PART 2: FINANCIAL LITERACY – Pissed Off and Passionate at the Same Time?

I am on a mission — to raise the financial IQ of America’s middle class. How did that become my mission? One simple word — PAIN (watching the pain caused by financial illiteracy play out in the lives, marriages, businesses, and handicapped retirements of people I care about and even in my own past). Picking up where we left off, I want to continue to describe how I improved my way of thinking and how I began to help other people.

A colleague of mine told me something very disturbing about some of his clients’ behaviors.  This colleague who helps finance large accumulation tools to grow people’s wealth was describing how in his early days as a financial advisor he was part of an organization that taught people to buy term life insurance and invest the difference, rather than to pay the larger premiums required for permanent policies. He told me stories of how he would go back to people that he taught this way after 20 years when their 20 year term policy was expiring.  He would say “Well, how did you do in investing the difference?” They would reply, “Well, what do you mean,” to which he would respond, “well, by now, you should have $500,000 because you invested the difference of what you saved by buying term insurance instead of permanent insurance. So how did your investing do?” He described how we was met by blank stares. Why? Because they didn’t do what they were taught. Instead of buying term life insurance and investing the difference, they spent the difference!

As often as I can be critical of Dave Ramsey, my biggest criticism is with those who follow him. They don’t do what he says. He tells people to get disability insurance. They don’t do it. He tells them to make sure they have a strong foundation. They don’t do it. They pick and choose what they want from his teaching. They DO create their budget. They don’t get enough term insurance. He talks about self-insuring and they don’t do it. They just consume what’s left and say with a pat on their back, “I’m following Jesus. I’m doing what God says. I’m doing what Dave Ramsey says.”  It’s all a bunch of hogwash.

Not only are people not doing what they are advised to do, they also have adopted a scarcity mentality. 

• DEBTROUNDUP.COM defines a scarcity mindset as “the belief that there will never be enough — whether it’s money, food, emotions or something else entirely — and as a result, your actions and thoughts stem from a place of lack.”

 A SCARCITY MENTALITY thrives when the model is screwed up and broken. A scarcity mentality is not how you should live. It’s not how you should ever raise your children.  Here are some saying passed around that reflect the scarcity mindset:

•  there is never enough,
•  things are tight
• Money doesn’t grow on trees
• Turn off the lights when you leave the room!

One of my biggest regrets is that for most of their lives, my children were raised with a scarcity mindset.  I regret that after my divorce they had to watch us scratch out an existence before I learned to keys to growing wealth.  They had to go with us to churches to get boxes of food because we couldn’t pay our bills and that was the only way we could eat. I hated that I had to take my children through that time. It grieves me that while I was a pastor in Savannah, my children were indoctrinated with this scarcity mindset as we were accumulating large amounts of consumer debt. We never had money to go on a real vacation. We never had money to really enjoy things.

It was crazy. 

There I was (in my poor years) a pastor with some of the best seminary training you can receive.  Despite that I did not learn jack squat about the Puritan work ethic and their money mindset. I wasn’t taught what John Wesley preached saying “make as much money as you can!”

These things were never taught out of fear of being seen as pushing a health, wealth, and prosperity message. There is no denying it, that there are a lot of showcase people who are teaching false gospels and misleading multitudes of people to pad their own pockets. Even so, there are some who are teaching the truth. You don’t throw the baby out with the bathwater.

How does this scarcity mindset get spread so pervasively?  Robert Kiyosaki had it right. People learn stupid crap growing up. They’re taught what the banks and the government and the financial institutions want them to. 

• “Put money in a savings account”. Why? Because that’s where you should put it because it will be safe.  Well, true it’s safe however it won’t do anything for you, but it will do a lot for the bank.
• “ Put money into a qualified account like a 401K or an IRA.”  Why? Well, where the hell are you going to put your money to grow it? You don’t know how to pick out stocks, do you? So, put it there. That way you can grow it for yourself and for the government. Oh, they forgot to tell you that the government will never allow you to save enough to really be wealthy and therefore you’ll be dependent on them.

So we are taught to turn it over to a grouplike Edward Jones or J.P. Morgan — they will grow it for you, right? They will grow it and they will grow fat. They will have yachts and you will have a jon boat. They will have a limousine and you will have a Toyota Corolla.

It’s jacked up.

Unknowingly, parents are feeding their kids the ideas that the government and the banks are telling them to. They leave high school for college, they graduate with a degree and walk across the stage with $100,000 or more in college debt. They step out into a world that they cannot leverage their degree to grow wealth. And they are in the same rat race over and over and over again. 

It is a tragedy. It is a travesty.  It is a consequence of the financial philosophies we are taught from day one.

So I am on a mission to DISMANTLE this philosophy as fast as I can, as loud as I can, and as long as I can.  

On the third and final part of this blog series, I will let everyone in on my not-so-secret experiences, failures, and truths. Look  forward to it until then.

Until next time.