Smart people don't have money problems - HA!

An incredibly incorrect assumption made in our society is that people who have financial problems must be uneducated. However, most of my clients are very well educated and manage much responsibility, but they have problems getting bills paid on time every month.

What do you need to pay your bills? Enough money? Enough brains? Enough time? The truth is - all three! However, having money and brains can't do it alone. So many people I know don't allocate enough time to the task of managing their personal finances. In addition to assuming this is common sense, is the assumption that it's simple and will take a minimal amount of effort.
Many people don't want to spend a lot of time thinking about paying bills, so they put their energy elsewhere. The little consequences can really add up for some people. And intelligence has nothing to do with it.

True Story - A friend of mine was the personal assistant for a successful Investment Advisor. She had told me about how her boss had gone on a one week trip out of the country with his family to invest in a real estate opportunity. While he was gone he received the third notice on a $66 water bill he had been neglecting. His family returned on a Saturday morning to find that their water had been turned off. He called the Water Company who explained that they couldn't turn the water on until Monday morning. So on Monday my friend received instructions to drive the money to the Water Company and pay the delinquent bill. On the way, her boss's wife called her to find out how much longer before the water would get turned on. "This is ridiculous," she complained. "He's buying five million dollar condos, and I can't wash my hair!"

Don't make the assumption that sending your kids to a good college will teach them how to get their bills paid. Schools don't teach these topics and they are not common sense!

If I just had more money...

The basic assumption is if we just had more money, all our problems would go away. Many parents tell me, "I teach my kids to save their money," thinking that equals "They'll know how to pay their bills." But teaching someone to save is teaching them how to NOT spend money. Paying bills requires knowing how to spend your money, as well as knowing how banks work, how to manage a checking account, and how to be smart about credit cards.

We daydream about buying a new house, new cars, and being able to travel, not realizing the amount of money management that is still necessary with the luxurious lifestyle.
Someone with a high income who lives in a really expensive house can get overwhelmed with all the bills and paperwork involved with maintaining their personal finances just as easily as a person making a low income living in a modest apartment.

I went to visit a client at his home. He had three months of mail piled up on his desk. He said bill collectors call him regularly and he's been trying to stay on top of things, but it's out of control. I sat down and spent an hour and a half organizing his mail and making a list of his bills. When I got to his bank statement, I noticed he had $65,000 in his checking account. I asked him, why he hasn't paid his bills? His response was, "I don't even know what I owe. It takes up all my time just to manage my business!"

Managing your personal finances isn't about how to get more money, it's about managing the money you have.

Oh, you're teaching Common Sense!

I'm in a local bookstore searching through the Personal Finance section. It's a rather large section so I stand there for a good 30 minutes scanning every book, trying to find one that will cover many of the items that my clients need help with. No luck. I find books on how to get rich quick (or slow), how to invest in the stock market, and how to save for retirement/college education. But these aren't the questions, we need answers to.


"What do I do right now if I don't have enough money to pay my bills?"

"Paying taxes, how does that work?"

"What does it mean to balance a checkbook? Do I need to?"


I have clients of all incomes and backgrounds, and these are the questions they don't ask, but need to.


Most people have to deal with basics of managing their personal finances, but we don't do anything to educate ourselves in these areas. It's assumed that our parents will teach us, or the information is so simple, that we'll just figure it out when we need to. As a result, we've created a whole generation of people who believe this information is common sense.


The more serious issue is that because we all believe this is common sense, we're not asking to be educated. And we, as a culture, have developed a real sense of embarrassment around this topic. If we write out a check incorrectly, or forget to pay the electric bill one month, we don't talk about it. We berate ourselves for not knowing better, and try to do better next time.


Education is the key.