Full Disclosure: I’m Illiterate

Well, financially illiterate anyway. Maybe not completely illiterate, I can sign my name and make out the various nouns and verbs of the financial world. Let’s say I’m at the “see spot run” phase of financial knowledge. The most troubling thing is that according to everyone except my psychiatrist, I am an adult. An adult with a high school diploma and a college degree. Sixteen YEARS of schooling. And yet finances, beyond paying the guy at my bodega for 3 lbs of cheese, is this mystical world beyond the scope of reality. And I’m not alone.

This is what I see whenever I check my ATM balance.

This is what I see whenever I check my ATM balance.

In fact, according to Bloomberg Businessweek, the whole financial collapse we’ve been trying to bounce back from the last few years may be, in part, resulting to the fact that Americans don’t know what they’re doing with money. Yet take comfort, my American brethren, the rest of the Western World sucks too according to several surveys put out by the OECD. According to the survey only 28% of Australians surveyed showed understanding of compound interest, most Brits don’t seek out financial information and Canadians find picking correct investments to be a more stressful experience than going to the dentist. An OECD survey also pointed our that four out of ten Americans aren’t saving for retirement. Are you one of them? I am.

Finances aren’t skill set I ever really had any use for until the most recent years of my life. Oh sure, I mean I like money, but I have never been especially good the whole getting it or, once I have it, keeping it. Because I like things.

Things like beer. Things like Goldfish (the snack as opposed to the freshwater fish, although with enough beer the difference becomes immaterial). Video games. Pizza. Clothes. SHOTS! An awesome new hat. Dinner. Movie. Cigarettes. New iPod. New phone. Seven cakes. A new hat (just as awesome)… Nothing too grand or luxurious, but things add up. Things which easily add up to more than the meager money situation you are allotted as person with a degree in pretend. Your debt options with an arts degree often come down to back alley handies and ritual suicide.

Boy, I'm glad I understand blank verse

…still better than four years of studying accounting.

We’ve gotten to seppuku and so far I’m just talking about BASIC finances like maintaining a budget and spending less than I earn. When we start talking about problems like credit card debt, student loans, mortgages, IRAs, 401ks, 403bs, stocks, commodities, APYs, APRs… Graaagh! I got about half way through typing that before my brain said, “This all looks like a problem for future Dylan,” just like I did in college. The problem is now I AM future Dylan. And future Dylan is also an idiot.

Once again, I’m not alone. Your average twenty-something has $45,000 in debt. And I have friends with debt far higher than that already monstrous amount, clocking in at above 100k. Honestly, it takes serious effort to keep my brain from just switching off when discussing that much money. It’s a fake amount of money to me. A lot of my childhood was weened on food stamps and my life until recently has been a paycheck to paycheck type of existence, so the thought of chipping away at a mountain of money is laughable. With an arts degree? It’s unthinkable. It’s not distressing  so much as it’s like if someone pointed at the Empire State Building and said “lift that”. The only correct response to that is to back away very slowly, because the person talking to you is crazy sauce banana pants.

LIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIFT!

LIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIFT!

But it’s real. It’s all real. And a lot of us have no idea what to do about it.

Who to blame!?

Why are we so bad with money? Well there’s always blaming the schools, since only 13 states require students to take a personal finance course to graduate. What’s worse is that in those few states that require personal finance education, 60% of teachers surveyed said they felt unqualified to teach the subject to students. While it can be claimed such responsibility lay with parents, it seems wildly naive to me to think that all parents will educate their children on proper financial care or even can educate their children on finances. Parents at the poverty line often have more immediate concerns than teaching kids how to balance a checkbook, such as feeding and ensuring the kids get to school at all. And too often kids at the other end of the spectrum are disadvantaged by parents too good at providing for their children and not removing the safety net until they’ve reached the “real world” where they suddenly realize they’re unsure how money works.

Tack onto this a predatory financial market that many have called to be more securely watchdogged by the federal government, and you can see that the the cards are stacked against us. American’s aren’t saving for retirement, but half of us bought a lottery ticket last year and the likelihood of that financial strategy is about one in 175.2 million. Somewhere around the likelihood of you being attacked by a shark while being struck by lightning. Good job, America.

Damn. Should have bought a ticket.

Damn. Should have bought a ticket.

How to suck less at finances?

Ah yes, the part where I’m supposed to be helpful. Well here’s a few tips that I have been trying (with marginal success) to follow.

1. Figure out what you spend money on.

It seems like a silly thing to say, but do you really know what the majority of your paycheck goes to? I mentioned before that when I cut cigarettes and booze out of my life I was flabbergasted at how much more money I suddenly had on hand. Obviously I knew that I spent money on these things, but clearly I wasn’t aware the chunk it was taking out of my paycheck. Pay attention to what you spend. Keep a tally. Or if you’re remarkably lazy like me, enroll in a site like Mint.com which will keep track of things for you if you’re buying with a debit or credit card. (Mint is a great tool for other reasons)

2. Auto-pay/save/de-debt

We live in the future. And in the future your bank accounts can do a lot of stuff for you without you having to worry about it. If your bank offers a bill pay service, use it. Pay off those credit cards and utilities and student loans. Make the money go to those things automatically. If you’re like me, a stack of pizzas is WILDLY more important than my college debt, in the moment. But those sorts of value choices in the long run can easily kill your credit score. Did you know your credit score was important? Neither did I. I just thought it was something that asshole in the commercial would sing about, but it’s real. It’s all real.

3. Read

Ok. So the idea of reading financial books sucks for all but the dweebiest dweebs. But you should. You know how rich people know some sort of strange magic spell where they turn their money into more money? Well they manage that by having knowledge about how finances work (or at least employing people who do). As unappetizing as it might be, take the time to read up a bit on tedious things like savings accounts, interest rates, mutual funds, and IRAs.

Final thoughts

I’m awful with money. While I never ended up homeless on the streets of New York, bills and rent haven’t always been a “sure thing”. Sometimes my checkbook wasn’t appropriately balanced… that’s a big lie. Never was my checkbook balanced. I don’t even know where my checkbook is, I think I threw it away. And I don’t have a scale with which to balance it. I haven’t a clue why this balancing process would even be financially helpful! I don’t understand FINANCES!

In the past, when rent day came rolling around, my bank account number was often a smaller number than the one I owed the landlord. Even an equal number in this category isn’t exactly great. You have a place to live, but no food to eat. Within a few days you start giving your roommate’s cat cat a funny look.

Your murder shall be delicious

Your murder shall be delicious

But worse than having to explain why my roommate’s recently breaded cat is meowing from the microwave is the stress. The stress of knowing people want money that you don’t have or don’t have to spare. It’s not something great to do.

And mostly it can be avoided. Barring terrible financial setbacks, illness or Godzilla attack money generally just requires some planning and some self-control. So to anyone who might be reading this who hates money management and sometimes goes weeks without checking their balance in the hopes that the festering single digit number will just handle itself… you’re not alone. And it’ll get better. But it might take a few adjustments.

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