There seems to be a view out there that some people are good with money, and others are not. In my experience, though, some people are AMAZING at certain areas of finance and yet CLUELESS at others. Also, I’ve noticed that you absolutely cannot make a reasonable assessment of someone’s financial ability just by examining their lifestyle. I’ll share the example of someone I know…
A great man I know simultaneously makes incredible and poor decisions with his finances. He has maintained an astounding long-lasting credit score of 848 and also has lived in a trailer park for all of the recent years of his life and is still working at a managerial job he doesn’t particularly like at the age of 74. Nice dichotomy, right?
Firstly, the good: He’s built up his ridiculously good credit score by paying off his credit card each month, making sure his expenses don’t exceed his income, by being very diligent about his bills, and never making a mistake. He maintains a very solid emergency fund so he never has any cash-flow problems at all. He is sure to have health insurance. He’s also a very generous man and gives money to those in need on a regular basis and tips far more than what is usual. Plus, he has huge motivation to take care of his friends and children. He was born right after the Great Depression and has the mindset that people need to make their own way in life by means of hard work and responsibility, which he has clearly demonstrated in life.
Secondly, the bad: He’s had 74 years to build wealth, and here he is with no wealth. He has no nest egg other than his emergency fund because he relies on the significant current income of his job, his pension, and his social security. So while he has guaranteed income sources, he hasn’t focused on building any real wealth at all. He routinely buys depreciating assets he doesn’t need, including cycling through cars, and doesn’t keep track of where his money really goes. He stopped investing, and pulled out all of his money from the stock market, at the very bottom of the recession after the 9/11 incident. He was unable to pay for college education for his offspring.
So the point I’m making is that we need to be aware of ALL aspects of our finances. Just because someone’s “good with money” doesn’t mean they’re good with all aspects of money. There are many ways to be good and bad with money, as shown by the above example. Everyone has areas for which they could improve.
And lastly, it’s important to not judge, because that neighbor down there in an apartment or a trailer park might have a credit score and a general view of money that exceeds what you would imagine, while someone in a very large house could actually be on the verge of losing it all.
Really important take on finance. You NEVER know one’s financial situation by looking at them!!! I like your approach; very sensible. Just picked up your feed! Keep it up!
Thanks for the positive feedback.
The Wealth Artisan
Good analysis on a common misconception. It reminds me of the book “The Millionaire Next Door” which talks about what REAL millionaires actually do. It was surprising to read when I was younger. My favorite part is when the author setup this nice room to interview a millionaire and when the guy came in the author offered him some wine. The millionaire replied “Do you have any beer?” and the author replied “What is your brand?” To which the millionaire responded “I drink two kinds of beer, Budweiser, and free!”
Excellent analysis and perspective. Keep up the great work.
Wealth Artisan Team Member