Where did you learn to manage your money?
April 18, 2011
Most people learn about managing their money the hard way - from experience, a new poll for MoneyRates.com and MSN Money has found.
The online poll, which ran in early April, Financial Literacy Month, and which drew nearly 8,000 responses, asked: From whom or where did you learn your most valuable money skills?
Fifty percent (4,047) chose "yourself-the hard way." Next was from parents - 24 percent (1,884.)
Other responses were:
- Books and magazines: 9 percent
- The Internet: 7 percent
- Friends: 3 percent
- A financial adviser: 3 percent
- A teacher: 2 percent
- TV: 2 percent
While the results are not scientific (people could vote more than once if so inclined), they likely paint a fairly accurate reflection of reality when it comes to financial literacy, says Kim McGrigg of Money Management International in Houston. "We find that the majority of consumers learn about personal finance at home whether that's self-taught or from their parents," she says.
Learning the hard way hits the pocketbook
The problem with learning about money from trial and error is that it can be quite costly compared to other avenues, McGrigg says. Learning about your checking account, savings accounts and refinance rates "from the school of hard knocks can be the most difficult way to go."
Young people are more fortunate if they make mistakes with their money because they have a longer time to recover, McGrigg says. They can learn from their mistakes. "But I have to say," McGrigg adds, "it's never too late to brush up on your financial literacy and improve your financial situation."
Resources to become savvy on the cheap
So what are the best ways to become more financially savvy?
- Read money magazines. "You can get a lot of good information in the financial press," says Russell Wild, a financial planner in Allentown, Pa., and the author of a number of books on investing in the "Dummies" series. But, he says, ignore the headlines and go to the back pages. Editors put the most sensational stories on the cover so they sell. Usually, the better stories with the most sound financial advice are toward the back.
- Ask your folks. Parents can be a good source of advice about money as long as they can change with the times, says Denise Beeson, a loan officer who teaches business classes at Santa Rosa Junior College in California. "The money markets have changed so dramatically in the last few years, your parents may not know what the best checking accounts and savings accounts and refinance rates are," she says. "I wouldn't discount their advice but I would consider whether it's contemporary for the extreme challenges we're facing now and will in the future."
- Search the Internet. "There are lots of great money websites, which means the information is at your fingertips 24 hours a day, seven days a week," McGrigg says. "Just make sure you choose sites that are providing unbiased information rather than trying to sell you something. You have to do a little due diligence."
- Visit your library. Lots of good books have been written that can provide basic as well as advanced information, and what's best about this resource is that it only costs you time.
- Get advice from financial advisers. Although the survey found that few learned from financial advisers, they can be a good source of financial information. Some advisers work on commissions and some are fee-only. It's important to choose the adviser you're most comfortable with - whose style matches yours and your financial goals, Wild says. Even a bookkeeper can be helpful if you need to start with the money coming in and money going out each month to be able to devise a budget, Beeson notes.
Experts recommend always using more than one source when making financial decisions. "Look at as many avenues as possible," Beeson says. "It's truly up to you to manage the resources out there and come back and form your own financial plan that you understand and that you're comfortable with."
Financial literacy no easy street
No one style or system fits everyone, Wild adds. "So when so-and-so is telling you about their investment in such-and-such, remember that it may not be appropriate for you." That's why it's important that you learn about finances, investments and handling your money - so you can make responsible decisions about how to spend and allocate your money, he says.
No one says learning about money and how to manage it is easy either. "It's going to take some time and energy on your part," Beeson says. But if you know what you're doing and what your options are, you can put your financial house in order, she says. "You can put a plan in place so that you can ensure that you have some kind of financial future."