The other day, I had the TV on in the background, and a lesser known morning talk show caught my attention when they were going to have a segment on helping a single mom get their financial life back on the right track. Of course, they disappointed me with focusing more on fooling with different types of bank accounts and setting up automatic overdraft protection with a credit card on her bank account. Yeah, that’s great. Just keep assuming that she’s going to keep bouncing her checking account. That’s why she asked you for help! Anyway, they did little to correct WHY she was in the predicament that she was in, but they did ask her this one question: “What was it that got you into the situation that you are in now?” She responded by saying, it was poor decision making and the lack of financial knowledge. It made me happy to hear that she wasn’t trying to blame someone else for her situation. She took responsibility for the decisions that she made and knew that she made some decisions due to ignorance. I think she hit the nail on the head for most people that find themselves in a financial mess. I know that I can trace many of my financial mistakes back to a poor decision and a simple lack of financial knowledge.

Poor Decision Making

There are many reasons why we make poor financial decisions. But I am going to focus on three reasons: greed, quick decisions, and a lack of knowledge.

• Greed. Many bad decisions that we make out of greed have to do with investing money. This is why get-rich-quick schemes become so popular. We get that thought of making millions and doing it quickly. Scam artists make it look so easy, but it’s not. Making money and becoming wealthy is never easy. It ALWAYS takes hard work, no matter how you slice it. The best way to combat the feeling of greed is to be a giver. Give your possessions away, give away money, and give your time to others. It’s the best medicine for a greedy heart. The feeling that you get when you help someone else and let go of that powerful green paper is therapeutic in itself.
• Quick Decisions. Sometimes we are pressured into making quick financial decisions, and then we get home and say, “what did we just do?” The best example of this is going car shopping. Don’t ever go out to look for a car unless you are ready to buy the day that you go out. Car salesmen are in the business of turning you from a casual browser to a customer who is ready to buy. They will make the deal look so good and tell you that if you don’t jump on it now, the car might not be there tomorrow. These are all sales tactics to encourage you to make a quick decision that you might not normally make under less pressure situations. When making a large purchase or making a big financial decision, the best method to implement is to sleep on it. Take 24 hours to let the decision simmer in your mind. You’ll find that you make much better, sounder decisions when you have more time to think about it.

Lack of Financial Knowledge

The lack of basic personal financial knowledge in this country is astounding. You can go an entire 13 years in the public school system without ever learning how to balance a checkbook, buy a house, invest for the future, or formulate a written budget. I know there are some high schools that are starting to offer personal finance classes, but much of the cirriculum is coming from companies that are financially supported by credit card companies. Doesn’t that sound like a conflict of interest? The only thing a credit card company is going to teach you is how to start using their credit cards to “look” responsible and grown-up. You can also go through four years of undergraduate work at a university and never be taught basic financial knowledge. Why is this? Because, society expects you to learn it on your own or from your parents. But, if your parents aren’t good with money, then you’re stuck learning it yourself. If you weren’t blessed with parents who taught you sound principles about money, then you need to start by reading all of the financial books you can get your hands on. You can click on that link for a few books to start your journey of financial knowledge. Also, seek out a mentor. Find someone who you feel has it together with their money, and ask them to teach you what they know about money. Be sure not to look for the first person that has a big house and a nice car. It doesn’t always mean that person practices good financial principles. Look for someone that seems to be content with their life and is free of consumer debt.

Are you read to get out of your mess? Are you starting to see a light in the dark tunnel? Are you ready to start making better decisions and learning about personal finance? Focus on those two ingredients and you’ll be well on your way to financial freedom.

Update to Post: I revised the title due to comments below. This post may have come off as insensitive to those struggling with their finances due to other factors such as huge medical bills, as discussed in the comments below. My point for this post is to outline that the majority of the time, YOU are responsible for your financial struggles, not someone else or something else. The only way to help yourself from incurring large medical bills is making it a point to pay for medical insurance and keep a large emergency fund for out-of-pocket expenses associated with bills not covered by insurance.