Image via WikipediaWhat is the financial literacy of this country? How many thousands of financial blogs are there? There is a money section in every newspaper. We have Money Magazine, Kiplinger and others magazines. We have Suze Orman and Dave Ramsey on TV and radio. With all this good information, why is so much of the population in a financial mess?Where has all this information gotten us? We are in a level of indebtedness that some think is dangerously high? People are out of work and they are afraid. With all the help out there to many people remain ill-equipped in understanding money matters.
I propose there is to much focus on information and not enough on how it relates to real people. Author Bruce Sellery new personal finance book called Moolala: Why Smart People Do Dumb Things With Their Money (And What You Can Do About It) contends "We have given everybody more information than they can ever possibly consume, without giving them insights,”.
Sellery describes how people were not grasping the informations financial lessons. He’s developed workshops on handling money and he’s written Moolala, a very approachable, self-help book full of quotes from people he’s worked with.
He describes a couple he was advising who had a six figure income, money in mutual funds under performing the index's, no college fund for the 2 children and 2 new cars in the driveway.
His plan for the couple was what he called the "Priority Pyramid". Starting at the bottom:
Cash Flow. Are you earning more than you are spending? Maximize income and minimize expenses.
Debt. Have you eliminated useless credit card debt? Living below your income would help this.
Savings. Are you saving enough to meet your goals. Whether they are retirement, a car or putting the kids through college.
Taxes. Are you taking care of the tax implications of your investments by using tax free or tax deferred accounts.
Investment Performance. Are your investments keeping up with the benchmark indexes. If not why not just invest in the indexes?
Optimizing Investment Returns. Using other strategies to maximize gains.
After reading a little of Mr. Sellery's advice I don't see he is much different than any other financial guru. I see the same advice as all the rest. There is nothing new to his book.
Mr. Sellery retreads the golden oldies of personal finance. If your a new comer to the personal finance world take heed of these principles they are golden. But knowing something and doing something is to different things. The author makes the point that you have to change your behaviors to carry out your goals. You're in the mess you're in now because of your behaviors. You have a basic understanding of spending and saving, everyone has, but you don't focus on it.
Financial knowledge is only the tool you use to get to your goal. It's like like buying a diet book or joining a gym, they're tools to a purpose. The knowledge is a tool. Your problem is your sitting there waiting for the tools to do the work, ain't going to happen.
To make this money thing work you have to change. You must change on the inside, no book will do that for you. If your a spender, stop spending. If your not making enough money, do something to make more money. You need to turn the ship around and just do the opposite of all the dumb things your doing. You don't need to be a genius to be a winner with your money.
