topic Re: Why aren't people more financially responsible? in Relationships and Money

Why aren't people more financially responsible?

800who — Mon, 02 Jul 2018 00:58:13 GMT

I never knew it growing up because my parents were good at hiding it, but they weren't the most responsible financially. In high school I took a class about personal finance and it was very basic, but somehow it got me into being financially responsible and credit etc. Now credit is almost a hobby for me. I am 19 now with a top tier credit score and I got my first credit card a month after I turned 18 and I rememeber talking to my dad about it as I was coming up on my 18th birthday and he was almost angry/dissapointed when I mentioned that I wanted to get a credit card and I was confused, today I understand why because my parents had terrible financial habits and my siblings who are significantly older than me made bad financial decisions when they first turned 18 and my dad had to suffer through it and fix it. I knew personally that I was more than capable of having a credit card. I've been working at a credit union for about a year now, and it's so weird seeing all these people that just barely scraping by... which is more expected however, I see way too many people treat credit cards as "extra" money and the crazy high balances people have and then watching them make that minimum payment every month has me so confused. The highest credit card balance I've seen personally is like $45k with a 800 or so minimum payment and I guess what I'm getting at is why is this so common. Thoughts and opinions on this?

Re: Why aren't people more financially responsible?

egghead88 — Mon, 02 Jul 2018 01:44:59 GMT

Wow... there are like thousands of answers to your question and I’m happy that you’ve learn at a early age financial responsibility. The simplest answer I can give you is.. life happens. As you experience the up and downs that life hands you, stand firmly in financial beliefs. Good luck!

Re: Why aren't people more financially responsible?

Anonymous — Mon, 02 Jul 2018 02:50:32 GMT

Good for you staying in check!!!

A lot of people are financially responsible, however there are still many that are not.

I blame our society, advertising and marketing.

The ooolala's that get people excited.

spend away.

borrow more

up to your eyeballs and then some.

Yes everyone will have a different opinion, and those that are not responsible, will have a different reason.

edit to add: I am a retailer and get to swipe many cards each day,

and I have seen many declined due to insufficient funds/over limit.

Better luck next time?

Re: Why aren't people more financially responsible?

iced — Mon, 02 Jul 2018 18:08:33 GMT

@Anonymous wrote:
Good for you staying in check!!!

A lot of people are financially responsible, however there are still many that are not.

I blame our society, advertising and marketing.
The ooolala's that get people excited.
spend away.
borrow more
up to your eyeballs and then some.

Yes everyone will have a different opinion, and those that are not responsible, will have a different reason.

You had me all the way up to the last sentence above, the last word even. I would substitute "reason" for "excuse", and then we're in total agreement. I'll add to this, though in my own sugar-coated style.

Many people are selfish, lacking in self control, and terribly gullible. Marketers use psychology to convince you that by buying their stuff, you too can live like the affluent and be the envy of your friends (spoiler alert: you aren't and you won't be). Don't worry about how you're going to pay for it, what matters is the feels! Even entire cultural traditions (xmas presents, engagement rings, etc) are the direct result of successful marketing convincing the mindless masses they need to part with their money or face ostracism and judgement from their peers.

By many, I mean most. 40% of Americans can't cover a $400 emergency expense from savings. 25% have $0 in savings. 51% are making no contributions to a retirement plan at all (even with a pension, which is rare these days, one should be saving something). Any way you slice it, at least half this country is unprepared for their future and/or aren't even trying to prepare. I bet most of those same people have newer smartphones, TVs, designer clothing, and possibly even a nice car or two, though.

Perhaps as irritating, many people also lack an awareness of the effects their actions have on others or themselves in the future. When someone buys something they can't afford and uses YOLO or "I can't take it with me" as justification, they just failed the awareness test. **bleep** the consequences to them in one year, or twenty - they just want gratification NOW. They might be dead in 20 years and can't spend it then, sure, but they're just as likely to be alive in 20 years and be a burden on those around them because they didn't save enough to support themselves...or counted on some social net like Social Security to save them only to find it falls short of their needs or is gone altogether.

Side note: apparently, **bleep** is a swear word around here. It's like 1980 all over again. Shucky-darn, er, I mean... **bleep**.

Re: Why aren't people more financially responsible?

CGeorge — Mon, 02 Jul 2018 18:16:39 GMT

Yes, I have a step-daughter - and when she is able to get a credit card (rarely) - she immediately runs it up to the limit.

I would love to tell her: "That credit is just burning a whole in your pocket...!"

I personally despise owing any money. You have to learn that the credit card balances have to be PAID - it isn't free money!

Good for you!

Re: Why aren't people more financially responsible?

Anonymous — Mon, 02 Jul 2018 18:43:20 GMT

You never know what people are going through so don't automatically assume (really judge) that just because people are scraping by it's because they aren't financially responsible. As another person said "life happens" which I am sure as you get older you will find out for yourself.

@800who wrote:
I never knew it growing up because my parents were good at hiding it, but they weren't the most responsible financially. In high school I took a class about personal finance and it was very basic, but somehow it got me into being financially responsible and credit etc. Now credit is almost a hobby for me. I am 19 now with a top tier credit score and I got my first credit card a month after I turned 18 and I rememeber talking to my dad about it as I was coming up on my 18th birthday and he was almost angry/dissapointed when I mentioned that I wanted to get a credit card and I was confused, today I understand why because my parents had terrible financial habits and my siblings who are significantly older than me made bad financial decisions when they first turned 18 and my dad had to suffer through it and fix it. I knew personally that I was more than capable of having a credit card. I've been working at a credit union for about a year now, and it's so weird seeing all these people that just barely scraping by... which is more expected however, I see way too many people treat credit cards as "extra" money and the crazy high balances people have and then watching them make that minimum payment every month has me so confused. The highest credit card balance I've seen personally is like $45k with a 800 or so minimum payment and I guess what I'm getting at is why is this so common. Thoughts and opinions on this?

Re: Why aren't people more financially responsible?

Anonymous — Mon, 02 Jul 2018 18:52:01 GMT

@iced wrote:
@Anonymous

You had me all the way up to the last sentence above, the last word even. I would substitute "reason" for "excuse", and then we're in total agreement. I'll add to this, though in my own sugar-coated style.

YOU SAID IT, not I.

Funny thing is I used the word specifically to be reserved. You called me out! haha

Many people do not know what a budget is, or even that there is such thing as savings accounts/retirement accounts.

oh boy. oh boy.

Credit can be used to your advantage in MANY ways, but you really have to be well educated in credit

and how it works, for it to work for you. Again, it isnt a gift card hahaha!

Re: Why aren't people more financially responsible?

800who — Tue, 03 Jul 2018 09:53:22 GMT

Yeah when I said scraping by, I said that is understandable. I guess as I thought about this more yesterday I realized that I haven't experienced a whole lot of life yet, I guess my main point is how it's almost a trend for people to be in outstanding debt and it seems like they aren't even really trying to get out. Credit limit? $5000. Balance? $4800.. they will charge 200.. max it out and then pay 200 on it... rinse and repeat.

Re: Why aren't people more financially responsible?

Anonymous — Tue, 03 Jul 2018 11:10:09 GMT

Have to be getting hit with overlimit fees once that interest hits...hmm

Overspending.

Lets get a "value meal" ....not knowing for two people that would be $10-20

Or chain rest dinner, when it is all frozen/bulk, thawed and cooked to order...

when cooking a meal at home could be as low as $2, $5 or even under $10 with fancy ingredients.

Driving those $350+$550 autos, when could have been cash car or lower payments after saving a bit.

Getting 12-25 mpg, when could have been 35-55mpg...spending $100/wk on fuel vs $10-20

ohhh, spending $5k on that vacation (on credit) vs saving up, thinking well have to be happy

even tho only happy that day(s) if lucky.

ohhh, the cell phone thing (:/facepalm)

Again, no budget.

I used to be guilty of the eating out 4-7 times a week (although in my budget)

However now we go out maybe 2 times a month now. (saving $400-1500/mo)

Also was guilty of buying anything on spot that I/we wanted. (again in budget for most part) but

now think on it for a few days/weeks and only buy normally after agreeing we "need" it.

Most purchases today will either be clothing, food staples, or other necessary items for kids etc.

All money is budgeted and some goes extra to mortgage, auto, investing/ret, home/auto repair

and prepaying/saving for future as in heat, auto ins and inspections etc. unexpected expenses.

I also have a son that got his first job, and luckily he learned some stuff in economics

and we have chatted about finances a lot so far, as he has to get a bank acct and such.

Gonna try to teach as much as i can about saving vs spending. and budgeting for purchases.

Also about credit and how to use wisely and beneficially.

Anyone finding themselves in tight spots, need to cut ALL expenses for a few months

until they are starting to save money and build savings....after starting that budget.

Believe me, only takes a few months to see it grow.

Might take a year or years to get out of debt, but it can happen.

It will only make you stronger and more independent as time goes on.

Re: Why aren't people more financially responsible?

Kree — Tue, 03 Jul 2018 17:18:42 GMT

@iced wrote:
@Anonymous wrote:
Good for you staying in check!!!

A lot of people are financially responsible, however there are still many that are not.

I blame our society, advertising and marketing.
The ooolala's that get people excited.
spend away.
borrow more
up to your eyeballs and then some.

Yes everyone will have a different opinion, and those that are not responsible, will have a different reason.

You had me all the way up to the last sentence above, the last word even. I would substitute "reason" for "excuse", and then we're in total agreement. I'll add to this, though in my own sugar-coated style.

I disagree. Reason is a perfectly acceptable word in this context. Reasons are causal; excuses are correlations, or ficticious. However causal relationships are also correlations, so we can use Reason as a blanket term, and without knowing the specifics of a scenario it would be rude to the speaker to define their statement as an excuse without knowing the full context.

For example, "My business failed because my employees stole from me." could be a reason because the statement is true. I've read stories about CFOs embezzling millions of dollars and by the time the deed was found out, the business was unsalvagable. The statement could be an excuse because it is just a correlation. Yes the cashier took 5 dollar out of the register every shift, but the theft, even over years, would only amount to a small percentage of the companies total gross. The statement could also be a ficticious excuse. No employees actually stole from the company but the owner did not want to admit to the real cause.

Re: Why aren't people more financially responsible?

Kree — Tue, 03 Jul 2018 17:27:18 GMT

@800who wrote:
I never knew it growing up because my parents were good at hiding it, but they weren't the most responsible financially. In high school I took a class about personal finance and it was very basic, but somehow it got me into being financially responsible and credit etc. Now credit is almost a hobby for me. I am 19 now with a top tier credit score and I got my first credit card a month after I turned 18 and I rememeber talking to my dad about it as I was coming up on my 18th birthday and he was almost angry/dissapointed when I mentioned that I wanted to get a credit card and I was confused, today I understand why because my parents had terrible financial habits and my siblings who are significantly older than me made bad financial decisions when they first turned 18 and my dad had to suffer through it and fix it. I knew personally that I was more than capable of having a credit card. I've been working at a credit union for about a year now, and it's so weird seeing all these people that just barely scraping by... which is more expected however, I see way too many people treat credit cards as "extra" money and the crazy high balances people have and then watching them make that minimum payment every month has me so confused. The highest credit card balance I've seen personally is like $45k with a 800 or so minimum payment and I guess what I'm getting at is why is this so common. Thoughts and opinions on this?

I would say that there is not 1 definition of "financially responsible", as such not all "financially irresponsible" people actually are. Likewise, not all "financially responsible" people actually are. This makes the subject hard to address without first attempting to come to a common definition of "financial responsibility.

Re: Why aren't people more financially responsible?

iced — Tue, 03 Jul 2018 18:12:03 GMT

@Kree wrote:
I disagree. Reason is a perfectly acceptable word in this context. Reasons are causal; excuses are correlations, or ficticious. However causal relationships are also correlations, so we can use Reason as a blanket term, and without knowing the specifics of a scenario it would be rude to the speaker to define their statement as an excuse without knowing the full context.

For example, "My business failed because my employees stole from me." could be a reason because the statement is true. I've read stories about CFOs embezzling millions of dollars and by the time the deed was found out, the business was unsalvagable. The statement could be an excuse because it is just a correlation. Yes the cashier took 5 dollar out of the register every shift, but the theft, even over years, would only amount to a small percentage of the companies total gross. The statement could also be a ficticious excuse. No employees actually stole from the company but the owner did not want to admit to the real cause.

When it comes to financial matters, I would concede your point with the caveat that using the word "excuse" is also accurate in any case where the individual provides a "reason" for their financial situation that does not include any self-blame, even without the full context of a situation, because the person has at least some control, and thus responsibility and ownership, of their financial situation. We cannot simultaneously own/be in control of something while also not accepting responsibility for it should it go bad.

If it's your company and your employees stole from you in enough value and/or over a long enough time that it bankrupted your business, that's also on you for not managing your business better as it is on them for stealing. CEOs often resign over things they may have had no direct control or even knowledge of, but it's still on them because they were at the helm. Ignorantia juris non excusat is just as applicable to financial matters as it is to the law.

Re: Why aren't people more financially responsible?

Anonymous — Wed, 04 Jul 2018 02:34:22 GMT

I like the fact that the OP had a class in high school teaching finance. In my opinion, this should be a course in every school.

Re: Why aren't people more financially responsible?

TheVig — Thu, 05 Jul 2018 02:15:23 GMT

My parents have always been good with money regardless of how much or how little comes in the door. They always instilled living below one's means and constantly saving for retirement and a rainy day. Did the advice always stick? Nope. I made my mistakes with money when I was young, and cleaned it up when I was young.

I know people who make $24k a year and those who make $124k a year or more. Both ends of the financial spectrum doing stupid with money. Only difference is the person making $124k a year can hide the stupid a little bit better. But at some point that house of cards will fall too.

I live below my means. I hate payments, period. Refuse to be a slave to the lender. To me a "life happens" moment would be needing to fund a organ transplant. I don't sweat $600 car repairs. Those aren't life happens moments to me.

2008 / 2009 confirmed what I already knew. A lot of people who looked like they had their shyt together, really didn't. Everything in their lives was on payments. They felt like they had to live in a certain neighborhood or live in a certain school district etc. New cars all the time. You get the idea........

When times were good, a lot of people assumed I didn't have or make much money. They found out wrong when I still went on vacation, all the while their homes were being foreclosed on, cars repossessed, etc.

My all time favorite excuse I heard..........but I lost my job. My response was.........what did you do with all your money when times were good?

Re: Why aren't people more financially responsible?

arkane — Thu, 05 Jul 2018 04:17:53 GMT

As pointed out previously, the need for instant gratification and keeping up with the Joneses is what largely drives our hyperconsumerism culture. Couple that with poor to non-existent financial literacy education and you have a recipe for disaster.

I'm also fortunate my parents have been really good with money and always lived below their means. I've also recently come to appreciate the experience of growing up in relative poverty up until around 15. Doesn't mean I didn't do stupid things when I was young though -- I actually started revolving debt albeit at "0% APR" at just 12 lol. Neighborhood mom and pop game store would routinely allow us to take home a console/game with only a fraction of the payment as long as we provided them our phone numbers. Sounds real nice now but in hindsight it definitely did not promote financial responsibility and could've gone downhill in a jiffy. (The owners were nice people and I truly believe they meant well but kids and instant gratification just do not mix) Thankfully I cleaned up my act in my teen years and never bought another thing from without being able to PIF. Anyway...

@TheVig wrote:

I live below my means. I hate payments, period. Refuse to be a slave to the lender. To me a "life happens" moment would be needing to fund a organ transplant. I don't sweat $600 car repairs. Those aren't life happens moments to me.

...

My all time favorite excuse I heard..........but I lost my job. My response was.........what did you do with all your money when times were good?

@Anonymous having 12+ months of expenses saved up really saved my @$$ when I got laid off last January, especially for a place like the Bay Area where the cost of living can only be described as insane.

Re: Why aren't people more financially responsible?

Revelate — Sat, 07 Jul 2018 14:19:46 GMT

@iced wrote:
By many, I mean most. 40% of Americans can't cover a $400 emergency expense from savings. 25% have $0 in savings. 51% are making no contributions to a retirement plan at all (even with a pension, which is rare these days, one should be saving something). Any way you slice it, at least half this country is unprepared for their future and/or aren't even trying to prepare. I bet most of those same people have newer smartphones, TVs, designer clothing, and possibly even a nice car or two, though.

Can't disagree with the rest of your comments at all but I'd caution being a little careful on statistics as a lot of people don't have an employer-provided retirement avenue... case in point, I accepted an all-inclusive W2 rate contract, no benefits, and I'm stuck without anything I can do except dump the contribution limit into a Traditional or Roth IRA.

Zip, zero, nada. I didn't realize it was this hampering of an employment bit when talking retirement accounts and if they look to extend it I'm going to convert it over to C2C and start stuffing money into a tax-advantaged account.

Likewise, some of the other stats I don't have a savings account because they're financially lame, and when I'm really managing my finances I don't keep much in my checking accounts either and if the statisticians are looking at this alone, they're missing the big picture frankly.

Credit fundamentally changed how I managed money, but if you took the snapshot of my bank accounts and my credit report, one would think I'm living month to month and even underwater, unless one had the actual transaction record from Chase, or a copy of my tax transcript... neither of which is available in the public domain.

Re: Why aren't people more financially responsible?

sarge12 — Sun, 08 Jul 2018 00:32:27 GMT

There is no 1 hard fast rule for why people get in credit trouble, as some face issues beyond their control...illness, job loss, etc. But...By far, the biggest cause is people have not learned to say no to themselves, when faced with the instant gratification of getting things they want now. It became very simple for me to control my credit, once I learned to control myself. I had to set hard fast rules for myself, and always stick to them. Rules like...if I can not pay for it with cash, I can't use a card for it either. Before there were such a thing as credit cards, the previous generations had to live off of what they earned at all times, and they survived. It was called living within their means, and someone who successfully manages their credit today, will usually do the same. Credit cards are good for SUB's, rewards, and extended warranties or other perks, but people should not let a piece of plastic cause themselves to spend money they have not yet earned for wants. I use credit cards, and make money off of their use...every single year, I make 500-1000 bucks. I never pay a penny of interest, and only pay AF on cards that I will more than make up for in rewards or SUB's. If you are not making a profit off of credit cards...well...you are using them wrong, or can not yet qualify for the right cards.

Re: Why aren't people more financially responsible?

arkane — Sun, 08 Jul 2018 00:52:40 GMT

@sarge12 wrote:
There is no 1 hard fast rule for why people get in credit trouble, as some face issues beyond their control...illness, job loss, etc. But...By far, the biggest cause is people have not learned to say no to themselves, when faced with the instant gratification of getting things they want now. It became very simple for me to control my credit, once I learned to control myself. I had to set hard fast rules for myself, and always stick to them. Rules like...if I can not pay for it with cash, I can't use a card for it either. Before there were such a thing as credit cards, the previous generations had to live off of what they earned at all times, and they survived. It was called living within their means, and someone who successfully manages their credit today, will usually do the same. Credit cards are good for SUB's, rewards, and extended warranties or other perks, but people should not let a piece of plastic cause themselves to spend money they have not yet earned for wants. I use credit cards, and make money off of their use...every single year, I make 500-1000 bucks. I never pay a penny of interest, and only pay AF on cards that I will more than make up for in rewards or SUB's. If you are not making a profit off of credit cards...well...you are using them wrong, or can not yet qualify for the right cards.

So true. Unless it's a car or house or some unexpectedly large medical bill, that's the rule I go by as well.

I find just keeping track of expenses immensely helpful too. Don't even have to create a budget, just record everything in a spreadsheet. Seeing just how fast the charges from thoughtless spending add up is enough of a psychological deterrent for me.

Re: Why aren't people more financially responsible?

sarge12 — Sun, 08 Jul 2018 01:15:58 GMT

@Revelate wrote:
@iced wrote:
By many, I mean most. 40% of Americans can't cover a $400 emergency expense from savings. 25% have $0 in savings. 51% are making no contributions to a retirement plan at all (even with a pension, which is rare these days, one should be saving something). Any way you slice it, at least half this country is unprepared for their future and/or aren't even trying to prepare. I bet most of those same people have newer smartphones, TVs, designer clothing, and possibly even a nice car or two, though.

Can't disagree with the rest of your comments at all but I'd caution being a little careful on statistics as a lot of people don't have an employer-provided retirement avenue... case in point, I accepted an all-inclusive W2 rate contract, no benefits, and I'm stuck without anything I can do except dump the contribution limit into a Traditional or Roth IRA.

Zip, zero, nada. I didn't realize it was this hampering of an employment bit when talking retirement accounts and if they look to extend it I'm going to convert it over to C2C and start stuffing money into a tax-advantaged account.

Likewise, some of the other stats I don't have a savings account because they're financially lame, and when I'm really managing my finances I don't keep much in my checking accounts either and if the statisticians are looking at this alone, they're missing the big picture frankly.

Credit fundamentally changed how I managed money, but if you took the snapshot of my bank accounts and my credit report, one would think I'm living month to month and even underwater, unless one had the actual transaction record from Chase, or a copy of my tax transcript... neither of which is available in the public domain.

Yes Revelate...you can't just look at someones ordinary bank accounts, or even tax returns. If you looked at mine, it looks like I am barely meeting my bills, and that is on purpose. The 420,000 dollars I have access to in 401k and retirement are both tax deferred, so I withdraw only what I need to. With less than 30,000 dollars total debt including my mortgage, and 25,080 a year in SSDI, and being 60 years old, I think the 420k is enough to get by fine.

Re: Why aren't people more financially responsible?

iced — Sun, 08 Jul 2018 01:56:35 GMT

@sarge12 wrote:
@Revelate wrote:
@iced wrote:
By many, I mean most. 40% of Americans can't cover a $400 emergency expense from savings. 25% have $0 in savings. 51% are making no contributions to a retirement plan at all (even with a pension, which is rare these days, one should be saving something). Any way you slice it, at least half this country is unprepared for their future and/or aren't even trying to prepare. I bet most of those same people have newer smartphones, TVs, designer clothing, and possibly even a nice car or two, though.

Can't disagree with the rest of your comments at all but I'd caution being a little careful on statistics as a lot of people don't have an employer-provided retirement avenue... case in point, I accepted an all-inclusive W2 rate contract, no benefits, and I'm stuck without anything I can do except dump the contribution limit into a Traditional or Roth IRA.

Zip, zero, nada. I didn't realize it was this hampering of an employment bit when talking retirement accounts and if they look to extend it I'm going to convert it over to C2C and start stuffing money into a tax-advantaged account.

Likewise, some of the other stats I don't have a savings account because they're financially lame, and when I'm really managing my finances I don't keep much in my checking accounts either and if the statisticians are looking at this alone, they're missing the big picture frankly.

Credit fundamentally changed how I managed money, but if you took the snapshot of my bank accounts and my credit report, one would think I'm living month to month and even underwater, unless one had the actual transaction record from Chase, or a copy of my tax transcript... neither of which is available in the public domain.

Yes Revelate...you can't just look at someones ordinary bank accounts, or even tax returns. If you looked at mine, it looks like I am barely meeting my bills, and that is on purpose. The 420,000 dollars I have access to in 401k and retirement are both tax deferred, so I withdraw only what I need to. With less than 30,000 dollars total debt including my mortgage, and 25,080 a year in SSDI, and being 60 years old, I think the 420k is enough to get by fine.

I think you both might be reading too specific a context into some of the stats. Not contributing to a retirement account doesn't necessarily mean an employer-sponsored 401k or 403b - it can be any retirement account, including personal IRAs. Those numbers aren't mine (and more than one source has cited such numbers), but it tells the same story: people aren't saving enough - or anything, in some cases - for retirement. If someone doesn't have an employer-sponsored 401k, that's no reason not to still contribute to an IRA. Even those with pensions should be putting more aside.

Like retirement, savings doesn't have to mean a traditional savings accounts. The research questionaires that go around to people usually ask questions like "if you had to pay $400 for an emergency today, do you have the ability to do so without borrowing it?" and not "do you have $400 in a savings account?" As such, one should really think of such a stat as indicative of whether or not someone has the ability to handle an emergency debt more than how their savings are stored. In all honesty, I've yet to see any research into exactly how people who do save distribute their savings across savings accounts, brokerages, IRAs, or any other vehicle for saving.

Also, tip of the cap to you sarge. I'm on track for more than twice the SS income you are and 10x the savings, and still lose sleep at night wondering how I'm going to get by fine in retirement. To be able to do it on so little shows how disciplined your budgeting is.