Not Smart about Money

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I'm amazed at the people who tell me they're not smart about money. Well educated, professional, highly responsible, creative and competent people all turn to jelly when it comes to their personal finances. Whazzup with that? I've even met people who have to manage their company's money (accountants, bookkeepers, financial officers) who can't figure out how to balance their own budgets. Heaven preserve me.

What is it about money that brings even the smartest and most sensible person to their knees? Why do we make such a big frickin' deal out of something that is, at it's heart, completely straightforward?

Y'know what really gets my goat? It's the folks who are so willing to turn a blind eye to the foundations of their financial life only to open up a conversation about "investing" and how smart they are about "putting their money to work?"

Isn't it after all, way easier to save a dollar than to earn (and pay taxes on) another dollar? So how come we're willing to spend time and effort reading, learning, improving our knowledge of the sassy, sexy world of investing even as we refuse to take care of our money housekeeping?

There's the guy who had $6,000 worth of parking tickets. He had to put his car in his girl's name so he could get it licensed. Hey, the guy had to drive for his living! How moronic is that?

There's the girl who took a pass on her company pension plan for the past eleven years, even though her company is willing to match her dollar for dollar (in essence giving her a 5% increase in income) just because she didn't want to have to forgo the spending money. And she works for a bank. Lord love a duck!

How about the student who didn't think twice about taking out all the student loans he'd qualify for, along with every credit and store card he was offered. Four years later he has a very unimpressive undergrad degree, $53,000 in debt, and job that pays $11.27 an hour. Oy!

So why are relatively smart people not so smart when it comes to managing their money?

I think it's because they haven't taken the time to really think about what they're doing. Let's face it, if you get a parking ticket and you pay it right away, that's one thing. If you stick it in your glovebox and ignore it, it will double and then triple. If you let it add up to $6,000 you're in serious denial.

But if you thought about what else you could do with that $6,000 – a great vacation, a serious amount of entertaining, a new bathroom – you'd just kick yourself, wouldn't you? This is the step that's missing for so many people: they just don't think!

If you want to be smart about your money, you have to think about it. When you do something that makes money go away, you have to weigh what you're getting against what else you could do with that money.  It's called Opportunity Cost.

The next time you're tempted to do something boneheaded like miss a payment on your credit card so you can buy a new somethin' or 'nother, think about it. Don't just push the thinking part aside. And if you're all up in investing, but you don't have an emergency fund, you're carrying a balance on your credit card, or you haven't made a will, quit your smirking. You're not so smart!

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