted sex offender be unlearned and ignored?
Second, fame and fortune are fleeting. The number of the once rich and famous is long and deep. Consider the likes of Allen Iverson, Curt Schilling, Terrell Owens, Mike Tyson, Vince Young, Kenny Anderson, Mahrion Jones and Scotty Pippen. Add to the list Lenny Dykstra, Tony Gwynn, Derrick Coleman, Jack Clark, Dorothy Hamill, Warren Sapp, Sheryl Swoopes, Antoine Walker, Evander Holyfield and Lance Armstrong. The same applies to entertainers like M. C. Hammer. See for example http://www.celebritynetworth.com/articles/celebrity/broke-athletes/.
In order to turn the tide, we recommend a significant shift in public policy, accompanied by material educational reform. In addition to teaching the three R’s, our public schools and community colleges should also provide instruction on financial literacy, fiscal management and money ethics.
Financial terminology, words and phrases should be the focus of the financial literacy curriculum. The money management component should concentrate on asset management and growth by helping participants keep tract of their money, control their spending and implement a routine and reliable savings plan.
And the money and ethics curriculum should center on money related values by: 1) redefining wealth and prosperity to include human, intellectual, familial and civic/social assets, 2) teaching participants to reject criminality, infamy and obscenity as a way of earning a living, 3) convincing them that positive values are bankable assets, and 4) persuading participants to purchase only what they need, to be happy living within their means and to appreciate what they have.
In conclusion, we do not argue that money is unimportant. None of us can live without it, at least not well. Nonetheless, money is not the end. Rather, economic independence and financial security earned by hard work, diligent savings and prudent investments are the means by which to preserve and grow the most important assets of all; our dignity and self-respect.
Leo Barron Hicks, Founder and CEO
Blackacre Policy Forum