Assuming you have an income, aside from unavoidable taxes, you have the choice on where your money goes. However, if you are not careful, it can seem like your money is disappearing into pit or black hole. Unless you really sit down and write down all your bills and expenses, it's hard to know exactly where you money is going and in what percentage of your total income. This is why you need a budget.
As I become more financially literate, I wonder why I did not learn this stuff earlier. Why has no one told me about it? Why did I not learn this in school? College?
You start to wonder if there is someone benefiting from me not knowing how to properly manage my finances. By me not being financially independent, others are benefiting. My money goes somewhere if it's not in my pocket afterall. I'm now convinced policy makers and school curriculum makers keep this knowledge out of our hands for their benefit. Someone is actively working to keep others ignorant.
Imagine if we're all required to learn the basics of investing for retirement in high school or college? How about just basic personal finance? Imagine if we were all educated on how credit cards and credit scores worked? I feel if we were all given this proper education, there might not be such gigantic wealthy inequality in the United States.
If people really understood where there money was going, how interest rates worked, and how important it was to save money for retirement, people would be in less debt and have a much better financial outlook.
So much critical information is hidden from you. Legally, this information is public. But, the only way you learn something is if you seek it out or if someone teaches it to you.
I'm embarrassed and angry to admit I didn't know the existence and value of an individual retirement account (IRA) until age 35. Knowing about the benefits now, I really wish I started one 10 years ago. I lost out on A LOT of savings. But, how was I supposed to know? I discovered the existence of IRAs randomly during a conversation with an older coworker. Luckily my employer signs up all of their employees with a 401K plan by default. Besides the 401K I had with my employer, I had no idea there was another retirement/investment vehicle I should have been taking advantage of.
Even then, I didn't know all the details of the 401K. I suppose it's partly my fault for not looking into it, but let's face it, personal finance and saving for retirement is boring! I figured I was young and didn't need to worry about it yet. My first job out of college put me in a fund with a very high expense ratio by default. I didn't discover this until earlier this year. I had no idea I had the option to change this. In retrospect I feel I was somewhat taken advantage of. Luckily my current employer has a very low expense ratio for the default fund.
In addition to the hidden information, there is also a lot of misinformation that spreads. Believe it or not, some people believe that you need to carry a balance on your credit cards in order to build credit. That's crazy! Even more crazy, many people carry balances in general and end up paying astronomical amounts in interest.
Some misinformation is hard to decipher. You really need to educate yourself and sometimes read between the lines. I often read that many people avoid investing because it's too risky. The thing is, it is risky. But, it's not too risky if you do it right. There's risk involved in most things you do. The fact is, investing over the long term in right funds carries very little risk. Another scary fact is that on the flip side if you don't invest, you're at very high risk of not being able to retire.
In general I'm pretty disgusted with America's education system. But now, my feelings are stronger. Why are we forced to learn about the Unit Circle and systems of equations, but not how to balance a checkbook? I majored in mathematics in college, so I'm one who appreciates the study of the subject - however most of us will never use the more complex stuff in our lives. If there is a curriculum change in the future for pre-college years, teach up until basic algebra. After that, teach personal finance.
Personal finances should be a required class all high school students need to take before they can graduate. But guess what? Since it's not a requirement, certain wealthy people and corporations are benefiting from our ignorance. Are we set up to fail? It does seem that way. But, if you are ask good questions, do your own research, or be lucky enough to have someone inform you, you may just be okay.
Sources / Additional links
https://www.reddit.com/r/politics/comments/jec6tc/dow_jones_falls_410_points_as_covid19_stimulus/
