doxoINSIGHTS published their October “Bill Pay Impact Report” citing these main themes for consumer finances:
- 57% of consumers have seen a reduction in income due to the pandemic
- 42% of Americans have skipped paying one or more bills since the COVID-19 pandemic started
- 75% of consumers continue to be very worried about the future of their financial health
Moody’s Analytics reports the US Economy is operating at 82% of where it was in early March and Statistics Canada reports the Canadian Economy is operating at 88% of where it was in early March.
With households continuing to skip bill payments and rent one item becomes very clear, the average consumer lacks financial literacy and preparedness.
The pressures impacting us will end; and, economic recovery will occur. Looking to the future this is an opportunity to identify any areas of weakness in your personal financial plans and adjust to strengthen your position.
Why Do People Lack Financial Literacy?
Behavioral scientists’ from the University of Illinois reported in 2018 that “many young people lack financial literacy and money-management skills, indicating an urgent need for educational programs” and that the most financially precarious group “lacked access to mainstream financial institutions, they were frequent users of alternative financial services…” We can partly point a finger on the education system and societal issues. Another note in this report makes a key point “What differentiated people in the financially precarious and at-risk groups from their peers was that they experienced much less financial socialization”
Financial socialization is where we learn about financial concepts and prudent money-management behavior from family, peers, schools, businesses and financial institutions. This 2018 study focused on 18 to 24-year-olds. The current global economic state and personal financial issues currently being experienced indicate a broader lack of financial literacy and money management skills. At the highest levels.
The recommendations from this study and financial socialization could not prevent the economic failures this year. No bank, government or corporation has been caught in a strong financial standing this year except those, by luck, in the right corner of consumer markets. If a person were to scratch the surface, a world of new information has become available to us regarding the strategies and initiatives at play behind the scenes that have created a pattern of financial failure in global economies. These strategies have played out through world banks, central banks, commercial banks, corporations and households without transparency or awareness.
How might you better prepare yourself for the future? The answer is, still, improving your financial literacy and money management skills.
Be Careful Where You Get Your Information From.
The average household today obtains much of its financial knowledge and advice from their financial institution, or bank, as I have written before this advice maximizes the products the bank is able to sell to you by leveraging the relationship you have with the bank. Commercial banks are retail outlets which develop and sell retail products. They develop exciting tools such as ‘how much can you afford’ mortgage calculators and ‘RRSP Loans’ to help themselves to your money.
Yes, I exclude banks from my circle of friends as it relates to increasing my financial literacy, and I feel you should do the same. Your bank today will assist you by remortgaging your home, or opening Home Equity Line of Credit so you can make your monthly obligations. The outcome of this repeated behavior will be that we no longer own our property and you will become a slave to both your employment and debt.
Not sure I’m correct? Ask any one of the 75% of consumers who continue to be worried about their future.
You can continue to come back to this site, and I will provide as much free content as I am able to in support of increasing financial socialization. Things won’t improve in our economic troubles until many people free themselves from this financial system.
My Goal Is To Be Free
I pursue Financial Independence while building on my True Best Self. Why do these fit together? Alignment of purpose and actualization. On the path to creating wealth you must understand yourself, your habits, motivations, dreams and vision.
You should also be free, and financial advice from your bank won’t lead you there. Media has proven they cannot be trusted so treat all information you get from media outlets as suspect until you prove it otherwise. Governments follow policy set out by world organizations, these same governments are indebted to world banks and use your tax dollars to pay this debt while also bailing out commercial banks when fraud leads to failure. None of these parties have any skin in this game and you don’t want them having the title to your home.
If people like you and me continue to borrow our way out of trouble the banks will own more, and our grandkids won’t be able to afford housing in their home country. Yes, you can get a mortgage for that dream home at extremely low borrowing rates now. This cheap debt drives an economy of housing where banks and realtors profit while housing prices continue to rise, and indebtedness escalates. No one wants to see a decline in home values, but this then creates a viscous cycle. How much will your home cost when your kids want to buy it back from the bank?
This is the ultimate transfer of wealth from the have nots to the haves.
In our Rules for Financial Mastery we outline steps for creating a very strong personal financial position. If you had these practices in place with your personal finances today the fear and uncertainty coming from external pressures and lack of control would have very little impact on you, you would even have options for improving your financial position. These rules are hard to follow and require commitment, they are different than what you will see the average consumer doing but they will create options for your future.
Make Choices That Create Options.
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