Financial Illiterates Take Note

If Franklin was correct that an investment in education always pays the best interest, then an investment in financial education would be compounding. If the pun is lost on you, then perhaps you are part of a growing majority whose personal finance acumen is woefully lacking.

With generous company pension plans quickly going the way of the dodo, the responsibility of funding retirement is falling into the hands of individuals who are often too ill-equipped to take on the task.

The simple process of bringing the masses up to speed on personal finance should fall to our schools, but turning to educators in this matter is folly simply because those with government funded guaranteed pensions are likely not that well informed on the matter themselves.  Why would they be? If all of your meals were prepared for you, would there be any reason for you to learn to cook?

Keep It Simple

So it should surprise no one that the typical high school graduate is no longer prepared to cope in a world rife with complicated financial products that didn't exist just ten short years ago. True, you can still go through life with a savings account at a big bank, government bonds, and a traditional mortgage, but unless your plan requires you to work until you're 75, you will need to modify your approach.

If you read a book a day on personal finance for the rest of your life, you still wouldn't put a dent in the volume of information that has been written on the subject. I prefer to distill what I need to know down to one basic axiom: buy what you need, not what you want; invest any remainder in the companies that satisfy those needs.

Lather, rinse, and repeat.