Personal Finance: What Works Over Time?


Why is personal finance so hard for most people?  I believe we are hard-wired to make financial mistakes because most of our financial lessons have come from our parents.  What do most of our parents know about personal finance?  Where did they learn their poor money habits?  From their parents of course!  The other major source of financial education comes from the constant barrage of ‘experts’ on 24 hour television news.  This is for what I call the “What’s working now crowd.”  We should not be focusing on what is happening now.  We need to focus on what has always worked over time.

What’s the problem?
The statistics are startling as 43 percent of American families make less money than they spend¹.  It is easy to see why personal bankruptcies have skyrocketed.  The bankruptcy rate among 18-24 year-olds has increased 96 percent over the past 10 years². Historically our schools have not taught anything practical about money. The average high-school student thinks they will make $145,000 a year.  Only 34 percent of teens understand credit card fees².  Universities are often filled with credit card solicitors where credit cards are offered to students turning eighteen.  As one can easily imagine it is common that these young shoppers max out their cards as they are bombarded with the latest must haves and do not understand credit card interest.  Could our current economic crisis have been prevented if a few simple lessons in money management and personal finance were taught in our schools over the past few decades? Money can be so hard to make but so easy to spend.

What are possible solutions?
I believe the answer to a brighter financial future for our nation is to have financially savvy kids.  Schools should teach our kids financial responsibility. It amazes me that we teach our children how to go out and work for a living but not about what to do with the money they’ve earned.  We are taught about politics, history and family planning but why not financial responsibility? Shouldn’t there be a prerequisite course on personal finance before one graduates high school, college or graduate school.  If your children’s school will not teach these lessons it is imperative that we as parent do. We need to teach our kids how to earn money, spend it, save it and invest it prudently. I recently heard about a modern day piggy bank which has four chambers for coins—one for saving, one for spending, one for donating and one for investing. It is never too early to start learning about money!
We should keep lessons of money management relevant.  Retirement has little importance to a seventeen year old but they could become interested in the magical powers of compounding. Albert Einstein called it the 8th Wonder – “It can work for you, or against you. When you invest it works for you. When you borrow it works against you!” Getting started with investing as early as possible can make a big difference in how much wealth is ultimately accumulated. The benefits of saving early in life are greatly magnified by compounding.

Our kids should be encouraged to open up savings accounts rather than credit cards. They need to become knowledgeable about what credit cards are really all about, personal budgets, investing for their future, The Law of 72 and what it means to pay themselves first.

Personal finance should be as important as reading, writing and arithmetic in our schools. Rather than teach complicated investment strategies we should offer a back-to-the-basics approach to handling money: Don’t spend what you don’t have.  Save a portion of every dollar that you earn and invest in the stock market for the long-term rather than short-term gains. It’s time to get schooled about money.

David Rosell is President of the Rosell Financial Group in Bend. He is the Past Chairman of the Bend Chamber of Commerce and the incoming President of the City Club of Central Oregon. He can be reached at 385-8831 or

Investment advisory services offered through Rosell Financial Group, a State Registered Investment Advisor.  Securities offered through ValMark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste 300 Akron, Ohio 44333-2431. 800 765-5201. Rosell Financial Group is a separate entity from ValMark Securities, Inc.

¹ 10/18/2008
² Teach Kids About Money by Igniting Their Entrepreneurial Spirit! By Sharon Lechter.2010


About Author

Leave A Reply