Better Financial Education or Better Self-Discipline?

I like to think of myself as a pretty even-keeled person. It takes a lot to shock me. Weinergate? Not shocking. Lebron James choking in the fourth quarter? Meh.

But something I saw recently really left me taken aback: According to a study by the National Bureau of Economic Research, roughly half of all Americans say they would be unable to raise $2,000 in cash over the course of a month if needed for an emergency. Now I consider myself well informed about both personal finance and macroeconomic issues. I have closely followed the ups and downs of the U.S. economy in recent  years, both from a personal and professional perspective. I read more personal finance columns/blogs than is probably good for my mental health.

And still this piece of info really, really surprised me.

Now, it’s easy to act cynical and say “Of course, Americans are lousy savers. Everyone knows that.”  But this study really casts things in a harsh light. $2,000 is a reasonable figure for an unexpected medical expense or a home or car repair – the types of issues that can snowball quickly into creating more severe financial hardships (not having $2k to fix your car can cost a lot more than that if you needed that car to get to work).

So where are we going wrong? Clearly there is an issue of self-discipline for some segment of these survey respondents. I thought about looking for data on how many households have iPhones and big screen TVs and then thought I was already depressed enough.

There has to be something more at work here though: We can’t look at half of our society being in a financially precarious position without thinking that we need to provide better (or at least some) financial education. In my own experience, I was never offered any personal finance courses through my high school years. There are other opportunities for education later in life, but the audience has to be willing – and may only be so after problems have already surfaced.

One thing has become clear in recent years though: We need to do better with our finances as a society or the problems of the few can quickly become problems for all.


What do you think? Do we need to improve financial education in the U.S.?


To reach Donna:

Phone:  212.584.5479
Twitter: @donnamcsorley