Financial Literacy is Saying, “What Would Mom Do?” Before Every Purchase

Financial literacy is important.  Despite the nationwide push by companies, websites, the federal governments and the school systems the statistics show that not only are millions of Americans living paycheck to paycheck but they are stressed about it.  From the housing crises, to the student loan debt problems emerging, and the establishment of hundreds of nonprofit organizations and the Consumer Financial Protection Bureau, established by Dodd-Frank in 2010, the problems are clear and more resources are being directed to the issues.

The fundamental reason for most of this is that it’s just more expensive to run a household than in previous generations.  A family of four simply didn’t have a $1,500 monthly health insurance bill a few generations ago.  Using a study published by the Wisconsin Policy Research Institute it shows that total spending by consumers and government combined went from $75 billion in 1970 to $1.877 trillion in 2004.  That’s almost a 10% annualized growth rate over a 34 year time period.  Looking further back it was just in the 1930s when insurance against the cost of health care was first introduced by Blue Cross, and in the early 1900s it was commonly accepted in society that doctors would provide services to those in the hospital free!

In addition to health care there are items like a vehicle per person, cell phones, cable tv, internet access, liability insurance, even gym memberships and many others that by historical standards are new expense but widely considered necessary.  Believe it or not gym memberships only recently started in the early 1980s and now represents over 50 million people.

So literacy is important however households can have access to all the financial education they can get their hands on, and the internet provides more than they could ever consume, but at the end of the day it comes down to sacrifices.  When it comes to accomplishing your financial goals unless there is an asset or inheritance, business, or invention that is providing your wealth independent of your salary everything comes down to cash flow and time.  Maintain positive cash flow, put that surplus in productive places, and wait.  And then repeat.  And unfortunately sometimes it’s not even that straightforward with events like disease, disability and accidents.

So what can you do?  Thankfully we live in a country with a lot of support for people in need and resources from organizations that provide direction.  If you are looking for education try the National Endowment for Financial Education or the Institute for Financial Literacy or through the federal government there is the Consumer Financial Protection Bureau.  Also there is the option of working with an accountant and Certified Financial Planner (CFP®) on your personal finances.  Whatever you do though, don’t stop looking for ways to accomplish your goals.  Have debt?  Keep in touch with the lenders and the banks for options.  Looking to monitor your cash flow better? Try online programs or working with a counselor.  Need more income?  Try to develop additional skills and certificates to document for potential employers your qualifications and dedication.  And constantly assess whether the items you are spending money on are really needs.  Every time you consider buying something think, “What would mom do?”.  And if that doesn’t help then think, “What would grandma do?”.

Securities offered through Triad Advisors, Member FINRA/SIPC.  Advisory Services offered through Planning Solutions Group, LLC.  Planning Solutions Group, LLC is not affiliated with Triad Advisors.  PSG Clarity is a division of Planning Solutions Group.

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