I don’t like the phrase “common sense” when it is paired with anything related to personal finance. In my opinion, there is nothing common about finances when you are uneducated.
By watching what I was being exposed to growing up, it was common to be in debt. If you needed a new car, then common sense said to get a car loan. If you were short one month and needed groceries, common sense said to use a credit card to purchase them.
Those actions were common, every day occurrences and that made them common sense.
The topic for this blog post came from a post on the Payoff.com Blog. “8 Common Sense Do’s and Don’ts of Personal Finance” really resonated with me. Of those 8, presumed “common sense” steps, I have failed at all eight of them! No surprise there when you come from a family that never discussed money and lived with a parent who used her credit cards a lot.
I think the article could have been reworded and approached differently and the impact would have been better. To know that I’ve failed those 8 steps in my past makes me feel like I am ignorant.
Some things are NOT common sense.
When you do not have a financial education there is no common sense to personal finance. I certainly think there are people who have the mindset capable of thinking about it but I don’t think that’s the average person and that, in my opinion, is what makes something “common sense.”
If you are a parent, it is your responsibility to teach your children about making more money than they spend. If you don’t, you’ll have an adult who lives how they wants to live and then makes “ends meet” by acquiring debt in the form of a credit card.
If you do not show your children how to track their spending and budget their finances, you will see your child become an adult who is in debt and struggling with their life.
Personal finance is not common sense.
It is a confusing topic for many people and one that needs to be explained before common sense becomes credit cards, overspending and under-budgeting.
April is Financial Literacy Month. My goal with this blog has always been to show people the face of debt in the hopes that they will learn about personal finance themselves and then teach those they love about it too. My new career goal is to take this blog and turn it into opportunities to speak about personal finance and the importance of financial literacy. There is no better time than today to learn something new and pass that information on.
I also blog at A Five Star Life. I write about anything that comes to mind but try to focus on finding the good in daily life.
on April 4, 2012 at 9:20 am
I think you make a good point. For those who have always been good money managers or were taught good skills, having a budget or spending less than you earn is common sense. But for those who aren’t in that position, the basic principles aren’t as easy.
We all know it’s common sense not to touch a hot stove but that’s because we were taught it; none of us were born knowing it. Personal finance kind of works the same way.
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You make an excellent point Jess. Now that I think about it, it was common sense for my family to take out loans, go out to eat 2 times a week (at least) and for one parent to handle all the finances while the other one gets “an allowance”. I agree with you, “common sense” with personal finances is subjective. For some people it may be common sense to “spend less than you earn”, but I didn’t understand that concept till like 3 years ago.
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I agree common sense to one person isn’t the same to another. It’s very subjective. Some ideas are usual to the lifestyle of someone when others are completely foreign but very helpful.
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Mom’s common sense to finance was literally relying on credit cards for everything. When I say everything I mean everything. If she was short one month she would get cash advances as if it was her own cash minus the fees. It was as if the fees weren’t there if she didn’t acknowledge it. That’s where my common sense about money came from but I don’t see anything common about it at all.
on April 5, 2012 at 8:08 am
Within your post, you use the phrase “making more money than you spend.” That is the second time I’ve seen that this week in the blogosphere. This is somewhat contrary to “spend less than you make.” I think I like your version, but ‘common sense’ says that you should spend less than you make! Wouldn’t everybody love to earn more than they spend? Not everybody has that option though, as some people can’t even control their spending. This is common, but does not make sense!
I enjoyed reading your perspective on this issue.
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I couldn’t agree more. I also grew up in a household where money was only spoken about when there was no money left. Due to lack of education and poor personal choices, I’m now in debt myself but have been spending the last two years getting educated, setting up plans, budgets, etc. I also speak with my daughter (she’s 3) about money. And while a lot of our conversations revolve around want/need, I plan to continue this in the future, so she doesn’t end up like me. Thanks for pointing out that common sense isn’t always common or sensible to some.