How Come I’m Broke and You’re Not?

One of the questions I’m asked most frequently is, “How did you learn so much about finance?” The subtext to the question is usually along the lines of, “I know you aren’t a genius or good with numbers, so how come you have a handle on this stuff and I don’t? How come I’m broke and you’re not?”

It’s true I’m not a genius. A bit of a nerd maybe, but not a genius. I don’t have a formal financial education. I struggled through the two economics classes I was required to take in college and avoided anything to do with math like the plague. Throughout most of my education, I had a serious aversion to numbers. Give me history or literature any day but please, don’t make me learn math. When my advisor suggested an accounting class, I all but ran from the room screaming, “Nooooooo!”

You’d think, with such a less than stellar background, that I would be horrible with finance. The good news is, to be “good at” finance, you don’t have to have a formal background in finance or math. You don’t even have to like math all that much (basic math and some skill at percentages helps, but if you have a calculator you can compensate in a pinch). You do have to learn some things, but most of what you need to learn isn’t that scary or in depth, unless you just want to dive into some obscure concepts and theories for giggles. If that’s you, more power to you, but most of what you need to learn comes from real life.

Exactly how did a math-phobe like me learn so much about finance? The biggest educator that I had was not the school system. It was my family. I was very fortunate to grow up in a family that spent and budgeted wisely and also talked about money around me. I might not have known the exact details of our finances, but I knew there were bills to pay, how they got paid, and that there were long term savings goals that trumped the latest thing that I wanted. My parents never carried any debt other than the mortgage and yet managed to live very nicely because they saved for the things they really wanted. They taught me how to balance a checkbook and showed me how to pay bills. They opened a savings account for me and let me make the deposits and showed me how interest works.

Best of all, they didn’t spoil me or give me everything I wanted. (I say it’s the best now. At the time it frustrated me to no end.) I knew that things had to be earned. They prepared me to be an independent adult who earned and saved her own money to pay for what she needed. After eighteen years of living under their roof, I had a pretty solid grasp of basic personal finance and I knew that my first years on my own were going to be hard. They weren’t going to bail me out and I wasn’t going to be living the lifestyle that I had in their house for quite a while. I was going to have to earn a better lifestyle. It worked. I don’t have everything I want, but I live comfortably and am debt free. I live by the example they set and it has served me well.

The second best finance teacher for me has been books. It hasn’t hurt that I love to read and will read anything I can get my hands on. When I need to know something, I turn to books first. As such, I’ve learned about retirement planning, estate planning, running a business, elder care, insurance and taxes. Each time I’ve had a financial question pop up, I’ve headed off to the library. I’ve found the answers I needed, plus I usually find a tip or idea I didn’t know before. Even now that I don’t have as many financial questions, I still head to the library and scan the shelves seeking a new book or a new point of view. I don’t use everything I learn, but it’s nice to have a lot of information to draw upon when I need it.

Television (much as I hate to admit it) has helped me, too. Channels like CNBC or Bloomberg are good for getting exposure to the markets and how they work. They are also good for learning about current events and their effects on the economy. News on foreign channels such as the BBC gives you a wider perspective than what you get from American channels. Watch enough of these channels and you’ll start to get a better feeling for the ups and downs of world economies and what makes them tick. I also learn from documentaries about debt and economic crises. The best ones are not only informative, but entertaining.

The Internet is also a good teacher, if you are savvy enough to filter out the inaccurate information. The Internet is a great resource for money-saving tips and the latest financial news. You can find information from all over the world quickly and easily, allowing you to see how people in different places handle their finances. It can also be a good resource for learning about financial concepts and interacting with financial experts and authors. Just be sure to double check your source before acting on any information on the Internet.

Voyeuristic interest has not been as important in my financial education, but it certainly is an interesting teacher. I’ll admit to being curious about how other people live and spend their money. If we’re honest, most of us are that way. No, I don’t spy on my neighbors but if the conversation turns to money, I listen to what they say. If they’re talking about how much they have or how in debt they are, I listen to find out how they got there. If they’re giving out stock tips or investment strategies, I listen to see if it’s something I can use. I listen to people who have financial conversations in restaurants or other public places. I also like to read personal blogs, stories on message boards, or stories in magazines and newspapers to find out how real people manage or don’t manage their money. You can learn a lot by paying attention to those around you. Even if they are dissimilar to you, you can learn from their successes and failures and be entertained at the same time.

Finally I’ve learned just as much from bad examples as I have from good examples. I won’t name names, but quite a few people in my life are terrible money managers. They have gotten themselves into holes and positions that I’m not certain they’ll ever get out of. I’ve watched it happen and learned from it. I’ve seen the aftermath of bad financial planning; the inability to retire, the massive debt, and the children who suffer, all at close range. It’s not something I care to experience for myself, so I study how to avoid it.

Admittedly, some of my education came about through fate. If I hadn’t been born into a financially conscious family, I might not have had the head start that I did. But even if you grew up in a family that didn’t manage money well, I’ll bet you know at least some good examples of money management in your life. Watch them to see what they do and see if it’s something you can emulate. Or ask if they can teach you how they succeeded. Many people are willing to mentor others, even if only informally.

The rest of my financial education is something that anyone can have. Anyone can go to the library or bookstore and trawl the finance and business aisles. When you need to know something about finance, look up the answer yourself; don’t rely on someone else to get the information for you. You’ll learn what you need to know and probably a few other things in the process. Even if you don’t have something specific you need to know, you can still look around and read different ideas and points of view.

Anyone can learn from others, as well. You don’t have to become a stalker to learn from your neighbors, coworkers and friends. Just practice paying attention to what is going on around you and what is being said. Some people are incredibly comfortable talking about the most intimate financial details of their lives. You can listen without divulging your own financial issues. The Internet makes it super easy to be a voyeur into people’s financial lives. People post their details and problems on blogs and message boards for all to see. All you have to do is click around the net and read their stories if you want to know what works and what doesn’t.

If you know some bad examples of money management, watch them and learn what not to do. Learn from their mistakes. If someone is constantly moaning to you about their debt, or how they are being foreclosed upon, pay attention to how that happened and vow not to repeat it in your own life. Bad examples can be just as instructive as good ones.

Going forward, vow to give your children a financial education. If you’ve made mistakes, make sure to communicate those mistakes to your kids so they don’t repeat them. If you’ve had successes, share how those came about. Teach your kids how to work for money and spend it wisely. Teach them about interest, savings, bill paying, mortgages, and other financial skills. Show them where to find the answers to their own questions about money. If you give the gift of a financial education to your kids, not only will they likely be financially responsible adults, but they will likely pass that knowledge along to their own kids.

A financial education doesn’t have to come from school. Sure, you can learn about finance in school, but real life tends to be a better teacher. Learning from the success and failure of others, whether it’s your family, friends, coworkers, or complete strangers is an easy way to learn. It’s also easy to teach yourself what you need to know through books and other resources. Simply having the desire to learn, to know how to manage money, to avoid being taken advantage of, and to understand the concepts your advisors throw at you is the first step. A financial education keeps you from being at the mercy of others for your financial well being. It’s also a gift you can pass on to your kids and future generations.

Image courtesy of m00by

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5 Responses to How Come I’m Broke and You’re Not?

  1. Christina says:

    I’m beginning to recognize this phenomena among my more open friends: some of us who started with several disadvantages have caught up or surpassed those who grew up with stable middle-class families. Maybe because we knew not to take anything for granted, and to protect what we earned.

  2. Lori says:

    Different upbringings can also make you better at certain situations. My husband is very good at living on a shoestring budget since he grew up in a lower-income family, but doesn’t know how to save. I learned investing early, but never had to live paycheck-to-paycheck until late in college, so didn’t learn how to cut costs in basic areas. Together we’re a pretty good financial team though!

  3. Amy L:) says:

    Thank you for the advice. I am so frustrated and just googled, “I’m broke, I need help” and your blog popped up. Can you recommend any books for someone like me who owns a small business that is upside down in major debt? Im not sure if I should bankrupt the business or not? It’s doing okay now but the debt is so depressing I feel like I am on a never ending hampster wheel. I have personally guaranteed a lot of the debts but I own a house so I need to take the first step to my financial freedom but not sure where to start. Do you have time to write back to me? You can write directly to my email if you are comfortable dong that. :) Thanks wise friend. Amy.

  4. pfadvice says:


    If you aren’t sure what to do, what you need to do is go to a small business accountant and let him/her see all your numbers. Each business is so different that rarely will generic advice work. The accountant should als tell you exactly what you will need to do to make the business work financially.

  5. Nice article Jennifer!

    After getting financial knowledge it can be useless, IF we don’t put that knowledge into fruitful action.

    If we go to the store and ‘save’ $175 on a flat screen with a coupon and then go out the door and buy a new CPU with the $175? We haven’t SAVED anything.

    Instead, go home, open an online savings account and move that $175 over to it. Keep doing similarly in various buying situations. Budget to purchase items. Watch for sales. Limit our wants. Live below our means. Look toward & plan for the future. Over time we’ll have a nice nest egg and other people will ask how we did it.

    One step at a time.

    Knowing is good.

    But putting that knowledge into action? …is better.

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